Labour's Hypocrisy

Claire condemns Labour's Borrowing Bonanza

January 2011 official figures have revealed that the national debt has risen above £2 trillion for the first time in our history.

According to the Office for National Statistics the national debt, including the cost of bailing out the banks, now stands at £2,323,000,000,000. That works out at over £37,600 for every man, woman and child in the country.

This terrible debt is Labour's legacy. They thought that they had abolished boom and bust and so ran large deficits even before the financial crisis.

Because of this, we are currently paying £43 billion per year, over £120 million per day, in debt interest. This is money that could otherwise be spent on frontline services like schools and hospitals. The average earner in Devizes has to work for 154 days just to pay the interest on Labour's debts.

Commenting, Claire Perry MP said:

"These are shocking figures. Labour maxed out the nation's credit card with over £1 trillion of government debt. The longer it is left the worse it will get. If we don't take steps now to live within our means we'll end up paying higher taxes and face deeper cuts just to pay off our debt"

Debt has reached more than £2 trillion

• National debt has reached £2.3 trillion. According to new figures published by the ONS, net debt including financial sector interventions has reached £2,322.7 billion (ONS, Public Sector Finances, 25 January 2011, link)

• It works out at £37,600 per person. The national debt per person now stands at £37,589, based on a population of 61.8 million (ONS, Mid-Year Population Estimates, link).

• The new measure of debt includes Lloyds and RBS for the first time. As the ONS say: 'For the first time data for Royal Bank of Scotland and Lloyds Banking Group have been fully incorporated into the public sector finances. This has impacted considerably on the measure of public sector net debt that includes the effects of the financial interventions' (ONS, Public Sector Finances, 25 January 2011, link).

• Debt interest is costing us £120 million per day. In 2010-11, debt interest payments will be £42.7 billion or £120 million per day (OBR Economic and Fiscal Outlook, November 2010, Table 4.14).

This debt is Labour's fault

• Labour ran a structural deficit for seven years before the recession began. The recession began on 1 April 2008 (ONS, Times Series IHYQ). Cyclically-adjusted public sector net borrowing – the structural budget balance – was in deficit in each of the seven years before that between 2001-2 and 2007-8 (OBR, Budget Forecast, Table C15).

• Labour entered the financial crisis with the largest structural deficit in the G7. According to the OECD, the UK's structural fiscal position was one of the best in the G7 in 2000, but by 2007, just before the crisis, had deteriorated to be the worst in the G7 (OECD, Economic Outlook 88, November 2010).

• Institute for Fiscal Studies: before the crisis Labour had one of the largest structural deficits in the developed world. 'By the eve of the financial crisis, [fiscal drift under Labour] had left the UK with one of the largest structural budget deficits in the developed world... the vast majority of other OECD countries did more to strengthen their public finances during Labour's first eleven years in office than Labour did in the UK' (IFS, The Public Finances: 1997-2000, 19 April 2010, p. 2 and p. 10).

• Tony Blair: Labour did not do enough to eliminate the structural deficit after 2005. 'We should also accept that from 2005 onwards Labour was insufficiently vigorous in limiting or eliminating the potential structural deficit. The failure to embrace the Fundamental Savings Review of 2005-6 was, in retrospect, a much bigger error than I ever thought at the time' (Tony Blair, A Journey, pp 681-2).

154 days of debt interest

• The average taxpayer will pay £1,400 in debt interest this year. The independent Office for Budget Responsibility forecasts debt interest spending of £42.7 billion in 2010-11 (OBR, Economic and Fiscal Outlook, Table 4.14, link). There are 30.5 million taxpayers, so on average each taxpayer will pay £1,400 in debt interest (HMRC, Number of individual income taxpayers, link).

• Average Earnings in Devizes are 23,022. Figures from the ONS show median full time earnings in Devizes are 23,022 (ONS, Annual Survey of Hours and Earnings, Table 9.7a, Tab 'Full Time', 8 December 2010, link)

• Someone on average earnings pays 3,309.4 in income tax. Based on a personal allowance of £6,475 and a tax rate of 20 per cent, someone earning 23,022 would pay 3,309.4 in income tax (HMRC, link).

• This means that the average taxpayer works for 154 days just to pay Labour's debt interest bill. The average taxpayer will pay £1,400 in debt interest this year. That makes up 42 per cent of their total tax contribution of 3,309.4 (1400/3,309.4 = 42 per cent). So for 154 days of the year the average taxpayer is just paying for debt interest (42 per cent x 365) = 154

Claire Perry condemns Labour's hypocrisy on petrol costs

On the 16th March, speaking in the Opposition Day debate on the cost of fuel, Claire Perry, MP for the Devizes constituency condemned the Labour motion calling on the Government to cut VAT on fuel as cynical, muddled and financially incoherent.

During her speech Claire questioned the Opposition's recent "Damascene conversion" to supporting rural motorists and challenged the financial and legal viability behind the Labour proposals but asked that the Chancellor consider the plight of motorists in the Devizes Constituency when he presents his budget this Wednesday.

After the debate, Claire said:

"There is a real problem with fuel competition in the rural areas outside London such as my constituency of Devizes, and we face high fuel costs as a consequence. However Labour's cynical motion is as muddling as it is financially illiterate. The previous government consistently penalised rural motorists for 13 years with twelve rises in fuel duty -four in their last 16 months in office. They also planned, as part of their scorched earth economic policy before the election, six further rises to come into effect over four years after they left power so their cynicism in presenting this motion is breathtaking. A change in VAT just for petrol would also be illegal under European law.

"However, I am calling on the Chancellor to provide some help for rural motorists in the budget this week. In my Constituency of Devizes we have to use our cars to go about our everyday business and the current high cost of petrol is causing real financial hardship."

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