Miliband turns Brownite

Well done David Miliband, for writing an article in the Guardian that is free of wonkery and abstractions. Miliband deserves applause for being the first Labour leadership contender to address public spending cuts with reasoned analysis, not ideological retorts. Also, he is right to urge George Osborne not to sell the public stakes in RBS and Lloyds at a bargain price. But his central thesis merits censure. He perverts recent history to fit an avowedly left-wing analysis of public spending. Miliband writes:

‘Let’s take the deficit argument head on. We need to remember what the Tories want the country to forget: it was falling tax receipts – not rising spending – that primarily caused the deficit to rise. We would not be in this position if there had not been a global economic meltdown.’

The deficit long pre-existed falling tax receipts and global economic meltdown. Gordon Brown predicted that borrowing would fall in 2005-06 from £39bn to £36bn. What actually transpired was an overspend of £32bn. At the beginning of 2008, the deficit had risen to £43.6bn. This, as the table below (click to enlarge) illustrates came during a sustained period of growing tax receipts.

There is a structural deficit, the direct result of 10 years of fiscal irresponsibility and unsustainable spending. Global financial meltdown was a significant but late contributing factor to the deficit’s growth.

Miliband’s article is an obvious pitch to the left, his hand forced by the rise of Diane Abbott and the resurgence of Ed Balls and Ed Miliband. David Miliband now argues that Labour can only oppose the Tories if it defends its record in government – all that ‘record investment’.  Such an analysis explicitly condones the financial policy that ushered Britain into this mess. There’s nothing substantively new about Miliband’s analysis; it’s profoundly Brownite, and it assumes that all spending is objectively ‘good’.

There is a debate to be had about the depth of cuts, but Miliband’s stance (and that of his rivals for the leadership) should be discarded. The last three years prove that overspending and debt are ruinous. Ultimately, borrowing is restricted by means.