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Comprehensive Spending Review

I want to finish my argument about why public spending rose. Some of the increase was deliberate, but by far the biggest factor was the direct cost of Government support for the UK financial sector. About £90 billion—way more than half the amount of the deficit—was spent up to June this year on recapitalising Britain’s banks, without which everyone’s savings would have disappeared and the entire banking system would have collapsed. That is how Labour stopped a slide into slump and how we promoted recovery from recession. Borrowing was certainly not out of control. The Office for Budget Responsibility reckoned that borrowing last year, in 2009-10, would come out more than £10 billion lower than we had forecast when in government, and £8 billion lower in the current year. Unemployment has also stayed lower than was forecast, and the economy had started to grow again by the end of last year—recovery was fragile but real in the run-up to the general election, as a result of our Government’s spending and investment policies.