Britain's opposition Labour Party leader Ed Miliband delivers his keynote speech at the Labour Party annual conference in Manchester Reuters

Ed Miliband used a good portion of his keynote address to the Labour Party Conference in Manchester this week to highlight a number of economic issues as he attacked the two-year record of Conservative Prime Minister David Cameron and his Chancellor George Osborne. The speech received rave reviews from the party faithful but raised several questions with respect to accuracy. IBTimes UK has highlighted some of the major business and economic points raised by Miliband, fact-checked some of his assertions and provided context for some of his accusations. Here's what we found:

CLAIM: Coalition has increased borrowing

QUOTE: "What about borrowing? Borrowing. The thing they said was their number one priority. This year borrowing is rising not falling. Let me just say that again. Borrowing the thing they said was the most important priority, the reason they were elected. It is rising not falling."

VERDICT: In one specific sense, he's correct. In the broader sense, he's actually quite wrong.

The most recent Office for National Statistics figures show the April to August net borrowing total to be £31bn, compared to £48.4bn for the same five-month period last year and £45.3bn for the same five-month period in 2010.

The August borrowing figure, taken in isolation, shows borrowing of £14.4bn compared to £14.3bn in August 2011 and £14bn for August 2010.

All of those figures, of course, exclude the government's interventions in the financial sector (which were based on decisions taken by the previous government).

So borrowing is, in fact, little changed for the month of August over the past three years. Osborne's Office for Budget Responsibility predicts a £120bn budget deficit for this financial year, down from £125bn in the year that ended in March 2011.

However, there has been some trickery in the Coalition's arithmetic: Osborne used £28bn of the Royal Mail's pension assets to lower government borrowing in April - in much the same way that Gordon Brown used the £22.5bn earbed from the one-off sale of 3G spectrum licences in 2001.

CLAIM: Economic performance has worsened under Coalition

QUOTE: "So what have we seen? We've seen recession, higher unemployment, higher borrowing

VERDICT: Borrowing we've dealt with. Recession, yes, that's indisputable. Higher unemployment? True, but with caveats.

The ONS tells us the pre-recession peak for employment was reached in the March to May period of 2008, when 29.57 million Britons were working.

The latest ONS figures, released on 12 September, put that same figure at 29.56 million.

Over that four-year span however, the number of people in full-time employment fell by 640,000 while part-time employment increased by 628,000. The number of unemployed people increased by 978,000, but the number of economically inactive people (between the ages of 16 and 64) fell by 60,000.

Headline Labour Force Indicators show that the unemployment rate under the Coalition government has actually changed very little over the past two years, rising from 7.8 percent in the May to July 2010 period to 8.1 percent for the current period.

Meanwhile, the rate of employment has actually risen over the two years of the coalition, from 70.7 percent to 71.2 percent.

CLAIM: Coalition turned recovery into recession

QUOTE: "This Government took power in difficult economic times. It was a country still coming to terms with the financial crisis. A financial crisis that has afflicted every country round the world. I understand why you were willing to give David Cameron the benefit of the doubt. But I think we've had long enough to make a judgement. Long enough to make a judgement because they turned a recovery into the longest double dip recession since the war."

VERDICT: Partly true

There's no question the economy was growing when the coalition took office in the Spring of 2010. GDP had rebounded in the third quarter of 2009 and continued to expand into the fourth quarter of 2010. Job growth was largely stagnant, with 2.44m unemployed in June 2009 and 2.49m out of work in December 2010.

However, here's what the International Monetary Fund said about the state of the UK recovery during its final assessment under the Labour government in late November 2009:

"... The speed and the strength of recovery remain highly uncertain and will depend, among other factors, on the pace and extent of adjustment in bank and household balance sheets. Despite recent signs of stabilization, the economy's resilience to potential future shocks also is not yet fully assured. The surge in public sector borrowing, combined with the rapid accumulation of contingent liabilities and continued financial sector fragility, represent significant vulnerabilities. Therefore it is critical to implement credible and consistent policies to maintain domestic and external stability, limit downside risks, and strengthen market confidence."

