They say, “If you tell a big enough lie and repeat it constantly, people will believe it”—and that is what the Tory-led Government have done. We are constantly told that the last Labour Government left the biggest debt in the developed world. That is an odd thing to say when the Chancellor admitted to the Treasury Committee in 2011 that he did not even know that the UK had the lowest debt in the G7.
Of course the UK will have a higher debt and deficit than some other countries, and Government Members often make a comparison with Greece, but Greece has a totally different economy from ours; we are the sixth largest in the world. Of course our debt will be higher than Greece’s, but the real figure to look at—one that relates to economic competence—is the ratio of GDP to national debt.
Let me remind the House—I know Government Members have a collective amnesia about this—that in 1997, when the Labour Government came to power, the national debt was 42% of GDP; after 11 years of the Labour Government and before the global recession of 2008, the ratio of GDP to national debt was 35%. That is a reduction of 11%, and it was not achieved by a Government who were financially incompetent. In fact, that Government achieved an even greater reduction than the Conservatives.
The second claim that we hear is that Labour created the biggest deficit in the developed world by overspending. If that was the case, why did Germany, Japan, the United States and other similar economies have a problem? Why did they have banking crises? Why were they not in deficit? We know the answer. We know that there were global economic problems. We know that the financial crisis began in the United States with the sub-prime mortgages. In fact, it was a former Chancellor, my right hon. Friend Mr Darling, who took a bold initiative, saving our banking systems and, subsequently, saving half a million jobs as well.
Those are not just my views. The International Monetary Fund concluded that
“the UK experienced an increase in the deficit as result of a large loss in output/GDP caused by the global banking crisis and not even as result of the bank bailouts, fiscal stimulus and bringing forward of capital spending. It’s basic economics: when output falls the deficit increases.”
The deficit increase was not due to any of the actions taken by the Labour Government. In fact, all those actions made the economy better, and saved more jobs. In contrast, this Government’s policies over the past three years have done nothing to help the economy to grow.
Another reason for our financial loss was the fact that we are one of the main financial centres in the world. Given that there was a global banking crisis, of course we were likely to take the hit more than other countries. We should also bear in mind that up to 2008, while Labour was in power, the actual borrowing costs were low. Indeed, they are still low. That is because in the United Kingdom our bonds are strong and are performing well, because people know that the Bank of England is there to step in if there is any problem, and, of course, because over the last 300 years the UK has never defaulted on its debt. The Government try to blame austerity, saying, “We must introduce all these measures because we need to balance the books,” but the truth is that they are using austerity as a justification for downsizing the state, which, in ideological terms, the Conservative-led government have always wanted to do.
Even the Chancellor’s budget deficit programme is not working. Everyone knows that a budget deficit occurs when expenditure exceeds income, but one way of securing income is taxation, direct or indirect. When people are being laid off and are not working, they are paying no taxes. They are having to be supported by a benefits system, which is why—