The claim
“When Ed Miliband was born, his share of the national debt was under £600”
Conservative Party Press release, February 4, 2011
The background
Ed Miliband said in a speech on inter generational fairness today that the “British promise” – his somewhat clunky version of the American Dream – is under threat.
For the first time, the youth of today could find themselves worse off than their parents, Mr Miliband said – thanks to government’s cuts agenda and the abolition of the Educational Maintenance Allowance, among others.
Nick Clegg hit back strongly that Mr Miliband’s comments “beggared belief”.
The Deputy PM went on to champion the “moral dimension”, arguing that it would be wrong to delay paying off the deficit and wrong to shuffle our debts onto the next generation.
“This strikes me as little short of inter generational theft. It’s the equivalent of loading up your credit card as a parent with debt and then expecting your children to pay if off for you,” he said.
As Mr Clegg vented further on Twitter, FactCheck lamented the lack the facts within the debate.
Mr Miliband’s broken “British promise” line hinged on a survey of 2,374 people done in November – which Labour wouldn’t show in its entirety to FactCheck.
But then, ping!
A press release pops through from the Tory Party HQ. Channel 4 News’ eagle eyed economics editor Faisal Islam smelled blood.
It was a rebuff from the MP Matthew Hancock. “Ed Miliband talks about leaving something better for the next generation but his plans would burden our children with over £22,000 of debt,” he said.
This is nothing new – shortly after the election David Cameron gave a speech on the deficit claiming that: “Today, our national debt stands at £770 billion. Within just five years it is set to nearly double to £1.4 trillion. To put it in perspective, that is some £22,000 for every man, woman and child in our country.”
Our friends at the Institute for Fiscal Studies have backed this up. The IFS says that by 2014-15, the OBR’s figures in the pre-Budget report last June implied (assuming inherited Labour policies) that public sector net debt would rise to about £21,500 per head (using ONS forecasts for population growth), while nominal GDP per head would rise to £28,500.
But what struck us all as odd, was the Tories’ press spiel above Mr Hancock’s quote: “When Ed Miliband was born, his share of the national debt was under £600. However, after Labour maxed out the nation’s credit card and under Ed Miliband’s own plans, a child born today will owe £22,300.”
The press release provided a handy explanation of the maths behind it all too. And it showed that they made the comparison in cash terms – rather than real terms.
The IFS told FactCheck this was a “very odd” thing to do. It makes much more sense to think about debt per head relative to income per head in each of the years and see how these compare. Because incomes have grown substantially over Mr Miliband’s 41 years – due to inflation and real growth in the economy.
National debt per head in 1969 – the year the Labour leader was born – was about £600, as the Tories said. But in the same year, nominal GDP per head was about £800 (according to stats from the Office for National Statistics).
And if you adjust it for inflation, over the period 1969 to 2014-15, prices have risen by 1,359 per cent. This means that the cash level of debt per head in 1969 (£600) equates to around £9,000 in 2014-15 prices.
The verdict
Using cash terms is dodgy accounting from the Conservatives.
They would have been on much firmer ground if they’d just said when Ed Miliband was born, his share of the national debt was £9,000 – not £600.
It’s still a sign of how much more indebted we have become under the Labour government, but not quite as bad as the press release suggested.