In terms of financial market performance during the recovery period, the FTSE 100 rose around 19 percent until Cameron and Osborne took office, but has risen 28 percent since then.

The FTSE 250, perhaps a more accurate reflection of the health of "UK plc", rose 9.5 percent from the recovery until the Coalition takeover, and his since risen 22 percent.

Unemployment under the coalition has risen from 2.48m in May of 2010 to the current 2.59m.

Government borrowing costs, as measured by benchmark Gilt yields, have fallen from 3.89 percent in May of 2010 (a level similar to that of Spain) to the current 1.70 percent. The pound has advanced more than 4 percent in the past 12 months, according to Bloomberg data, making it the top performing developed market currency in the world.

Miliband said the financial crisis "afflicted every country in the world". That's both true and false.

It's beyond question that the financial crisis impacted global trade and thus hampered growth, but many developed nations and emerging markets avoided recession during its peak, including Australia, Brazil, Norway, and, of course, China.

CLAIM: Coalition sending £40,000 cheques to millionaires.

QUOTE: "What do they choose as their priority? A tax cut for millionaires. A tax cut for millionaires. Next April, David Cameron will be writing a cheque for £40,000 to each and every millionaire in Britain."

VERDICT: Manifestly false

Under the current budget, taxable income between £35,000 and £150,000 each year is currently hit at 40 percent. Anything above £150,000 is hit at 50 percent. That will change next year as part of George Osborne's last budget statement, taking the top rate back down to 45 percent, higher than was for the vast majority of the last Labour government.

The Institute for Fiscal Studies says around 308,000 people earned enough to pay that top rate in the 2010-2011 financial year. They contributed around 28.1 percent to total income tax take of £

Using simple arithmetic, we can assume the highest earners paid around $44.3bn into the government's coffers during that year. Reducing the top rate by 5 percent, then, reduces the total by £7,191.55 per person per year.

That's not only a long way from £40,000. And as it's a reduction in the amount taken, it's hardly akin to "writing a cheque". Furthermore, the tax reduction applies to those earning $150,001 each year, which, again, hardly qualifies as "millionaire" status.

Without knowing the value of personal wealth held by everyone in Britain earning enough income to reach the highest rate of tax, it's a mathematical impossibility to discern what the value of the tax reduction will be for any particular.

CLAIM: David Cameron will benefit from the Coalition tax policy change.

QUOTE: And here's the worse part. David Cameron isn't just writing the cheques. He is receiving one. He's going to be getting the millionaire's tax cut. So next week maybe Mr Cameron can tell us how much is he awarding himself in a tax cut? How much is that tax cut he is awarding himself? For a job I guess he thinks is a job well done. How many of his other Cabinet colleagues have cheques in the post from the millionaire's tax cut? And how can he justify this unfairness in Britain 2012.

VERDICT: Unknowable

As has been noted in the Guardian, this claim is rather specious and largely unknowable.

David Cameron's annual salary as Prime Minister is £142,500. He's been pressed in the past to reveal if outside earnings take him past the top rate threshold, but he's not yet provided the details. He should, of course, but until he does it's unfair for Miliband to assume he would benefit from the cut.

CLAIM: Britain easy prey for foreign takeovers.

QUOTE: "Companies in Britain are far more easily bought and sold than in many other countries"


Data from several sources suggest this isn't true.

Of the 62 major M&A deals itemized by Reuters in 2011, only three - International Power, Central Networks and EMI Group - involved British companies.

Data from Merger Market shows M&A activity grew 2.5 percent to $2.2tn globally, but UK M&A deals fell by 44.6 percent to $21.4bn in total value.

Official ONS figures for 2011 show a 12.5 percent decrease in foreign-led takeovers of British companies from 2010, with a total value of £32bn.

All that being said, there *is* evidence that UK companies were attractive assets under the previous government. Management Today magazine reports a $160bn outrun of inward takeovers against UK firms buying companies aboard and notes protection from hostile takeovers that kill British jobs - such as during the £11.5bn takeover of Cadbury by Kraft in 2010 - were the result of a change in the 2002 Enterprise Act which eliminated the concept of a "public interest" and limited the ability of the government to intervene.

