Reminder: the budget deficit was not caused by welfare spending

The ConDems incessantly justify cut after cut with reference to Labour’s supposed welfare profligacy. So maybe its time to remind ourselves why the budget deficit has increased dramatically…

BBC graph, UK Budget Deficit 1980-2015Here’s a useful graph(from the BBC) that shows the fluctuations in the budget deficit since the 1980s, with the deficit expressed as a proportion of GDP. Prudence was Gordon Brown’s watchword as Chancellor and when Labour came into power in ’97 they quickly turned their inherited deficit around. It creeps up again after the invasion and occupation of Iraq, but remains less than the 7.5% peak seen in the Major years. The deficit only went wild after 2008. What could possibly have prompted this uncharacteristic change in policy? Oh yes. The government spent $850 billion, or 51.7% of GDP on bailing out the City (world bank data, converted roughly). There is of course no justification for this massive transfer of wealth from poor to rich, which is why ministers so often repeat the lie that the cuts are in some way related to overspending on the welfare state.

Of course, the 3-400,000 marchers in London yesterday know this already, I hope their efforts will stop the lie becoming received ‘wisdom’.