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Our Crack Tongue & Groove

torylies.jpg Tory lies. EXPOSED.

The general election is on 7 May this year, but in the interminable run-up to it we’re going to be hearing a lot from the Tories about how reckless spending by the last Labour government broke the economy. It’s all lies, and here is why…

Hang on, didn’t Labour overspending on schools, hospitals etc leave the country with a huge pile of debt?

Not at all. It is true that Labour invested significant amounts in schools, hospitals and other areas of the public sector, but net public sector debt, as a percentage of gross domestic product, was actually higher during John Major’s administration in the 1990s…

I can feel a “…right up until” coming on…

…right up until the full force of the financial crisis hit home in 2008/09.

But didn’t Gordon Brown cause the financial crisis?

That’s what the Tories would have you believe, but you’d have to be borderline insane to believe that Brown caused recessions in the US, France, Germany, Japan etc. It was a worldwide phenomenon.

So who did cause the financial crisis?

The short answer is that responsibility for the crisis was spread far and wide with the chief culprits being financial engineers around the world who believed that they had eliminated risk through a complex grab-bag of mysterious “products” going by the exotic sounding names of “Mortgage Backed Securities”, “Credit Default Swaps”, “Collateralised Debt Obligations” and plenty more besides. Brown isn’t blameless of course, but he was just one of hundreds of policymakers who succumbed to the received wisdom about financial markets and their supposed voodoo-like ability to self-correct.

Is there a shorter answer to who caused the crisis?


So if the Tories had been in power in the early part of this century, then the financial crisis would have blithely past us by?

You’re joking! Cameron and Osborne slavishly signed up to all Labour’s public spending plans throughout the 2000s as they tried to shed their well-deserved reputation for trashing public services.

But surely they would have put more constraints on banks to stop their reckless gambling?

Definitely not. They favoured even more deregulation of financial institutions. George Osborne wrote an article for The Times in 2006 in praise of Ireland, and their ultra light touch constraints, stating: “A generation ago, the very idea that a British politician would go to Ireland to see how to run an economy would have been laughable. Today things are different. Ireland stands as a shining example of the art of the possible in long-term economic policymaking.”

Didn’t that “shining example” end up having to get a multi-billion pound bailout from the International Monetary Fund and the European Union because of their lackadaisical financial arrangements?

The very same.

But the economy was in a tail-spin when the Tories and Lib Dems came into power, you must admit…

WRONG! Due to Gordon Brown’s stimulus package the economy was actually growing in 2010, with a 1.9 per cent rise. Osborne immediately threw this into reverse by raising VAT and embarking on a self-defeating austerity programme, decimating public services as he went on his merry way.