FactCheck: debt and homeowners

Last Modified: 15 Oct 2008
By: Channel 4 News

With Gordon Brown meeting European leaders in Brussels, deputy leaders Harriet Harman and William Hague came out to play at PMQs.

The claim

"In 1997 public debt as a share of GDP was 43 per cent. We reduced it to 37 per cent. We are now in a position to allow government debt to rise in order that we should back up the economy in the way that's necessary."
Harriet Harman, prime minister's questions, 15 October 2008

The analysis

With the government signing banking bailout cheques left, right and centre, the size of the national debt is becoming a weighty political - not to mention economic - issue.

Harman's claim - something we've pretty much heard from Brown - makes it sound as though the government's been super-prudent in paying off debt before tough times.

It's all part of the rebuttal of the Tories' repeated allegations that Labour failed to fix the roof while the sun was shining. But is it true?

National debt was 43.3 per cent of GDP when Labour came to power. The party reduced it to as low as 30.3 per cent in 2001-02, but then allowed it to creep back up.

Harman doesn't show off about the reduction to 30 per cent; so instead, her comment implies that debt is currently 37 per cent of GDP.

Debt was at 36.9 per cent for 2007-8, so it seems fair to say that debt was at 37 per cent when the credit crunch kicked in.

But what about now? In February 2008, the government took Northern Rock into temporary public ownership, as the jargon went.

If Northern Rock is included on the books, debt is, in fact, 43.3 per cent of GDP - strikingly close to the figure Labour inherited.

Why leave off Northern Rock? Not so long ago, Labour set great store on the fiscal rules, which tethered them to letting debt increase to no more than 40 per cent of GDP. A fairly arbitrary figure, but worth examination given that Gordon Brown had used them to vaunt his fiscal competence.

The ONS plumps for the sans-Northern Rock figure for measuring debt according to the fiscal rules. Northern Rock is "different" from other public debt - the idea being that the bank will pay back the taxpayer and move off the balance sheet when it is eventually bought by a private owner.

But with the hole on the "temporary" balance sheet getting bigger and bigger, for how long will Labour's boasts about reduced debt hold water? Just this week £37bn public money went on the part-ownership of Lloyds TSB, HBOS and Royal Bank of Scotland, in addition to the nationalisation of Bradford and Bingley at the end of September.

The state of the national debt is something we'll be watching closely over the coming weeks, not least when the government sets out the state of the public finances in the autumn pre-budget report.

The sources
Treasury: public finances databank
Office of National Statistics: public sector finances August 2008

The claim

"I do not accept that the economic crisis that has hit this country is the fault of one million extra homeowners in the country."
Harriet Harman, prime minister's questions, 15 October 2008

The analysis

We feel duty bound to point out the correct number of new homeowners under Labour - after all, it's something about which GB was boasting just a year ago.

In 1997 there were 16,675,000 owner-occupied homes; in 2006 (the latest available figures) there were 18,522,000. That's an increase of 1.85 million.

Just a slip-up by Harman, or a quick backpeddle from Gordon Brown's debt-bubble-tarnished boasts? Either way, the real figure is nearly double the one she quoted.

The sources
Department of communities and local government: table 101 - stock by tenure, United Kingdom

The claim

"The right honourable lady had the honesty during her campaign for the deputy leadership of the Labour party to admit that the government had made a mistake over the war in Iraq."
Adam Price MP, Plaid Cymru, prime minister's questions, 15 October 2008

Interesting mention of honesty - for straight after being crowned deputy Labour leader, Harman appeared to backtrack on calls for an apology on Iraq.

Price is right to say that, while campaigning to succeed John Prescott, Harman was hard on the government's record in Iraq, saying they had got it wrong because there were no weapons of mass destruction.

And during a Newsnight debate on 29 May 2007, she said "Yep, I agree" after her opponent, Jon Cruddas, said the party should say sorry "as part of the general reconciliation with the British people over what's been a disaster in Iraq".

But once she became deputy leader, a mini-storm erupted over the apology that never was - or was it?

She denied calling for an apology, though did admit, with hindsight, that a mistake had been made. "I voted for the war on the basis that there were WMDs. That was clearly a mistaken belief and we have to acknowledge that," she told Radio 4's Today programme. "If I knew then what I knew now I wouldn't have voted for it, but I've also said that we've got to support our troops in Iraq."

The sources
BBC News, Harman denies Iraq apology call
FactCheck: did Harman call for an apology over Iraq?