CLAIM: Speculators profit from mergers.

QUOTE: "Do you know that when a takeover is launched the hedge funds and the speculators can swoop in for a quick profit. They are not acting in the interests of firms or the nation. They are just in it for the fast buck. It is wrong and we will change it."

VERDICT: True but irrelevant

A study commissioned by the New York branch of the US Federal Reserve by three US academics suggests a certain degree of truth to Miliband's statement. But not a great deal.

Analysing seven years of announced and withdrawn mergers from 2000 to 2007 showed that hedge funds acquired 3.2 percent of target shares (that is to say, of the company being purchased) in the quarter immediately prior to the public announcement of a takeover approach.

CLAIM: Rip-Off Britain.

QUOTE: "(Britons) ask: Why is it that when oil prices go up, the petrol price goes up. But when the oil price comes down, the petrol price just stays the same? They ask: Why is it that the gas and electricity bills just go up and up and up? And they ask: Why is it that the privatised train companies can make hundreds of millions of pounds in profit at the same time as train fares are going up by 10% a year? They think the system just doesn't work for them. And you know what? They're right. It doesn't. It doesn't work for them but for the cosy cartels and powerful interests that government hasn't cut down to size."


Let's address these individually:

Petrol Prices:

According to, average weekly petrol prices in the UK have risen by 60 percent since 1 January 2009: from around 86 pence per litre to the current average of 139 pence.

Over the same time frame, which corresponds broadly with the financial market impact of the global economic crisis, Brent Crude prices have risen 212 percent (from $35.22 per barrel to the current $110.77).

Electricity Prices:

According to the Department for Energy & Climate Change, standard annual domestic electricity bills around the United Kingdom have risen by an average of 2.25 percent since 2009 (£430 per year to £453) although collectively 23.8 percent since 2007 (£366 to £453).

Thermal coal prices have risen around 28 percent since 2009, according to

Rail Fares:

The rail argument is far more complicated to parse, but we break down some of its components. Train fares are due to rise in January by 6.2 percent, based on the July rate of retail price inflation (RPI: 3.2 percent) and the 3 percent cap put in place by Chancellor George Osborne. That said, the previous Labour government lifted the cap to RPI plus 1 percent in 2004 (Miliband was elected in 2005).

In 2012, fares rose by an average of 5.9 percent.

So, aside from a handful of specific fares that could rise by more than 10 percent, the national average increase is far lower.

The phrase "train companies" is rather open-ended, but for the sake of argument, we'll focus on train operating companies (TOCs) and not the rolling stock companies (ROSCOs).

Franchise agreements force those companies to pay a good portion of profits back into infrastructure investment. In fact, the agreement dictates that none of the revenue from fare increases can be converted in profit. The government, in return (via the Department for Transport) pays a "per mile" subsidy in return. That subsidy has been falling for the past three years.

In terms of "hundreds of millions" in profits, well, again, we're comparing apples to cornflakes. If Miliband is against the profit motive concept he should declare rail renationalisation. If not, he should define what he feels are "fair" levels of profitability.

What we do know is that of the five major train operating companies with stock market listings, only two (Go-Ahead Group and StageCoach) have seen their shares rise over the past two years (by an average of 23 percent). The other three (FirstGroup, National Express and Serco) saw their share prices fall (by an average of 24 percent).

Taking Stagecoach as an example, we know the firm generated a pre-tax £202.5m profit (down 1.5 percent from last year) from revenues of £2.6bn (up 8.3 percent from last year). That's a profit margin of 7.7 percent - a snip higher than the average rail fare increase next year.

At the standard 26 percent rate of corporation tax - paid *AFTER* the other payments to the government as part of the franchise agreements - Stagecoach would contribute a further £52.7m.

Miliband would have been on firmer ground if he compared the "all-in" price rises (both regulated and unregulated fares) under the last years of Labour (average 2.93 percent) to that of the coalition (4.2 percent).