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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Who will win the Copeland by-election?

Labour face a tricky task in holding onto the seat. 

What’s the Copeland by-election about? That’s the question that will decide who wins it.

The Conservatives want it to be about the nuclear industry, which is the seat’s biggest employer, and Jeremy Corbyn’s long history of opposition to nuclear power.

Labour want it to be about the difficulties of the NHS in Cumbria in general and the future of West Cumberland Hospital in particular.

Who’s winning? Neither party is confident of victory but both sides think it will be close. That Theresa May has visited is a sign of the confidence in Conservative headquarters that, win or lose, Labour will not increase its majority from the six-point lead it held over the Conservatives in May 2015. (It’s always more instructive to talk about vote share rather than raw numbers, in by-elections in particular.)

But her visit may have been counterproductive. Yes, she is the most popular politician in Britain according to all the polls, but in visiting she has added fuel to the fire of Labour’s message that the Conservatives are keeping an anxious eye on the outcome.

Labour strategists feared that “the oxygen” would come out of the campaign if May used her visit to offer a guarantee about West Cumberland Hospital. Instead, she refused to answer, merely hyping up the issue further.

The party is nervous that opposition to Corbyn is going to supress turnout among their voters, but on the Conservative side, there is considerable irritation that May’s visit has made their task harder, too.

Voters know the difference between a by-election and a general election and my hunch is that people will get they can have a free hit on the health question without risking the future of the nuclear factory. That Corbyn has U-Turned on nuclear power only helps.

I said last week that if I knew what the local paper would look like between now and then I would be able to call the outcome. Today the West Cumbria News & Star leads with Downing Street’s refusal to answer questions about West Cumberland Hospital. All the signs favour Labour. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.