The deficit: Fewer insults, more facts (and figures) please

George Osborne has had an extra year to get rid of it, and he has managed to do only half
Click to follow

Fraser Nelson, the excellent editor of The Spectator, has become heated about what he called a party's plan to "fight the next election lying about the deficit". There are two surprising things about this, and two regrettable things. The first surprising thing is that Nelson, the right-wing editor of a Conservative weekly, referred to a claim made by David Cameron. The second is that he is wrong.

Nelson took exception to the claim first made by George Osborne in the Autumn Statement last month that he had halved the deficit. It was repeated by the Prime Minister and last week it was put on the first Tory poster of the year. Nelson pointed out that the deficit – the annual amount Government has to borrow to cover the gap between spending and what it gets in – had fallen from £153bn in 2009-10 to £91bn in the current tax year. That certainly does not look like it has halved.

However, nothing in economics is quite what it seems. Osborne did not define his terms in his statement, but was quick to point out afterwards that he was talking about the deficit not in cash amounts but as a share of national income. Because the economy has grown since the 2010 general election, the deficit as a proportion of GDP has fallen from 10.2 per cent to 5.0 per cent. As this is the most sensible way to express the deficit, and is the measure with which the independent Office for Budget Responsibility concerns itself – Osborne's claim is therefore perfectly correct.

I am all for precision in language, and it would have been better if the Chancellor had included half a sentence in his original claim, "as a share of GDP", but Nelson's indignation is out of proportion.

This is regrettable, first, because it is a distraction from more serious criticisms of the Government's record on tax and spending. Indeed, the most important point about the claim to have halved the deficit is that it is roughly half the progress that Osborne promised. This lot were elected on a pledge to close the deficit entirely in this parliament, and they were joined in a coalition by the other lot, the ones who changed their minds about the deficit the moment the votes were counted.


Actually, the Tories were elected saying that the deficit should be eliminated altogether in four years, because that was the expected length of this parliament before Osborne had his eureka moment in the coalition negotiations and changed the fixed-term parliament from four years to five. So Osborne has had an extra year to get rid of the deficit and he has managed to do only half of it.

What Nelson ought to be pointing out with his brilliant vehemence is that Osborne has achieved what Alistair Darling promised to do at the last election. Nelson ought to be digging out old quotations from Osborne in Hansard saying: "The truth about Labour's plan is that it would mean billions of pounds more in debt interest" (22 March 2011). Those billions in interest are now being paid by the taxpayer, thanks to Tory-led management of the public finances.

Well, you might say, if Osborne achieved only half of what he set out to do, then Darling might have cut the deficit by merely a quarter. But, again, economics doesn't always work like that. Ed Balls argues that it was a mistake to cut public spending and to raise VAT so sharply in 2010, because that choked off the recovery. We cannot be sure, but I think he is probably right: under Darling the economy might have grown more, and so – as a share of GDP – Labour might indeed have halved the deficit by now.

There are other claims that Cameron makes, though, which are less justifiable than having halved the deficit. "When we came into office in 2010, Britain was on the brink of bankruptcy," the Prime Minister claimed in an email to supporters last week. There is no evidence for that assertion. Interest rates on government bonds, which have been warning signs that Greece, Italy or Spain might default in the past few years, never showed so much as a flicker in Labour's Britain. The only doubt about Britain's credit worthiness came when Moody's and Fitch, the ratings agencies, downgraded us from AAA to Aa1 and AA+ in 2013, when Osborne was Chancellor.

Today, though, we have even greater dishonesty from Labour. Its posters claim: "The Tories want to cut spending on public services back to the levels of the 1930s, when there was no NHS." This really is deliberately misleading, because it refers to spending as a share of the economy when the economy is 10 times larger than in the 1930s, and the "1930s" figure is almost the same as that for the Labour government in 1999-2000. While the reference to the NHS is simply an attempt to frighten people.

I would not say that Andy Burnham and Ed Miliband are lying, however. The second reason Nelson's criticism of Cameron and Osborne is regrettable is the language in which it is expressed. To accuse people of lying in public debate is not just rude, it is a mistake. Even if the Tory leadership were being deliberately misleading, which they were not, it weakens the criticism to resort to insult.

As the wind machine of the election campaign cranks up, I know I am talking into a gale, but let us have less of the "lies", "lying" and "liar".