After a week and a half with no polling, the first YouGov poll of 2011 is out. Topline figures are CON 40%, LAB 42%, LDEM 8%. These are essentially unchanged since the start of the Christmas holidays (which shouldn’t come as much surprise, after all, there are rarely any vast political events during the Christmas break).


73 Responses to “First YouGov/Sun poll of 2011 – 40/42/8”

1 2
  1. I state the obvious but this is vastly different from the first poll taken in 2010. I take a few things from these polls.

    1. Labour’s poll lead at the end of 2010 was not a fluke.

    2. Labour still is a fairly popular party if they could rebound from their 2010 low.

    3. Even if the cuts have been unpopular, the Tories are holding up under Cameron.

  2. And my memory doesn’t serve me all that well on this. But the first YouGov poll last year showed the Tories ahead of Labour 40%-31% (and then a day later, ahead 42%-30%). Other pollsters showed the Tories with a far bigger lead. Still, looking at that, the Tories are actually exactly where they were a year ago in terms of support, what’s changed is Labour’s level of support.

  3. I have to say I was surprised to see the Libs still down on 8.

  4. I think the Tories are holding up well because all the fire is being directed at the LibDems. Once the voters’ attention is turned away from the LibDems, the Tories will feel the heat.

  5. Going on from what Socialliberal says, the Tories are equally as popular as they were last year and 10% of people have moved from the LibDems to Labour. In essence, Labour are no more popular in themselves than they were but people have jumped opposition parties now that the Lib Dems are in with the Tories.

    Labour still need to reinvent themselves and not rely too much on disaffected Libs. The coalition may yet prove itself. The tide may turn on the Tories as the main architect of coalition policy. Lib Dem support always wanes between elections and government party’s support drops during the mid term. Add to that the polling effect on the cuts and its not hard to see the Lib Dem vote rising again in a few years time. The easy come swing to Labour may easily go.

  6. I have to say I’m amazed the Libdems are as high as 8%. I’m sure they’ll manage to get down to 5% or even lower over the next few months.

    The front page of tomorrows Indy won’t bring much comfort too Clegg, he looks rather Old & Sad.

  7. Its quite instructive to see that the coalition parties hold 50% of the poll share. The 8% of LD vote is not an anti govt protest vote. All of that is with labour ‘cos there is no where else to go.

    But everyone has had their free lunch. 13 years of spending unsupported by revenues. How many think that could continue?

  8. ‘…nearly…’

  9. The first Poll which postdates reaction to VAT will be much more interesting.

    It has had wall to wall coverage on TV today.

    Looking as if Clegg might have had to give way on control orders. A sign that DC is touching the tiller a little in the direction of his own party.

    DC will be an accomplished helmsman by the time this parliament is through.

  10. When was the groundwork for this poll? Presumably before the VAT headlines?

  11. @Trevors

    Labour came to power with national debt as 42% of GDP, in 2008 just before the recession it was 36% and in 2010 when they got voted out it was 52%. Hardly 13 years of unsupported spending. Let’s not even start with how good that compares to our international rivals or how well that debt is structured.

    Since this poll is fairly static and un-noteworthy may I ask, is the accusation that Labour “didn’t fix the roof while the sun was shining” the most pervasive myth of recent years?

  12. Trevor’s den, no coalition hold 48 % according to tonight’s poll

  13. Who was supposed to get a lift during bank holidays? Well nobody did this time. Ii never believed that anyway. I can’t think of any substantive evidence for it.

  14. @ Trevorsden

    Its quite instructive to see that the coalition parties hold 50% of the poll share.
    —————————————————–
    40% + 8% = 48%

    Maybe improve your arithmetic before diving into all that tricky GDP & deficit stuff? ;-)

  15. Trevor – what is the relevance of saying that the “coalition have 50% of the poll share” (which they don’t anyway)? As for the stuff about a “free lunch” give it a rest will you? That is pathetic – we can go to the DM to read that if we want. You will be welcomed there. This is supposed to be a non-partisan discussion site

  16. @Colin green

    “Going on from what Socialliberal says, the Tories are equally as popular as they were last year”

    Depends which part of the year I suppose. Certainly as popular as at stages of 12 months ago, but distinctly less popular than at other stages when they were riding strong anti Labour Government sentiment. However, when real votes were cast in May, to use your words, their 43-45% early 2010 poll ratings were “easy come, easy go” as they managed a pretty modest 36% when people actually went to the polls. Their high opinion poll rating contained a lot of froth as they benefited from anti government sentiment rather than pro Tory enthusiasm. In May some 7 or 8% of this froth melted away.

