Lest we forget
At almost every Prime Minister’s question time, Labour politicians jeer and hurl abuse at the Government for the worsening state of the economy. Likewise, in media interview after interview, Labour quite rightly lambast Coalition ministers for the extraordinary incompetence and bungling they have displayed in running Britain. But with so much mud and worse being justifiably hurled at the hapless and bumbling Coalition members, there is a risk we forget whose arrogance and ineptitude got us into the mess in the first place. Because, even though Gordon Brown may have largely withdrawn to his Scottish home to possibly sulk and write his memoirs, while still receiving his generous MP’s salary, expenses and other additional eye-watering payments former prime ministers can claim, most of the rest of the guilty are still sitting on Labour’s front benches itching to get the chance to finish the job they started – totally bankrupting Britain while enthusiastically filling their own pockets with our money. And none seems to be more implicated in the thirteen year long New Labours deployment of weapons of mass economic destruction than Shadow Chancellor Ed Balls.
When Gordon Brown, ably assisted by the talented and academically gifted Ed Balls, took over as chancellor, he inherited a situation that any other chancellor would have given his or her back teeth for. Tax revenues were growing faster than public spending and the British Government’s finances were moving towards a surplus – the Government was about to start taking more in taxes than it was spending. As part of New Labour’s 1997 election campaign, the Party had tried to boost its economic credentials by promising to stick to the previous Tory government’s public-spending plans for its first two years in office. Unable to splash out all the cash that was pouring in, Brown and his acolytes found they could use the excess money to reduce our public debt from around £350 billion to £312 billion in just a couple of years and thus reduce our annual interest payments from about £29 billion to less than £25 billion.
Brown, and one assumes Balls, seems to have always wanted to go on an unprecedented and reckless spending spree with our money. But their lust for spending our taxes need not have been a problem. Tax revenue was going up so fast that Brown and Balls could have happily pushed public spending up by a massive seventy per cent between 1997 and 2007, just under the seventy five per cent rises in tax revenues. This would have allowed them to waste hundreds of billions on whatever they wanted – unnecessary bureaucracy, huge pay rises for public-sector fatcats, hopelessly-managed grand projects like the Millennium Dome, tens of billions given to Blair’s favourite management consultants, and umpteen worthless multi-billion pound computer systems – and they still would have had enough cash left over to pay off pretty much all our Government debt during their first ten years in office
The tragedy for all of us was that a mere seventy per cent increase in public spending over ten years didn’t seem to be enough for Brown and Balls. They apparently needed more of our money to fulfil their great ambitions, whatever they were. And so they really let rip. Not satisfied with constraining themselves to slam public spending up by just a little bit less than the healthy rate at which tax revenues were increasing, Brown and Balls went for broke and more than doubled the amount of our money they spent.
The results were as predictable as they were catastrophic. As even the rapidly rising tax take wasn’t enough to satisfy New Labour’s addiction to spending our money, Brown and Balls had to borrow and borrow and borrow. Rather than being comfortably paid off bit by bit with our ever-increasing tax revenues, our national debt more than doubled from a low of £312 billion to over £760 billion under Brown’s and Balls’ dubious stewardship of our economy. Our debt is now well on course to hitting £1.5 trillion in 2015 – about four times what it was when Brown and Balls first got their hands on our credit card and went to town. Brown, supported by Balls, could have been the greatest Chancellor in British history – instead he was probably the worst.
As a consequence of Brown doing the opposite of what he promised interest payments on our national debt have now reached over £50 billion a year (more than we spend on defence) and are on course to pass £60 billion a year by 2016. If only Brown and Balls had just gone moderately wild with our money and put public spending up by an already sizeable seventy per cent, we’d have been able to laugh off the 2007 economic crash and continue to party while the debt-ridden US and the rest of Europe sank into deep economic gloom. If only Brown and Balls had just stuck to the seventy per cent, we would have had virtually no government debt and, with no interest payments to make, there would have been an extra £50 billion or so to cushion us against the effects of recession in other countries. If only Brown and Balls had even the slightest understanding of economics, we’d now all be as happy as pigs in the proverbial. But seventy per cent wasn’t enough for Brown and Balls. Instead of going moderately wild with our money, they went totally crazy and so now we’re actually up to our eyes in the proverbial, the proverbial will soon be up over our heads and we’ve no idea of how we’re ever going to get out of it. The difference between what Brown and Balls could have spent while maintaining sound finances and what they actually did spend wasn’t huge. But the result of years of slightly overspending was disastrous.
We now know, that due to the stupendous incompetence of New Labour politicians and our leading civil servants and the greed of companies, many of whom generously contributed to New Labour coffers while being awarded lucrative public-sector contracts, most of Brown’s and Balls’ extra spending – about £1.4 trillion, give or take a few hundred billion – was wasted on things like hiring an extra million or so unnecessary bureaucrats costing us between £50 billion and £100 billion a year; giving all public-sector workers generous pay rises – at least another £60 billion a year; giving public-sector bosses totally extraordinary pay rises – billions more for their salaries and pensions; huge computer systems most of which never worked but made consultants billions richer; and hundreds of billions in benefits for a few million Brits who, even during an economic boom, couldn’t be bothered to go to work and preferred to stay at home watching shows like the X-Factor and Big Brother on their large flat-screen TVs while two to three million East Europeans and others from further afield took the jobs the British couldn’t be arsed to do.
This massive squandering of our money meant that, in spite of splashing out all the country’s rapidly increasing tax revenues and in spite of also borrowing and spending about £400 billion more, Brown and Balls still didn’t have enough cash to build the schools, hospitals, roads, care homes and all the other grand projects they had set their hearts on. And that’s when they created what has been called the ‘shadow public sector’ – even more public-sector spending which was kept off the Government’s current spending accounts through long-term deals done with private-sector companies. This was mostly done through a huge programme of PFI (Private Finance Initiative) projects. With PFI, the Government signed contracts with private companies for them to build and often operate things like schools, hospitals and other public buildings. Some of these PFI contracts stretched out over twenty to thirty years, landing future taxpayers with crippling costs for decades into the future. The total capital value of more than seven hundred PFI projects is only about £56 billion. But with interest payments and running costs, we taxpayers will end up paying PFI companies over £300 billion by 2050.
Most PFI projects were so incompetently negotiated by civil servants that they became even more massively profitable for the companies involved than had originally been imagined. Profit margins of fifty to sixty per cent were not uncommon. Moreover, some PFI companies doubled or even tripled their profits by refinancing their projects, often making immediate gains of anywhere between £50 million and £100 million from just a few days’ nifty financial jiggery-pokery. Others made huge gains by selling on their share of their projects to other infrastructure companies or financial speculators. But for the British taxpayer, PFI was close to a shakedown forcing us to pay significantly more than what similar projects would have cost, even if they had been directly built and run by our inefficient, wasteful public sector. However, for the big-spending New Labour government, the main advantage of PFI seems to have been that they could spend quite stupendous amounts of our money while in office, but could leave the bills for future governments to pay. Plus, of course, having landed future governments with preposterous PFI bills, the Labour politicians responsible for the PFI debacle had the enormous pleasure of being able to mockingly accuse their successors of not controlling public spending, in the full knowledge that Labour politicians were completely responsible for the country’s economic chaos in the first place.
This is the same Ed Balls, who in May 2015 is asking the country to entrust him once again to the stewardship of the UK economy and purse strings.
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