There (apparently) was no structural deficit when Labour was in government and on Thursday night at the full Council Meeting we were told that they hadn't agreed a deficit reduction programme, nor would they have put up VAT (because Gordon Brown would let it happen-no doubt just like he stopped the abolition of the 10p income tax rate)etc. and what is more a good number actually believed that to be true.
Let us begin with the denial of structural deficit. Nick Thornsby has all the detail.
Ed Balls, speaking on The Andrew Marr Show on Sunday morning:
46.15 : “I don’t think we had a structural deficit at all in that period [i.e. leading up to the financial crisis]…”
47.14: “Was there a structural deficit? I don’t think so.”
The Institute for Fiscal Studies (page 6):
On the OECD measure, the UK had a structural budget deficit of 3.1% of national income in 2007. This is the 2nd biggest structural budget deficit among the G7 large economies (after the US) and the 4th highest of the 26 industrial countries for which the OECD has data.
So it no surprise that Labour Councillors should take their lead from Balls. When they were confronted with the deficit plan that the Labour Government had produced they simply denied it! Alister Darling knows the problem
"Mr Darling seems to be almost agreeing with Mr Osborne that there are deficit deniers in the Labour party and the two main ones are Mr Brown and Mr Balls."
But Mr Darling has told Sky News that he has always accepted the need to cut Britain's record £155bn deficit.............
The outgoing Labour government was already planning a fiscal tightening of 1.5%of GDP in 2010/2011. The difference between its deficit reduction plans beyond 2010/2011 and that of the coalition amounts to roughly half a percent of GDP per annum: well with in the forecasting error.
The trouble is Labour Councillors simply cannot believe that would be the case. To them it is unthinkable. Some of them would spend the entire gross national product before breakfast and still believe that more should be spent. Each extra pound spent is one more brick in the wall of the New Jerusalem and must be defended. Suggestion of economy are offensive. The bigger the state the better, the wider its reach the happier they are, they have no vision of an independent self governing people. They still cling to the to the ideas that capture the Labour party in the 70's and 80's and like Militant they seek to persuade folk that the council should not make these cuts but challenge Central government to pay up. I fully understand why such rhetoric is attractive if you are to loose your job but a moments sober thought leads people to recognise that is not a sensible path to travel. Labour controlled councils have rejected that path. How ever painful they are moving to set balanced budgets. It is only the luxury of being a minority in Sefton that allows them the chance of such statement. Sir Ron Watson keeps pointing out the inconvenient truth to them that if they wish to persue that line they should withdraw from the administration.