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FactCheck: do we really owe a debt of gratitude to Gordon Brown?

By Channel 4 News

Updated on 21 September 2008

The prime minister claims to have cut the national debt. Is he right? FactCheck looks at the balance sheet.

The claim

"In the last 10 years, we have reduced the share of the national debt from 44 per cent to 37 per cent."
Gordon Brown, prime minister, Andrew Marr Show, BBC 1, 21 September 2008

The background

The PM takes to the Sunday morning sofa at the start of his party's annual conference - and after a week of global financial turmoil including the collapse of investment bank Lehman Brothers and the competition-law-bending takeover of HBOS by Lloyds TSB.

It's now a year since the credit crunch started to bite - a year in which the Conservatives have frequently railed against the size of Britain's budget deficit, and criticised Gordon Brown for, as they put it, failing to mend the roof while the sun was shining.

Brown was tackled by interviewer Andrew Marr on what the government could do in the current economic climate, when it was already spending so much money.

The former chancellor defended himself - and tackled what he termed the "Conservative myth" head on - by claiming to have reduced the national debt in the past decade.

He said Labour was in a position to borrow "because of our good housekeeping", and talked of the "decision I made to pay off a lot of debt in the last few years".

Do the figures back up the claim?

The analysis

Brown came to the exchequer in 1997 on promising prudence, promising to stick to Tory spending plans for Labour's first few years in office.

He placed great emphasis on his fiscal rules, which both restricted the amount of debt the government could rack up (40 per cent of national income in any one year) and promised to balance the books over the course of the (undefined) economic cycle.

In 1996-7, public sector net debt - as a share of GDP - was 43.3 per cent.

To be strictly accurate, Brown should perhaps round the first figure down to say that debt had fallen from 43 per cent, and increase the length of the change to a less sound bite-friendly 11 years.

The following year - for most of which Labour was in power - it fell to 41.3 per cent. Then in 1998-9 - Labour's first full year at the helm - it fell to 39.2 per cent. In 1999-2000 it was 36.4 per cent; in 2000-1, 31.4 per cent. And in 2001-2 dropped to 30.3 per cent.

But in 2002 - the year Brown announced an increase in national insurance to fund extra NHS spending - debt started to creep up again. In 2002-3 it was 31.5 per cent of GDP; in 2003-4, 32.8 per cent and in 2004-5, 34.7 per cent.

In 2005-6, it went up to 36 per cent, in 2006-7, 36.6 per cent, and 36.9 per cent in 2007-8.

To be strictly accurate, Brown should perhaps round the first figure down to say that debt had fallen from 43 per cent, and increase the length of the change to a less sound bite-friendly 11 years.

But it's hard to dispute his claim to have debt at 37 per cent of GDP today.

Or is it?

Another set of figures in the latest Office of National Statistics public finances release puts public sector net debt in 2007-8 considerably higher - at 43.3 per cent of GDP.

This figure, which smashes through the 40 per cent limit set by the sustainable investment rule, includes the cost of nationalising Northern Rock last year.

Which figure is more useful? Northern Rock is expected only to put a temporary hole in the public finances - and as such, the treasury has decided to discount it for the purposes of judging debt against the sustainable investment rule.

It's something the independent Institute for Fiscal Studies has described as sensible.

That's the picture now, but what about the future?

The IFS pointed out in a public finance analysis last week that high borrowing - not least from the recent tax cuts announced since March's budget - means that, even without the impact of Northern Rock, Britain's debt is likely to exceed the 40 per cent ceiling by 2010-11.

The verdict

Brown massages the figures slightly - but he's broadly correct, so long as the nationalisation of Northern Rock, intended as a temporary measure, isn't included in the figures.

The Labour government did reduce the national debt - as shown in the national accounts - as a share of national income at the end of the last century (although it's questionable whether most people would understand this to be the "last few years" of which Brown went on to speak).

Debt is still lower than when Labour came to power, although this doesn't necessarily mean that Brown - or his successor - would be able to make such a strong debt-busting claim a couple of years down the line

In fact, recent increased borrowing debt looks likely to increase further.

FactCheck rating: 2

How ratings work

Every time a FactCheck article is published we'll give it a rating from zero to five.

The lower end of the scale indicates that the claim in question largerly checks out, while the upper end of the scale suggests misrepresentation, exaggeration, a massaging of statistics and/or language.

In the unlikely event that we award a 5 out of 5, our factcheckers have concluded that the claim under examination has absolutely no basis in fact.

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