Dear Claire,
In yesterday's letter, I did say I would be writing about the Tory mantra from the last 5 years: 'The mess we inherited', 'The situation we inherited' and even in your letter to my son:
"When this Government came into office in 2010, the country was in a mess. The last Labour government had borrowed more money than ever before as a result of the banking crisis and the recession, and had no plans to pay it off. That meant that you, the next generation, would have been saddled with the debts of the country, which I think is totally unfair (Boohoo!). By making some tough, but fair, decisions on government spending, we are dealing with the country's debts so you don't have to. We are also making the welfare system fairer, cracking down on benefit fraud and tax evasion and really getting the economy growing."
Well thank you so much for that Claire, you are making this process very easy for me - it's like shooting fish in a barrel! So where shall we start?
We'll start by thanking Ramesh Patel, a political blogger who is quoted in the Huffington Post. Ramesh is a Conservative too, so for him to post this stuff, he must be seriously fed up with your party's repeated inaccuracies.
So, let's get into it with Claim 1:
CLAIM 1
"The last government left the biggest debt in the developed world"
After continuously stating the UK had the biggest debt in the world Osborne admitted to the Treasury Select Committee that he did not know the UK had the lowest debt in the G7. This is also confirmed by the Organisation for Economic Co-operation and Development (OECD). Those who use cash terms (instead of percentages) do so to scare, mislead and give half the story.
It's common sense, in cash terms a millionaire's debt would be greater than most people. Therefore, the UK would have a higher debt and deficit than most countries because, we are the sixth largest economy. Hence, its laughable to compare UK's debt and deficit with Tuvalu's who only have a GDP/Income of £24 million whilst, the UK's income is £1.7 Trillion.
Finally, Labour in 1997 inherited a debt of 42% of GDP. By the start of the global banking crises in 2008, the debt had fallen to 35% - a near 22% reduction, as stated by the Office of National Statistics (ONS).
Surprisingly, a debt of 42% was not seen as a major problem and yet at 35% the sky was falling down? It's a wonder that Labour didn't make more of the "Mess we inherited" in 1997!
CLAIM 2
"Labour created the biggest deficit in the developed world by overspending."
Firstly, the much bandied about 2010 deficit of over 11% is false. This is Public Sector Net Borrowing (PSNB) (total borrowings) and not the actual budget deficit which was -7.7%, as reported in the Office for Budget Responsibility's report: OBR Economic and Fiscal Outlook March 2012 page 19 table 1.2.
Secondly, in 1997 Labour inherited a deficit of 3.9% of GDP (not a balanced budget ) and by 2008 it had fallen to 2.1% - a reduction of a near 50% - Impressive! Hence, it's implausible and ludicrous to claim there was overspending. The deficit was then exacerbated by the global banking crises after 2008. See HM Treasury. Note, the 1994 deficit of nearly 8%.
Thirdly, the International Monetary Fund (IMF) have also concluded the same. They reveal the UK experienced an increase in the deficit as result of a large loss in output/GDP caused by the global banking crisis and not even as result of the bank bailouts, fiscal stimulus and bringing forward of capital spending. It's basic economics: when output falls the deficit increases.
Finally, the large loss in output occurred because the UK, like the US have the biggest financial centres and as this was a global banking crises we suffered the most. Hence, the UK had the 2nd highest deficit in the G7 (Not The World) after the US and not as a result of overspending prior to and after 2008- as the IMF concur.
CLAIM 3
Our borrowing costs are low because the markets have confidence in George Osborne's austerity plan and without it the UK will end up like Greece.
Yes, the markets have confidence in our austerity plan and that's why The Pacific Investment Management Company (PIMCO), the worlds largest bond holder have been warning against buying UK debt.
The real reason why our borrowing costs have fallen and remained low since 2008 is because, savings have increased. As a result, the demand and price for bonds has increased and as there is an inverse relationship between the price of bonds and its yield (interest rate) the rates have fallen. Also, the markets expect the economy to remain stagnated, which means the price for bonds will remain high and hence, our borrowing costs will also remain low.
Secondly, the UK is considered a safe heaven because, investors are reassured the Bank of England will buy up bonds in an event of any sell off - which increases the price of bonds and reduces the effective rate. Note, how rates fell across the EU recently when the European Central Bank (ECB) announced its bond buying program.
Thirdly, because, we are not in the Euro we can devalue our currency to increase exports. Moreover, UK bonds are attractive because, we haven't defaulted on its debt for over 300 years.
David Cameron would like people to believe the markets lend in the same way as retail banks lend to you and I.
Overall, when the facts and figures are put into context these juvenile deficit narratives and sound bites ("mere words and no evidence") simply fail to stand up to the actual facts. The deficit myth is the grossest lie ever enforced upon the people and it has been sold by exploiting people's economic illiteracy.
So, will Cameron apologise? Of course not. He's infallible!
Cameron is playing the blame game to depress confidence and growth to justify austerity. Secondly, to use austerity as justification for a smaller state to gain lower taxes. Thirdly, to paint Labour as a party that cannot be trusted with the country's finances again.
Therefore, Conservatives will win a second term because, people vote out of fear. The latter strategy worked the last time in office (18 years) and will work again because, in the end, elections are won and lost on economic credibility. Hence, as people believe Labour created the mess they won't be trusted again.
Finally, as the truth is the greatest enemy of the a lie I urge you to share this on Facebook, Twitter, blogs, text and email etc etc. So the truth can be discovered by all, though something tells me you won't.
Let's leave the last words to both Winston Churchill and Joseph Goebbels:
"A lie gets halfway around the world before the truth has a chance to get its pants on" Winston Churchill
"If you tell a lie big enough and keep repeating it, people will eventually come to believe it" Joseph Goebbels
Claire, I would be highly embarrassed, were I to be associated with a group that had made such reckless unfounded statements such as the three statements above, all of which have been comprehensively disproven.
Something tells me you won't be in any hurry to retract such rubbish on behalf of your party.
We fight on!
Kind regards
Polly
p.s. what a pity you had a strop with a certain Marlborough-based website and decided not to talk to them 'ever again' (Yah boo sucks). All Devizes candidates have had their policies published there, with one notable exception. Is it not time to grow up a bit? All they did was repeat something readily accessible in several different places on the interweb!
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