    However, looking on the bright side from a Tory point of view, according to YouGov they’ve gained 4% since May or, if you want to go with all the other polls, between 0 and 2%. I’d say this a decent holding up of electoral support over a 7 month period, but far from being something that would necessarily keep them warm and comfy as we now enter a long period when real politics start to come into play. When I say real politics, I mean when the tangible evidence and consequences of conscious and calculated political decisions come into effect. We’re not quite there yet. Still a slightly phoney war and a battle of words but the VAT rise today is the first staging post when warm words won’t do any longer and the real political battle can be joined. I expect sharp movements in the polls from here on in, not all of them necessarily reversible too..

  17. @Quincel – “… the most pervasive myth of recent years”

    And one that even many ‘educated’ people regard as a truism.

    That this myth persists is a major failure on part of Labour politicians and explains the resilience of the Tory voting intention.

    It is possibly too late to dispel (though a concerted attempt needs to be made), but it will inevitably be pushed out by other myths in good time. ;)

  18. @Billy

    Indeed, though it is immensely frustrating because the figures are so easily obtained and so clearly refute it. Also because it is just so pervasive, until fairly recently I assumed it was true, then I happened to check the figures and found the reverse was so, how did this line stick?

    I should stress, I’m not some paid up Labour party member, but I like the facts and I hate misconceptions.

    I wonder what the myths about the current government will be in a years time, or maybe some are already around. Anyone?

  19. @ Quincel

    “Labour came to power with national debt as 42% of GDP, in 2008 just before the recession it was 36% and in 2010 when they got voted out it was 52%. Hardly 13 years of unsupported spending. Let’s not even start with how good that compares to our international rivals or how well that debt is structured.”

    That’s actually a fairly good record. Gordon Brown did run small deficits starting in 2002 through 2008. But they were productive deficits. The massive amount of public spending in the last years of the Labour government that rose the GDP to 52% was needed to (1) prevent economic collapse and (2) begin an economic rebound. It’s done both those things.

  20. Sorry, I’m confused. Genuinely. I thought that’s what I said, was I unclear? I believe that Labour’s economic record (at least in relation to public debt) is unreasonably treated.

  21. @ Nick Hadley

    I think Cameron and the Tories were saved by the Lib Dems in the election from pulling a Neil Kinnock circa 1992. Labour looked like it was slowly but surely edging up on them and might have pulled into a tie had it not been for Cleggmania and the temporary surge of the Lib Dems. Labour was able to bash the Conservatives as unsuitable for government with the classic political them of “we suck but they’re even worse! Stick with the devil you know” but the Lib Dems emerged as an alternative.

    The upshot for the Tories though is that Cameron can hold his own as Prime Minister and has grown into the role. Where once it was easy to tag Cameron as someone who lacked any substance, he looks like he knows what he’s doing now. His government could be described as “amateur hour” but he can’t be. And I think that’s why the Tories are holding up in the polls.

  22. I think this lead will really start expanding when the January sales are over, the dicounting stops, and traders take advantage of the VAT increase to put their charges up.

    I suspect the poll was taken before VAT went up.

  23. @ Quincel

    I flubbed up my sentence. It should have read “that moved public spending up to 52% of GDP”. And I was agreeing with you.

  24. I apologise, bed now I think, before I say any more stupid things.

  25. @ Trevorsden

    “Its quite instructive to see that the coalition parties hold 50% of the poll share. The 8% of LD vote is not an anti govt protest vote. All of that is with labour ‘cos there is no where else to go.”

    Slight error in addition to the minor miscalculation (which others have shown and I presume you acknowledge by the “nearly” in the following post).

    48% + 42% = 90% remainder 10%. That remainder is distributed amongst the others, which counts as an anti-government vote.

    So the split is, pro-government = 48%
    Anti-government = 52%

  26. @Quincel, Billy Bob.

