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Ealing and Northfield National politics

Ten Sharma Lies: Confuses total borrowing with the deficit

Ealing Southall MP Virendra Sharma used his latest piece in the Gazette to talk economic nonsense that I suspect he probably doesn’t even understand himself. No doubt the piece was written by council leader Julian Bell who acts as his researcher whilst drawing a full-time allowance from the council and refusing to answer questions about his other job. Sharma said:

Borrowing – which this Government said was its number 1 priority – is going up, not down.

Of course borrowing is going up. The borrowing supertanker was set on its course much earlier this century by Captain Gordon Brown. Now it is extremely hard to change course. Before the financial crisis hit in 2008 the Labour government was already spending 5.2% of GDP or £73 billion per annum more than its income (not accounting for variations of the economic cycle) – they call this the structural deficit. The deficit reached £150 billion when the Coalition came into power. Labour chancellor Alistair Darling had made plans to halve the deficit by the end of the next Parliament (and not reduce borrowing) in his November Pre-Budget Statement. In order to do this he halved capital spending.

When they came into power the Coalition set out in the Coalition Agreement to eliminate the deficit by the end of the Parliament. This would not reduce borrowing either merely add to it more slowly. This has proved harder going than envisaged two years ago but all the same the deficit is about three quarters of what it was under Labour.

The deficit has been cut but borrowing hasn’t. It never was going to be cut by either party in this Parliament. It was going to go up under either government. Sharma really doesn’t understand what he is saying.

2 replies on “Ten Sharma Lies: Confuses total borrowing with the deficit”

Confusing stuff, all these figures.

If the borrowing is not down does that mean the deficit will rise again? Or does it get debited straight to the National Debt if the tax recipts are inadequate? Perhaps it gets debited somewhere else?

Sharma is right on one thing. NHS. Closing the A&Es is a scandal. If Boris can talk about new airports, then he can talk about the NHS. Reducing the Ambulance service is a scandal and the same goes for the Fire Service. I can’t work out what is happening on crime generally but I still wish to see police more often in the streets of Ealing.

George,

It is pretty easy. Labour spent rather more than it took in. It would be nice just to stop but once you have made commitments to hire people and entered into contracts it is hard to go back so we are still spending more than we take in but at a lower rate, maybe £120 million rather than £150 million.

The only way to get back to balance is to spend less. Taxing more will do a lot more harm to the economy. We already take too much money off people. It is not a happy situation but the Coalition has decided that most bits of the state need to play their part apart from the NHS and overseas development. Both the fire service and the police have a bad history of restrictive practices and resistance to change. They need to do more for less like the rest of us and not keep asking to be made a special case.

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