It doesn't matter how right Labour are proved about the Coalition's slash and burn approach to the deficit if people believe that the deficit was Labour's fault in the first place. As Cameron and Osborne persist in destroying public services under the guise of responsible deficit reduction, the economy is going into a downward spiral. Reduce demand by sacking hundreds of thousands in the public sector and far from stimulating the private sector, it not surprisingly drags it down. And without growth, the deficit won't go down either. Labour will win the argument that the Tories and their Lib Dem sidekicks have cut too fast and too drastically. Labour might even win the argument that this was an ideological decision. But they will struggle to win support if people believe the deficit was created by Labour in the first place.
It actually wouldn't be that difficult for Labour to argue their case, but strangely they have given up the ghost and allowed the media and government free reign to claim that Labour overspent so therefore we have to tighten our belts. On first inspection this sounds very plausible to most voters, but as soon as we consider some actual facts it quickly looks very absurd.
1. In 2008 when the financial crisis hit, both the Tories and Lib Dems were still claiming they would maintain Labour spending on public services. Strangely this fact has disappeared from the media. If they believe Labour had overspent why would they claim to match their spending?
2. Just before the banking crisis hit, the national debt was actually lower than Labour had inherited off the Tories at around 37%!
3. The financial crisis has hit the entire developed world, even the most die hard Tory would struggle to claim that Labour spending policies in one small country off Europe - i.e. the UK have affected the whole world. So to blame Labour for the crisis just seems wierd.
4. Finally, government debt only ballooned when it had to take on the private sector debt of the banks. You can blame Labour for not regulating enough, but the only voices advocating that were on the left, certainly not from the hedge fund bankrolled Tories.
Imagine if Labour had not increased spending AT ALL on public services in its 13 years in office. Well for a start I don't imagine that would have gone down well with voters who in 1997 were crying out for investment in health, education and the rest. But leaving that aside, the maybe 200 billion Labour might have saved in expenditure, would still only have made a small dent in the trillions of bad debt the banks had racked up by buying up US and other bad debt in casino style deals.
Which ever way you face it, the problem is not that Labour overspent on public services (we still spend less than the EU average). Yet that Labour spent too much on public services is what most people believe, and until that changes, Labour and Miliband are in real trouble. They have to be clear about this and absolutely refute it when the media and Tory led government try to pin the blame on them. It is rubbish and people need to be told.