    OK, let’s look at the figures. Let’s start with looking at the debt as a proportion of GDP

    Part 1: Debt as proportion of GDP

    (Financial Year, GDP, Public Net Debt as %GDP)

    Thatcher
    1980 233.184 42.11
    1981 256.279 44.40
    1982 281.024 44.55
    1983 307.207 43.13
    1984 329.913 43.59
    1985 361.758 43.45
    1986 389.149 41.81
    1987 428.665 39.14
    1988 478.51 34.98
    1989 525.274 29.30
    1990 570.283 26.69

    Major
    1991 598.664 25.27
    1992 622.08 26.70
    1993 654.196 30.97
    1994 692.987 36.05
    1995 733.266 39.55
    1996 781.726 41.20
    1997 830.094 41.92

    Blair
    1998 879.102 40.14
    1999 928.73 37.86
    2000 976.533 35.37
    2001 1021.83 30.57
    2002 1075.56 29.33
    2003 1139.75 30.45
    2004 1202.96 31.82
    2005 1254.06 33.81
    2006 1325.8 34.92
    2007 1398.88 35.74

    Brown
    2008 1448.39 36.25
    2009 1395.87 44.19
    2010 1474 52.34

    Cameron
    2011 1539 60.56

    On this reading, you are broadly correct. But even so, note the uptick from 2004/5 onwards. This is when Brown threw away his Golden Rule by boosting spending in order to win the 2005 General Election and the wheels came off UK government spending. When the North Atlantic crisis (Google it) hit in 2008, things went horribly, horribly wrong and the numbers started going WHEEEEE!

    Now, let’s have a look at the debt, not as a proportion of GDP, but just as itself.

    Part 2: Debt in £billions

    (Financial Year, GDP, Public Net Debt in £billions)

    Thatcher
    1980 233.184 98.20
    1981 256.279 113.80
    1982 281.024 125.20
    1983 307.207 132.50
    1984 329.913 143.80
    1985 361.758 157.20
    1986 389.149 162.70
    1987 428.665 167.80
    1988 478.51 167.40
    1989 525.274 153.90
    1990 570.283 152.20

    Major
    1991 598.664 151.30
    1992 622.08 166.10
    1993 654.196 202.60
    1994 692.987 249.80
    1995 733.266 290.00
    1996 781.726 322.10
    1997 830.094 348.00

    Blair
    1998 879.102 352.90
    1999 928.73 351.60
    2000 976.533 345.40
    2001 1021.83 312.40
    2002 1075.56 315.50
    2003 1139.75 347.10
    2004 1202.96 382.80
    2005 1254.06 424.00
    2006 1325.8 463.00
    2007 1398.88 500.00

    Brown
    2008 1448.39 525.00
    2009 1395.87 616.90
    2010 1474 771.50

    Cameron
    2011 1539 932.00

    Here, the 2004/5 onwards spending like a sailor in a wh***house becomes even more obvious, as Brown spent like a teen with Daddy’s credit card. So when the crisis hit in 2008, the economy fell apart like wet tissue paper and we all became poorer.

    Part 3: Conclusion

    The point being is that Brown’s approach of averting recessions by throwing your money at it required larger and larger sums of money and would have inevitably gone wrong, just like a pyramid scheme and for similar reasons. We were due a recession in 2004/5 but Brown averted one by throwing hundreds of billions of pounds at it. As a result, the “Little House Price crash” of 2004/5 reversed itself, prices kept on booming, the bubble kept on inflating. So when 2008 came, instead of things just being bad, it was absolutely catastrophic.

    People think that the economy would have been OK if it wasn’t for the banking breakdown. My point is that things were going wrong from 2004/5 and that the economy would have been broken even if the banking breakdown hadn’t happened. Brown isn’t a bad man and he did some good things. But he was genuinely rubbish at his job and we’re in an enormous amount of trouble as a result.

    Regards, Martyn

    (source for above figures: http://www.ukpublicspending.co.uk)
    (eyecatcher so I can find this again)

  27. @Quincel, Billy Bob.

    OK, let’s look at the figures. Let’s start with looking at the debt as a proportion of GDP

    Part 1: Debt as proportion of GDP

    (Financial Year, GDP, Public Net Debt as %GDP)

    Thatcher
    1980 233.184 42.11
    1981 256.279 44.40
    1982 281.024 44.55
    1983 307.207 43.13
    1984 329.913 43.59
    1985 361.758 43.45
    1986 389.149 41.81
    1987 428.665 39.14
    1988 478.51 34.98
    1989 525.274 29.30
    1990 570.283 26.69

    Major
    1991 598.664 25.27
    1992 622.08 26.70
    1993 654.196 30.97
    1994 692.987 36.05
    1995 733.266 39.55
    1996 781.726 41.20
    1997 830.094 41.92

    Blair
    1998 879.102 40.14
    1999 928.73 37.86
    2000 976.533 35.37
    2001 1021.83 30.57
    2002 1075.56 29.33
    2003 1139.75 30.45
    2004 1202.96 31.82
    2005 1254.06 33.81
    2006 1325.8 34.92
    2007 1398.88 35.74

    Brown
    2008 1448.39 36.25
    2009 1395.87 44.19
    2010 1474 52.34

    Cameron
    2011 1539 60.56

    On this reading, you are broadly correct. But even so, note the uptick from 2004/5 onwards. This is when Brown threw away his Golden Rule by boosting spending in order to win the 2005 General Election and the wheels came off UK government spending. When the North Atlantic crisis (Google it) hit in 2008, things went horribly, horribly wrong and the numbers started going WHEEEEE!

