Debt, Deficit, Borrowing, Surplus, Tax, and Spend

I am going to explain this only once because I'm beginning to get truly frustrated with the ignorance I face from Conservative voters who don't want to accept that Labour has done the economy more good in the last three decades than the Tories. This really isn't that complicated.

Debt: The amount the government owes from borrowing, including the addition of any interest.

Deficit: The difference between budget spend and budget income leading to a negative balance.

Borrowing: The amount the government borrows.

Surplus: The difference between budget income and budget spend leading to a positive balance.

Tax: Money the government recoups from the populace through income tax and other taxes.

Spend: What the government invests in infrastructure, assets, welfare, and services.

So how do Labour and the Conservatives compare?

Debt

On its own and as a percentage of GDP, debt is consistently higher under Conservative governments than under Labour. Debt both prior to the Blair/Brown government and after it has been higher than during it.

Deficit

This is actually largely irrelevant. Large deficit isn't necessarily bad (unless the government are lying about their targets to lower it, but that's more because it shows government smoke and mirrors for the incompetence it is). Deficit is simply the difference in budget income and outgoings. Deficit is better than surplus in some respects as it shows money is going into the economy rather than being kept out of it in a surplus, although sometimes it is beneficial to be in surplus for a few years, pay off debt, and then start spending again. Under Labour, the Tory deficit was lowered, a surplus was created with fed into lowering debt, and then they began to invest, keeping the deficit stable. The rise in deficit came as a result of the GLOBAL crash, not as a cause of it, as government spending included bailing out the banks to stop a full scale crash of our economy.  This indicates anomalous spending in the years of the crash to save the economy, not recklessness on Labours part.

Borrowing

Under Labour yearly borrowing remained low and steady, the only exception was during the crash when the government borrowed to save the banks and the economy along with them. This was an anomaly, not a trend. However, since then, the Conservative government have continued to borrow at high levels. In 2015 their borrowing was still almost twice that of Labour's in 2007. Such borrowing while our debt remains high is reckless. It lowers the deficit, because it's 'income', but it doesn't improve our economic stability. In fact, high levels of debt are known to slow economic growth. As the conservatives are supposedly using cuts to welfare and public services to 'pay down the deficit'  and they aren't bailing out a new back every year, you have to wonder where all this borrowed money is going? Tax cuts for the wealthy? Ignoring corporate tax avoidance? Battle buses? I don't know, but it's an interesting question. 

Surplus

See Deficit

Tax

Despite a reputation for giving tax cuts, the Tories have a history of high taxation. They use stealth taxes to acquire income. Under Margaret Thatcher, effective tax reached a peak. It reduced under Labour, but rose under the Conservatives. We don't have any figures, but we can only presume the Tory dementia/death tax is intended to increase taxation further.

Spending

The government can invest in a number of ways, by purchasing assets which offset debt and can provide income or lower expenditure, or they can invest in infrastructure to improve productivity, or they can invest in welfare which has the twofold benefit of ensuring more people have money to spend, therefor increasing economic growth, and by ensuring recipients have some level of security and dignity, which in tern encourages productivity. Labour tends to invest in infrastructure, increasing economic productivity, while the current Conservative government seeks to cut spending which both slows economic growth and creates poverty. Child poverty has increased hugely in the last seven years, undoing the last Labour governments success and lowering it. 

Conclusion

The last Labour government had a policy of low levels of controlled debt, low levels of controlled borrowing, low levels of effective tax, productive economy, and investment to encourage productivity. The country made a lot compared yo what it borrowed. This placed us in a strange position during the global economic crash. Our accounts were in good enough shape that the government could borrow and bail out the banks to save the economy. The current Conservative government and the Tory government under Thatcher have high levels of debt, high levels of borrowing, high taxation, and slow economic growth, leaving us in a precarious position where another crash (such as that likely to follow Brexit) will have far greater impact than the global crash of 2008. And a future crash may well be the direct result of Tory policy and the Brexit referendum, as opposed to the 2008 crash which was global and not to be laid at Labour's door.

For a more in depth look at Tory and Labour policy, see my post Strong and Stable, or for more facts and figures on the economy, along with references for graphs shown here, see my post Debt, Deficit, and Deceit.

And remember, vote Labour for low debt, low borrowing, sensible spending, and low, stable, and open taxation.

Vote Conservative for high debt, high borrowing, spending on the already wealthy, and high, hidden taxation.

Carmine Raven