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FactCheck: budget 2008

By Channel 4 News

Updated on 12 March 2008

Alistair Darling's first budget speech was packed with claims - but did they add up?

All quotes taken from Alistair Darling's 2008 budget speech.

"By 2011 we will have seen the longest sustained expansion of investment in public services since 1945."

Pumping money into the likes of health and education after years of Tory under-investment has been one of Labour's proudest boasts.

Whether the money has been well spent is another matter, but has there been a record? According to Gemma Tetlow at the Institute for Fiscal Studies, it makes sense to say that it's the longest period of expansion in 40 years, though to stretch the claim back as far as the war is trickier.

It's worth remembering, firstly, that Labour inherited a very low base of investment - just 0.7 per cent of national income in 1996-97.

Because Labour stuck to the Conservatives' spending plans for their first three years in power, the party actually kicked off its term with a decline in investment.

The trend was then reversed. Public sector net investment is set to increase as a share of national income until 2010, then stay the same until 2011.

This marks an 11-year period of expansion, creeping up to the current number: just under 2 per cent.

What about before this? There was general trend of decline from the end of the Sixties until Labour took action in 2000.

Still, public investment under Labour has never touched the level at which it peaked towards the end of the Sixties: just over 7 per cent of national income at the end of the Sixties.

Quite how useful this figure is for comparison with investment today is debatable: there were far more nationalised industries back in the flower power days, for example.


IFS Green Budget 2008

"The defence budget has seen the longest period of increased spending in a generation."

Almost five years since the start of the Iraq war, Darling makes more claims of public largesse - although this time it's relating to spending in general, rather than specifically that for investment.

FactCheck has looked at defence spending in detail recently and found that, according to the treasury's own figures, although defence spending has increased in real cash terms since 1997, it's actually fallen as a percentage of national income (a handy way of assessing what slice of the growing economic pie the military is being fed).

Depending on how the numbers are interpreted, spending has increased over the past decade. There have, however, been drops rather than a sustained increase.

Rather than just the numbers, it's worth bearing in mind also what the defence budget has to cover. Darling's making his claim just two days after a defence select committee report found that the costs of ongoing military operations in Iraq and Afghanistan have almost doubled (a 94 per cent increase) this year compared to 2006-07 - taking the total likely spending for both operations to £3.2bn this financial year.


Defence committee highlights significant increases in costs of operations
FactCheck: defence spending

"The British economy has now been growing continuously for over a decade - the longest period of sustained growth in our history."

The longest sustained growth chestnut is one of Gordon Brown's favourite boasts - and has slipped its way into Darling's red box. There's a full analysis here but, as with so many statistical claims, it depends on which figures you choose to look at.

Quarterly figures do bear out the claim, but annual figures, which go back further and are more meaningful, don't. The period between the end of the Second World War and the 1973 oil shock takes the crown.

What about more recently?

"Despite the slowdown in the world economy, in 2007 the British economy grew by 3 per cent, the fastest growth of any major economy."

Sounds good - especially with credit crunch fears racking around the world economy - but is it true?

Growth was pretty healthy in 2007: the latest figures show GDP up by 3.1. per cent, up 2.9 per cent on the previous year. This beats the likes of the States (1.9 per cent growth in 2007), Germany (2.4 per cent), Japan (2 per cent) and France (1.9 per cent).

Although if we're playing top growth trumps, there's no shortage of other economies with healthier numbers: Finland - 4.3 per cent, Sweden - 3.6 per cent, India - 8.9 per cent and China - 11.5 per cent.

Still, things in Britain slowed towards the end of 2007, something reflected in the Chancellor's downgrading today of his growth forecast for the coming year.

According to the latest ONS figures, growth stood at 0.6 per cent in fourth quarter of 2007, down slightly from the 0.7 per cent growth in the previous quarter.


International Monetary Fund: country information
GDP Growth: Economy rose by 0.6 per cent in Q4 2007

"Record levels of employment, and unemployment at its lowest level for a generation."

As they never tire of telling us. The most recent figure do show a record level of people in employment: 29.4 million, or the highest since comparable record began in 1971.

The more meaningful figure - the employment rate for people of working age - was up slightly (0.2 over the year) - at 74.7 per cent. Similarly, the unemployment rate dropped 0.3, to 5.2 per cent over the previous year.

This isn't the lowest its been under Labour, however. In the three months to Septmber 2005, for example, the rate cruised down to 4.7 per cent. In general terms, Darling's claim does add up - unemployment has hovered around the 5 per cent mark since 2001.

"We will introduce legislation to impose a charge on [single-use carrier bags] if we have not seen sufficient progress on a voluntary basis... based on other countries' experience, it could lead to a 90 per cent reduction, with around 12 billion fewer plastic bags in circulation."

One of Darling's new budget announcements was the possibility of a tax on plastic bags - those disposable environmental scourges which are currently the subject of a Daily Mail campaign.

His 90 per cent drop claim echoes the experience of Ireland, where a bag tax (intended to reduce litter rather than climate change) saw the number of bags drop substantially.

The most recent figures from Ireland suggest inertia may have set in, with the number of bags back in circulation creeping back up - although only very slightly.

Local trials of a similar scheme, charging 5p per food carrier bag at Marks and Spencer, saw a decent, but more modest, 70 per cent drop.

Either way, Darling is unlikely to cull 12 billion bags; there are currently only around 12.4 billion in circulation, down from 13.4 billion a year ago when major retailers agreed to take voluntary action. Taking 90 per cent of these out of circulation would mean an 11.16 billion drop.


WRAP - Carrier bag statement, 28 February 2008
FactCheck: The 5p M & S plastic bag

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