    Now, let’s have a look at the debt, not as a proportion of GDP, but just as itself.

    Part 2: Debt in £billions

    (Financial Year, GDP, Public Net Debt in £billions)

    Thatcher
    1980 233.184 98.20
    1981 256.279 113.80
    1982 281.024 125.20
    1983 307.207 132.50
    1984 329.913 143.80
    1985 361.758 157.20
    1986 389.149 162.70
    1987 428.665 167.80
    1988 478.51 167.40
    1989 525.274 153.90
    1990 570.283 152.20

    Major
    1991 598.664 151.30
    1992 622.08 166.10
    1993 654.196 202.60
    1994 692.987 249.80
    1995 733.266 290.00
    1996 781.726 322.10
    1997 830.094 348.00

    Blair
    1998 879.102 352.90
    1999 928.73 351.60
    2000 976.533 345.40
    2001 1021.83 312.40
    2002 1075.56 315.50
    2003 1139.75 347.10
    2004 1202.96 382.80
    2005 1254.06 424.00
    2006 1325.8 463.00
    2007 1398.88 500.00

    Brown
    2008 1448.39 525.00
    2009 1395.87 616.90
    2010 1474 771.50

    Cameron
    2011 1539 932.00

    Here, the 2004/5 onwards spending like a sailor in a wh***house becomes even more obvious, as Brown spent like a teen with Daddy’s credit card. So when the crisis hit in 2008, the economy fell apart like wet tissue paper and we all became poorer.

    Part 3: Conclusion

    The point being is that Brown’s approach of averting recessions by throwing your money at it required larger and larger sums of money and would have inevitably gone wrong, just like a pyramid scheme and for similar reasons. We were due a recession in 2004/5 but Brown averted one by throwing hundreds of billions of pounds at it. As a result, the “Little House Price crash” of 2004/5 reversed itself, prices kept on booming, the bubble kept on inflating. So when 2008 came, instead of things just being bad, it was absolutely catastrophic.

    People think that the economy would have been OK if it wasn’t for the banking breakdown. My point is that things were going wrong from 2004/5 and that the economy would have been broken even if the banking breakdown hadn’t happened. Brown isn’t a bad man and he did some good things. But he was genuinely rubbish at his job and we’re in an enormous amount of trouble as a result.

    Regards, Martyn

    (source for above figures: h ttp://www.ukpublicspending.co.uk)
    (eyecatcher so I can find this again)

  28. It may be that this VAT increase might take longer to appear in the public consciousness than I first thought. Firstly it is sale season so the tax will be lost in 50% off etc. The other thing is that people do not regularly buy big ticket items where the extra tax is more obvious. There will be a steady drip drip effect.

    Also with the petrol tax – I recently noticed there is another increase in April, looks like fuel tax escalator again. yikes.

  29. @Quincel
    I have to agree with Martin. Also bear in mind that the deficit in 97 was a far lower percentage of gdp and had been falling since the early 90s recession. There for national dept would inevitably increase at a much slower rate.

    That is compared to today where the deficit is far higher as a percentage of GDP and will therefore increase the national dept at a faster rate and will now continue till 2015.

    Also, had the deficit reduction program of the labour government been enacted, national dept would have continued to rise beyond 2015.

    Id have to say, not exactly economic competence from Labour there.

  30. @KeithP
    With the fuel duty rise, id like to know where this stabiliser that osborne talked about has got to.

  31. @ Martyn

    Surprisingly (though not after the last few posts… Especially not those in the last topic) emotional and charged language throwing away even the veil of regards to facts and reality.

    Number of things:

    1) The economy did not fall apart in 2008 (not to mention the rest of your philippica), the banking system did. It was unfortunate that it was saved, but highly unlikely that any politician would not have done the same then.

    2) Every government in the developed world was to increase spending after the recession that never was in 2001 – some earlier, some later – demand had to be increased to avoid the recession, it’s rather unfortunate that all the major actors of the economy (households, business and the government) got into debt.

