Ealing Southall MP Virendra Sharma used his latest piece in the Gazette to talk economic nonsense that I suspect he probably doesnâ€™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 â€“ which this Government said was its number 1 priority â€“ 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 Â£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 Â£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.