Why Ed Miliband was being deceptive over debt

“Remember, our government paid down the debt before the crisis hit.” That’s what Ed Miliband said in a speech last Friday, and I took exception to it at the time. My point was, admittedly, quite blunt: how could the Labour leader make such a claim when debt was around £500 billion in 2006, and rising? So I’m glad that the excellent Full Fact blog has since looked into the matter, and come down broadly on my side – giving Miliband a 2-out-of-5 rating on their truth scale. But some of their wider points are worth developing, which is why I’m returning to the topic now.

First, though, the observation that I made on Friday. Here’s a graph which shows our national debt throughout the Labour years. From this vantage point, any claim that Labour “paid down the debt before the crisis hit” is quite ridiculous. It was about £490 billion in 1997, and fell in the years to 2001, but then rose until it was over £550 billion when Lehman Brothers collapsed:

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But as Full Fact point out, there is another way of looking at debt – and one which bodies like the IFS prefer because it better captures a country’s ability to service that debt.