    3) Very important and ignored: once the government, with large support of the population, embarked on massive investment in public services (schools, health) in 2001, it was inevitable that public spending was to increase. Since apart from stealth tax, the government did not increase taxation, the result was an increase in public debt. You can say 1) there was no need for this investment; 2) should have increased taxation; 3) I fall for myths of freely spending Brown, because it suits my cause. Actually, this is one of the key obstacles to the current cuts in the two mentioned sectors: it would require closures.

    4) The large increase in investment to social services actually reduced GDP and increased the overheating – it is far too long to go through it, but essentially you are using resources produced by the economy to services that do not, while you are paying wages there.

    5) The real question of the UK debts is PFI and pensions and not the figures you produced. Those can be easily managed – a good inflation would also help (and I think we have a good chance for that). Pensions are unlikely to be monetised and the scale of closures to reduce PFI obligations would be politically prohibitive. Inflation though would help in both…

    6) What the figures actually show that on long run it is impossible to finance a publicly owned social services expected by the population when the government collects 40 odd % of the GDP. 1) Taxation has to increase, or 2) services have to be privatised, or 3) large proportion of the population (the poor) have to be excluded from these services.

    So, the two alternatives to what Brown did was either 1) complete turnaround to an extreme version of free market capitalism; 2) classic communism. He did neither – if you say that he was wrong not to choose either of these two, say so, if you don’t, then it’s only about measures (scale, degree) for which you have no data and carry no responsibility.

  32. Martyn

    I think the only way you can judge this, is to compare the UK’s financial position with that of other similar sized economies.

    You will find that there has been a continued upward shift of debts in most major western economies for the last decade or so.

    Most economists believe that the cause of the debts is very complex and cannot simply be explained by looking at an individuals economies performance in terms of income and expenditure.

    If you research this further you will find that the problems are caused by globalisation, inbalances in trade, gradual reduction in the worlds energy supplies/raw materials/minerals, inbalances between countries with current account deficits/surpluses and failure of the financial markets.

    The truth is that had the Tories won the 2005 election, the UK would be in the same debt situation. They would not have done anything that was radically different.

    The world is changing with China due at some stage to overtake the US, as the world largest economy. Countries with large energy supplies/minerals/raw materials will also be doing very well. Take a look at the amount of sovereign debt that is owned by China and the amount of investments that Chinese companies are making all around the globe.

    The simple fact is that it costs more to run the economy, as government spending will always increase and at the moment we are not earning as much. It is going to take many years for the UK to adapt to the changing world we are in and for GDP to increase to a level, where deficits can easily be afforded. Until that happens, taxes will remain high, state benefits will be cut in real terms and state services will get worse.

    I am not sure you can hold Gordon Brown responsible for the worlds problems. I can’t remember the Tories campaigning to say that they would spend less, only that they would spend more efficicently. The Tories wanted to increase NHS spending in real terms, whereas Labour suggested a slight cut.

    My prediction is that the Tories will fail to cut the deficit in the way they are currently proceeding. There is some debate that the increase in VAT may actually increase inflation and lead to the BOE needing to increase rates. Taking money out of the economy, might actually prove to be counter productive, as it is unlikely to help growth.

  33. @Laszlo

    Firstly, thank you for the word “phillipic” – I hadn’t heard it before. Now let’s go thru your points.

    * Your point 1) Fair enough – we are not living in caves eating cold beans, the economy still exists. Neverthless it was a very very bad year.

    * Your point 2) Leaving aside the point that your statement is trivially untrue (*every* economy in the developed world? Venezuela? Estonia? Indonesia? Cyprus? Egypt? Turkey? All of them? That’s a very big net, so there’s likely to be at least one hole), I wasn’t talking about the 2000/2001 period (i.e. just before the 2001 election), I was talking about the 2004/2005 period (i.e. just before the 2005 election)

    * Your point 3). I take your point, but my point still stands: Brown spending freely isn’t a myth, it’s a fact, and I gave the figures above.

    * Your point 4) I don’t get your point: according to the figures above, GDP didn’t fall. But either way, your point 4 may not be relevant to the question at hand.

    * Your point 5) I agree that PFI and pensions are a problem. I don’t agree that inflation is the way to cure them, but I suspect that that is actually what will happen because of the scale of the sums involved.

    * Your point 6) Fair point.

