Chancellor George Osborne's Thursday speech at the Conservative Party Conference in Manchester dealt with themes we have come to expect from him: an emphasis on fiscal discipline and assurances that he is on the side of aspirational, "hard-working" people the length of the country. There were, however, also features we haven't heard before: notably a pledge that a future Conservative government, in good times, will run a budget surplus. In Osborne's words, the government will "fix the roof while the sun is shining".
Not so much a thinly-veiled criticism of the last Labour government, this was an open attack on Ed Miliband's predecessors in Downing Street. Ridiculing the previous administrations for excessive spending, supposedly leading to soaring budget deficits and the financial crisis, has been a largely successful tactic for the Tories - they are generally better trusted on the economy. Osborne began his speech on Thursday by insisting that the millions who lost their jobs during the crash will "never forgive" Labour. His message continues to be a simple one: you can trust us to be responsible.
The problem, however, is that the Chancellor's attacks on Labour are at best half-truths; at worst, a disingenuous narrative that threatens to distort the generation-shaping events of the past few years. It is true that the last Labour government sharply increased spending on healthcare and education. The early 2000s, though, saw a steady rise in UK economic growth - the net effect, as a percentage of GDP, was that Labour's spending was in line with other post-war governments. At the beginning of 2007, immediately before the financial crisis, state borrowing was running at 36 per cent of GDP - the Thatcher governments from 1979 to 1990 averaged 40.88 per cent. The UK's budget deficit, which in 2007 was lower than it had been for much of the Thatcher years, more than quadrupled in the following two years as the global crisis took hold.
The conclusion? While the 1997-2010 Labour governments deserve some blame for operating small deficits in good times, to essentially claim that Labour caused the financial crisis is absurd. The real causes - a burst US housing bubble that led to a catastrophic credit crunch in the global inter-bank lending market - were well beyond the control of UK politicians. The fact that the UK was already operating a small budget deficit did contribute to the scale of the ensuing domestic problems as bank bailouts, sharply rising unemployment and diminishing tax revenues strained public finances. These issues, however, would have taken hold even had a surplus previously existed. To lay the blame for post-crisis unemployment squarely at the door of the Labour Party - as attempted by Osborne - is severely deceitful.
The truth is that the vast majority of economists prior to the 2008 crash did not see a problem with UK borrowing. Other countries at the time - notably the USA - were running similar budget deficits. No one was "fixing the roof while the sun was shining" - the developed world was suffering a collective failure of responsibility by chasing ever more credit at a time of unprecedented prosperity. The Conservatives' singling out of Labour is a misleadingly narrow interpretation of a wide malaise; furthermore, it is a bit rich considering that Osborne, speaking as Shadow Chancellor in 2007, pledged to match Labour spending.
Furthermore, it is not only the Conservative Party that has massaged the truth in this context. All the major parties have identified that their election prospects are dependent on winning the economic debate; accordingly, each has distorted reality in an attempt to gain essential political capital. The Liberal Democrats (remember them?) are all too happy to peddle the Labour spending myth, insisting at their party conference that they would be a vital component in a potential coalition line-up in order to rein in Labour profligacy. Meanwhile Labour, in the context of a now-recuperating economy, have stuck to their line that the government's austerity policies have held back the recovery. This underplays the historical reality that it takes a while for economies to return to health after a recession, not least in the aftermath of the largest financial crisis since the Great Depression.
Why should we care about this duplicity? Regardless of the fact that such behaviour is inevitable from political parties, not least because so few engage properly with economic issues, it matters because millions of people will vote at the next general election under pretence. In a wider sense, crucial lessons from the last few years risk being undermined by the financial crash of 2008 being distorted into a narrow, partisan issue. The crisis was the result of an unsustainable global addiction to debt; one which, due to the failings of individuals and institutions at all levels of the financial system, almost brought the world order to its knees. Against the backdrop of this disintegration in cross-border market confidence, to imply that any single government bears ultimate responsibility is laughable. Labour's small deficits - which in any case would have been run up under a Conservative government - probably slightly increased the scale of the problems in the UK. The additional unemployment and reduction in market confidence caused by the Coalition's austerity policies have probably slightly lengthened the recovery period. But to ignore the wider picture is to fail to appreciate far-reaching lessons of responsibility that are relevant to us all.