Ed Balls - his claims and the reality

Ed Balls claims in his response to the latest batch of documents released by The Telegraph that:

"Once again the headlines and allegations are not remotely substantiated by either the content of the documents or the reality of what happened. The fact is that before the global financial crisis Britain had a lower deficit and national debt than Labour inherited from the Conservatives in 1997. The 2007 spending review plans show the current budget moving into structural surplus – even with our commitments in Iraq and Afghanistan. That spending review delivered slower spending growth with demanding efficiency targets – spending plans which were fully endorsed by David Cameron, George Osborne and the Conservative Party at the time."

Let's look at the figures... We will start with the deficit, now this can be defined in many ways but I have chosen the 'Net borrowing, £m (inc financial intervention)' figure , the so-called ANNX figure. Here is the data set for this measure of deficit from 1997 to 2011:
1997 -15,555
1998 703
1999 11,976
2000 16,697
2001 8,426
2002 -19,046
2003 -34,004
2004 -36,797
2005 -41,355
2006 -30,755
2007 -33,671
2008 -52,340
2009 -120,601
2010 -121,978

Do these figures back up Ed Balls' claim?

Let's try Debt... Actually whatever I say will not be believed by my little coterie of anti-commenters, so let's try Channel 4. Earlier this year they fact checked a similar claim by Unite's Len McCluskey. Let's see what Channel 4 had to say (my emphasis):

'The claim

“…the deficit is…not high by either historical or contemporary standards”
Len McCluskey elected head of Unite, The Guardian, December 19, 2010.

“Of course there’s a deficit – we’re not deficit deniers.… the figures you’ve got are clearly not the figures that I’ve got”
Len McCluskey, Radio 4’s Today programme, January 11, 2011.

The background

It’s the deficit debate that won’t go away: just how big is it exactly? Union boss Len McCluskey claims it’s not that big, by historical standards. Although on the radio this morning he said he was more interested in national debt than deficit. Radio 4 presenter, Evan Davies challenged his use of figures – saying “that’s the thing FactCheck can check.”

Well, how could we resist such a request from our favourite breakfast broadcaster? There are two issues here: how big is the deficit, compared to previous years, and how big is the national debt.

The analysis

Mr McCluskey’s claim in the Guardian doesn’t stack up.

Last year the deficit hit 11 per cent of GDP – that’s £156 billion – which is the difference between what the government spends and what it earns each year. That was the largest deficit since 1945. The previous peak was in the early 1990s – when it was 8 per cent of GDP.

This morning, Mr McCluskey insisted “we are not deficit deniers” – and then claimed he’d meant debt all along.

So, where do we currently stand on national debt, comparatively?

Debt means the net accumulated borrowing by the government. And as a share of GDP it’s currently around 60 per cent. Our friends at the Institute for Fiscal Studies provided the context – telling us it’s currently at the highest level since the late 1960s. In the 1980s it reached just above 50 per cent of GDP.

But if we go back a bit further, debt in the late 1940s jumped to 250 per cent of GDP. And during the 1920s and 30s, it held well above the 100 per cent mark. It’s worth remembering that much of that 20th Century debt was to fund two world wars, so there was a different context from our current economic downturn.

Over the last hundred years Len is right – debt has been higher – but in recent history it hasn’t.

We asked Unite where their figures came from – who pointed us to their press release which says “The UK deficit is not high by historical or international standards. Germany, France and Japan have all got higher net debt than the UK.”

Again there is confusion between the deficit and the debt, and between historical and international comparisons.

The verdict

There are a lot of claims being flung around about the deficit – partly as the Labour party and the unions try to get back on the front foot about the economy. But on this one Len McCluskey got it wrong. The deficit is the highest for nearly 70 years, and the national debt is the higher than for 50 years.'

Do you disagree with Channel 4 Ed?