    We may not in fact be disagreeing here, since we come to the same conclusion: to provide that level of services at that level of taxation causes problems over the medium term. Additionally, I suspect we both know what the solution will be, since it’s the same way the UK always handles its debt problems: it’ll inflate it away.

    We also agree that the increase in expenditure from 2001 was justified. Where we disagree is that you think (correct me if I’m wrong) that continuing the increase in unsupported expenditure past 2004/5 was justified, wheras I think it was just storing up problems (because it was no longer counter-cyclical) and the economy became a time-bomb. And this is the root of our different assessment of Brown.

    Regards, Martyn

  34. @R Huckle.

    It’s 2am. I’m not going thru the debt history of all 200-odd UN/IMF countries at this time of the morning.

    But you contend that “…The truth is that had the Tories won the 2005 election, the UK would be in the same debt situation. They would not have done anything that was radically different…”

    My point is that, if Labour had won the 2005 election (which they did) and Blair had moved Brown to Foreign Secretary (which he intended to but sadly did not), then things would have been radically different. They’d have been better.

    Disasters are rarely caused by a single action, but are the cumulation of a long chain. Brown’s mishandling of the UK economy didn’t happen overnight, it took years of patient overspending. If he’d dropped dead in (say) June 2004, he’d’ve been remembered as a great Chancellor. But he didn’t and just kept going, and his personal tragedy became ours.

    Regards, Martyn

  35. Martyn/Lazlo

    2001 was also significant due to the start of the West’s Afghan War, closely followed by their Iraq war.

    Do either of you have the data on the cost of 10 years war, and its contribution to the debt crisis?

  36. @Oldnat

    It’s 2:30 am.

    OK, quick story then bed. Iraqistan cost UK ~10billion GBP since 2001. Very rough rule of thumb: UK wars cost ~5 billion since 2001, UK disability and other benefits cost ~50 billion pa, UK quantitative easing cost >500 billion in 2008/9, UK GDP is about 1500 billion. Wars are cheap, benefits are expensive, bankers are very, very expensive. These figures are very very rough and are from memory, so don’t quote me. Now go to bed.

    Regards, Martyn

  37. The problem is, for Labour, that the poll leead is mostly at the extent of the Lib Dems. Ed Miliband, and Labour, need to start forcusing some more fire on the Tories and Cameron, and start to launch more effective criticisms of the Tories. It is possible that we might see the collasp of the coalition this year, and if Labour is prepared, it can force, and win a general election, if not, then Cameron may get a majority, or fund an alternative coalition.

  38. @ Quincel

    No need to apologize. I garbled my sentence there. I admit that I’m a Gordon Brown defender (I bought his book….I can’t vote for him so I can show my support in other ways lol) and I appreciate the statistics you gave. I hope he does for global economics what Al Gore did for the environment.

  39. @ Martyn

    I appreciate your figures. I think they confirm though that under Labour, there was not massive overspending and at many points, the percentage of government debt to GDP actually was in decline. It was only in the last few years with the massive economic meltdown that the dramatic increases occurred.

    Now as for the increases in spending and debt to GDP ratio that occurred between 2002 and 2008 (the small deficits that the government began running), I think that whether that spending was irresponsible is a debatable. The rest of Europe, which is very closely tied economically to the UK, went into a recession during this time period. Brown’s spending helped keep the UK economy growing and kept unemployment low. Also, I have to wonder if small deficits would have been run if Blair had not been tricked into getting the UK involved in Dubya’s Iraq misadventures. Wars require massive increases in public expenditures and had the UK stayed out of Iraq, the budgets might have been balanced until 2008.

  40. @ Martyn

    I am genuinely surprised to see how low public debt was under Thatcher. She meant what she said about low deficits and low public spending. She’s compared so often to Ronald Reagan but Reagan in fact spent more money than every single U.S. president before him combined…..(from George Washington to Jimmy Carter). It seems from your numbers that there were three big jumps. One jump was the recent 2008-2010 jump where spending increased to deal with the economic crisis. Another jump occurred under Major in the mid 1990’s (where spending went from 100 billion to 300 billion pounds) and then there is the mid decade increase (where spending went from 300 billion to 500 billion pounds). Some of numbers fluctuation might be due to inflation. But interesting nevertheless to look at.

  41. It is fair to say that it’s possible that the Liberal Democrats may not win the next General Election?

  42. @ Martyn

    I don’t think Gordon Brown mismanaged the economy. Booms and busts are a natural occurence in the economy. I can’t blame him for what happenned with the U.S. economic collapse, it was beyond his control.

