Another Cameron myth: the coalition hasn't reduced the deficit by "a quarter"

The most recent figures show that current borrowing has fallen by just 6.4 per cent since 2010, while net borrowing has fallen by 18.3 per cent.

David Cameron was caught out last week when he falsely claimed in a Conservative Party political broadcast that the coalition was "paying down Britain's debts" (the national debt has risen from £811.3bn to £1.11trn since he entered office). But what of his even more frequent boast to have reduced the deficit by "a quarter"? The Conservatives' website states

Dealing with our debts means we have had to take tough decisions. But we are making progress: in the two years since we came to office, we’ve already cleared one quarter of the deficit left by Labour.

The Tories' claim is based on the fact that public sector net borrowing fell from £159bn in 2009/10 to £121.6bn in 2011/12, a reduction of 24 per cent.  But since the net borrowing figure includes investment spending, which even Nick Clegg now concedes was cut too fast (capital spending fell from £48.5bn in 09/10 to £28bn in 11/12, a 42.3 per cent reduction), a better test of the coalition's fiscal rectitude is current borrowing, which reflects the difference between revenue and day-to-day (non-investment) spending. On this measure, borrowing has fallen from £110.5bn in 09/10 to £93.6bn in 11/12, a notably smaller reduction of 15.3 per cent. The shortfall in revenues caused by the near-absence of growth since the Spending Review in 2010 and the higher welfare bills caused by the rise in long-term unemployment have left Osborne unable to meet his deficit targets.

The coalition's boast to have reduced borrowing by a quarter also depends on ignoring all the figures since April 2012, when the last financial year (11/12) ended. If we take into account the figures since then (see table PSF1 on p.36) , the picture is even worse. Over the last 12 months (January 2012-December 2012), the government's net borrowing stands at £128.9bn (excluding the one-off transfer of Royal Mail pension assets to the public sector), an increase of 5.8 per cent since 2011, when borrowing was £121.4bn, and a fall of only 18.3 per cent since 09/10. As for current borrowing, that stands at £103.4bn over the last year, a reduction of just 6.4 per cent since 09/10 (when current borrowing was £110.5bn). 

So, to summarise, the coalition reduced net borrowing by 24 per cent between 09/10 and 11/12 but only by slashing infrastructure spending by 42 per cent and tipping the UK into a double-dip recession and, perhaps, a triple-dip. Current borrowing has fallen by a smaller 15.3 per cent over that period. 

If, unlike Cameron, we take into account the borrowing figures since April 2012 , net borrowing has fallen by 18.3 per cent since 09/10, while current borrowing has fallen by just 6.4 per cent.

For a government whose raison d'etre is deficit reduction ("The deficit reduction programme takes precedence over any of the other measures in this agreement," states the Coalition Agreement), the coalition really isn't very good at it. 

David Cameron addresses a session of the annual World Economic Forum (WEF) meeting in the Swiss resort of Davos. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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Why a Labour split may be in the interests of both sides

Divorce may be the best option, argues Nick Tyrone. 

Despite everything that is currently happening within the Labour Party - the open infighting amongst party officials, the threat of MPs being deselected, an increasingly bitter leadership contest between two people essentially standing on the same policy platform – the idea of a split is being talked down by everyone involved. The Labour Party will “come together” after the leadership election, somehow. The shared notion is that a split would be bad for everyone other than the Tories.

Allow me to play devil’s advocate. What the Corbynistas want is a Labour Party that is doctrinarily pure. However small that parliamentary party might be for the time being is irrelevant. The basic idea is to build up the membership into a mass movement that will then translate into seats in the House of Commons and eventually, government. You go from 500,000 members to a million, to two million, to five million until you have enough to win a general election.

The majority of the parliamentary Labour party meanwhile believe that properly opposing the Tories in government through conventional means, i.e. actually attacking things the Conservatives put forth in parliament, using mass media to gain public trust and then support, is the way forward. Also, that a revitalisation of social democracy is the ideology to go with as opposed to a nebulous form of socialism.

These two ways of looking at and approaching politics not only do not go together, they are diametric opposites. No wonder the infighting is so vicious; there is no middle way between Corbynism and the bulk of the PLP.

I understand that the Labour MPs do not want to give up on their party, but I don’t see how the membership is shifting in their favour any time soon. Most talk around a split understandably comes back to 1981 and the SDP very quickly yet consider this: the most defections the SDP ever achieved were 28. If there was a split now, it would probably involve the vast majority of the PLP, perhaps even 80 per cent of it – a very, very different proposition. There is also clearly a large number of people out there who want a centre-left, socially democratic, socially liberal party – and polls suggest that for whatever reason the Liberal Democrats cannot capitalise on this gap in the market. Some sort of new centre-left party with 150+ MPs and ex-Labour donors to kick it off just might.

Of course, a split could be a total disaster, at least in the short term, and allow the Tories further general election victories over the next decade. But let’s be honest here – given where we are, isn’t that going to happen anyhow? And if a split simply results in what happened in the 1980s recurring, thus eventually leading to a Labour Party capable of winning a general election again, would members of the PLP currently wondering what to do next not consider it worth it just for that?

Nick Tyrone is Chief Executive of Radix, the think tank for the radical centre.