    What sparked the economic collapse is really quite simple. When Dubya came into office in 2001, he wanted to help payback his cronies who had put him into office and create a way to win the national popular vote for his reelection. To accomplish this goal, the federal government allowed massive subprime lending. Lenders were allowed to go out and take advantage of people who didn’t know any better and let them purchase homes they couldn’t afford. All these loans were done on adjustable rate mortgages or baloon rate mortgages (complete with things like prepayment penalties). So people who couldn’t previously afford homes moved out to brand new homes in sparkling new exurbs and felt really good about themselves. Dubya’s mortgage buddies (folks like the late Roland Arnell) were thrilled because they could make loans to people who couldn’t afford them with the knowledge that eventually they would either make huge profits with the increase in mortgage payments or they would get to take control of homes and make a great deal of money.

    During the first few years of this, mortgage payments were low, real estate construction boomed, and people were happy. Then rates increased dramatically and people were foreclosed upon and lost everything. This would have been bad on its own but what made things even worse is that all these subprime loans were securitized and investors (including a lot of the big banks) bought them up. Once it was discovered that all these securitized loans were worthless, the value of their assets collapsed and all these companies faced economic collapse. Because markets around the globe are so interconnected and linked, this prompted the international crisis.

    This crisis would not have happenned had Dubya not had federal regulators ease up on mortgage lenders and allowed massive, unregulated subprime lending. And it would not have happenned had Dubya not appointed Chris Cox to run the SEC and allowed the stock market to run wild, completely unregulated with big banks and investment firms doing all sorts of things that proper government regulation would have prevented.

    Neither Tony Blair nor Gordon Brown were responsible for either of these two actions. Gordon Brown was responsible for helping put out the fire and clean up the mess. There are many in the U.S. who were infuriated about the bailouts of big Wall Street banks. I look at it from the perspective that there was no other choice but to save banks because an economic collapse would have brought everyone down. Looking at Gordon Brown’s public spending, he had to spend what he spent to prevent the system from collapsing and I don’t look at that as mismanagement so much as I look at it as leadership (and I credit Brown for not just his leadership in the UK but his international leader in the G20).

  43. Now looking at the figures, public spending went up from 2001 to 2007 by about 200 billion pounds. At the same time, the percentage of public spending as GDP went up from about 30%-35%. At the 35% level in 2007, the percentage of public spending that constituted GDP was lower than the percentages during all but the final few years of Thatcher, lower than the second half of John Major’s term and lower than the percentages under the first three years of Blair’s term. So yes, the amount of public spending was greatly increasing but by and large was not doing so while rising dramatically as part of the GDP.

    What is confusing though is that Cameron has made all these cuts and yet the percentage of public spending to GDP is predicted to be over 60% this year and the amount of predicted public spending will be even higher. Where are those costs coming from?

  44. Can we just all remember that due to inflation and GDP growth government spending rises almost every year in almost every country? That’s why government spending has risen in raw terms in something like 60 of the 65 post-war years, and why raw figures can have some good insights but must be looked at with caution.

  45. @SocalLiberal

    “I look at it from the perspective that there was no other choice but to save banks because an economic collapse would have brought everyone down.”

    I’m with you full square on this and your analysis of how the credit crunch and banking crisis contagion started in the US, before spreading to the European economies, is fascinating. The Bush inspired credit and housing boom that you describe is not wholly dissimilar to the booms that occurred here, both under Thatcher and Blair, and politicians looking to be re-elected can’t resist the easy feelgood factor engendered by readily available cheap credit and overvalued assets like property. Combine the two factors and we all feel like millionnaires for a short while but eventually it turns to negative equity, house price collapses, unpaid debt and insolvent lenders; primarily banks. It’s a tragic version of fools gold and I look back ironically at how, in Thatcher’s heyday, we all lapped up our windfall payouts as Building Societies, based on the mutuality principle, rushed like lemmings to become privately capitalised banks, most of whom (Halifax to name but one) became financial basket cases in 2008, requiring public funds to remain in existence. Nationwide, on the other hand, who had retained their Building Society status (much to the chagrin of a lot of their customers at the time who wanted the windfall payments) remained a solvent business throughout the banking crisis. The 1980s rush to financial de-regulation, carried on and encouraged by Blair, it has to be said, was a major contributory factor to the crisis that susequently exploded in all of our faces.

    You also make a valid point about there being no alternative but to bail out the banks. In the UK at the height (depth?) of the crisis, it is thought that RBS, one of our largest banks, was within 24 hours of switching their cash machines off. Let’s just take a moment to think about the consequences of that scenario. Basically, millions of people wouldn’t have been able to get hold of their money. The consequences for both them in partricular, and the economy in general, would have been unthinkable and we would have entered totally unknown and unchartered territory. The RBS collapse would have probably had a catastrophic domino effect as well and Brown and Darling were playing for extaordinarily high stakes. Thank God for all of us that they got the big calls right because we were tottering on the brink and staring into a financial abyss. It’s easy to blithely and anti-septically unpick it all now with the cool wisdom of hindsight, but the politicians were dealing with a financial Armageddon.

    Bit more serious than how many times a week we get our bins collected , isn’t it, or all the other trivialities we tend to get agitated about in our largely affluent and comfortable lives (still largely comfortable and affluent, not because of the bankers, but, ironically, because of the politicians who saved them and who we still so enthusiastically deride and diminish?)

  46. @SoCalLiberal,

    I think what’s happened is that the uncontrolled boom of the “noughties” (2000-2008) led to a rather false boost to UK GDP. Whatever the rights and wrongs of subprime and the global asset appreciation, it led to a huge amount of money being spent in the UK, much of it on the “never never”. People (including myself) enjoyed massive theoretical rises in their property value and converted this via a cycle of consumer debt and debt consolidation into demand for goods.

    This isn’t all Labour’s fault by any means. It really began way back in the 1980s, and apart from the occasional housing price crash has carried on ever since. But 2000-2008 was a real humdinger.

    Thus there is a slightly hidden story on debt to GDP. If the GDP growth itself is ephemeral, then the debt balanced against it is more menacing. Once the asset bubble burst, and that “hot air” GDP leaked out, we’re still left with the “real” debt but it appears huge pro-rata because the GDP it is being measured against has slumped back to “real” levels.

    In truth there isn’t a huge amount of difference between Tory and Labour governments since 1979 on either taxes or spending. But Brown certainly did, as Martyn has stated, spend money “counter-cyclically”. He spent all of the proceeds of that ephemeral GDP growth, claiming it wasn’t a boom it was his “prudent economics” and then borrowed more on top.

    What we need to understand is that it is neither likely that we can return to the economics of 2000-2008, nor is it a good idea that we do. We don’t want to get back to good GDP growth via house price increases that are converted into new televisions and foreign holidays. Our debt in future needs to be measured against a more realistic yardstick.

  47. @ Nick Hadley

    I don’t think boom and bust is the problem so much as utter greed combined with mind numbing stupidity. It’s one thing to deregulate and it’s one thing to have booms and subsequent busts. It’s quite another to allow lenders to engage in borderline criminal activity by taking advantage of people, allowing traders to make money off bad loans, and allow this kind of malfeasance all to win a few extra votes at the ballot box.

    “Bit more serious than how many times a week we get our bins collected , isn’t it, or all the other trivialities we tend to get agitated about in our largely affluent and comfortable lives (still largely comfortable and affluent, not because of the bankers, but, ironically, because of the politicians who saved them and who we still so enthusiastically deride and diminish?)”

    It’s lost on the Wall Street types who complain vociferously about recent government intervention.

    “You also make a valid point about there being no alternative but to bail out the banks. In the UK at the height (depth?) of the crisis, it is thought that RBS, one of our largest banks, was within 24 hours of switching their cash machines off. Let’s just take a moment to think about the consequences of that scenario. Basically, millions of people wouldn’t have been able to get hold of their money. The consequences for both them in partricular, and the economy in general, would have been unthinkable and we would have entered totally unknown and unchartered territory.”

    I keep asking you what are probably to you very silly/basic questions but do you have anything similar to the FDIC in the UK? For example, if you have an account in a bank and that bank collapses, is there any protection of the funds you had deposited?

  48. @ SoCaL

    For example, if you have an account in a bank and that bank collapses, is there any protection of the funds you had deposited?
    ————————————————-
    Yes, broadly speaking: £50,000 per person per bank.
    8-)

  49. Martyn

    Very nice posts & instructive numbers.

    Perhaps one can add that we now know that whilst those deficit spending years were building the a critical structural momentum into public spending, the GDP growth on which they were based was illusory.

    The credit crisis & the subsequent asset bubble burst exposed the mirage of that economy-but the spending suprtanker had been launched.

    Thats why we will still be increasing borrowing in five or six years time-even if GOs plans come off.

  50. “Yes, broadly speaking: £50,000 per person per bank.”

    £80k now I think Amber?

1 2