HAVING accepted the prognosis that Alistair Darling “had no option but to bail out the banks”, and that this itself increased borrowing, Douglas Mayer (Letters, September 11) argues “it was the extent of the borrowing by Labour for day-to-day running costs that directly affected the economy”, and in particular “the recruitment of one million people in the public sector”.

Unfortunately, the statistics don’t back this up. The monthly borrowing figures in 2008 show that public sector debt as a proportion of GDP increased from 49.7 per cent in September 2008 to 130.7 per cent the very next month, continuing to increase to 148.4 per cent in December 2009, before falling back (very gently). That must have been some recruitment drive.

Debt only increased very gradually during Labour’s time in office, being 37.8 per cent in May 1997, and 27.1 per cent in February 2002, before drifting back up again to the middle 30s by 2007. It was in October 2007 that the figures start to accelerate, from 34.7 per cent in September 2007 to 40.8 per cent the following month, continuing to increase till the same time the following year. We might ask, what happened in the 12 months from September/ October 2007 to 2008?

In November 2007 the BBC reported on the “US sub-prime mortgage crisis”, where “sub-prime” is a euphemism for irresponsible lending to borrowers with poor credit histories and weak documentation of income, who had been shunned by "prime" lenders. However, as these mortgages were as profitable for the banks as they were reckless, mortgage brokers could not sell enough. The outcome was a wave of repossessions, but not merely a matter of the occasional house in the occasional street, but every house in every street in some neighbourhoods. By late 2007, for instance, one in 10 homes in Cleveland had been repossessed and Deutsche Bank Trust, acting on behalf of bondholders, was the largest owner of property in Cleveland, but property of no value.

The finance industry’s interdependence is such that its collapse is rather like pushing over the first domino in a line – as one goes over they all follow. Lehman Brothers in America closed, as did Northern Rock in the UK, but a good many others such as Merrill Lynch and Royal Bank of Scotland all came within a whisker of doing so and had to be rescued.

If Mr Brown and Mr Darling are to be blamed, then it is for being asleep at the wheel, as the banking crisis hit. The collapse of the sub-prime mortgage market was a warning, but the very fact that the finance industry was selling such incendiary products should have led to closer regulation of the banking industry rather than “light touch”, as well as a recognition that “boom and bust” had not been abolished, but merely delayed. Even Gordon Brown has accepted that he “made a big mistake” regarding bank regulation.

Labour’s failure was not “excessive borrowing”. Debt under Labour till 2008 had been typical of the last 20 years of the 20th century. Its failure was to regulate the financial services industry effectively.

Alasdair Galloway,

14 Silverton Avenue, Dumbarton.

ISN’T it nice to know your place? I noted with interest that the Honourable Member for Stone, Sir Bill Cash has clarified that he and his colleagues refer to the “people outside, the real people of this country” as punters ("PM’s Chequers plan is a very serious breach of trust, insists Tory Grandee", The Herald, September 11). I have often thought that the real people of this country who vote the likes of Sir Bill Cash into power are quickly forgotten after the rounds of congratulations for being first past the post in an election have echoed around the counting venue.

When MPs or prospective MPs are on the stump they speak of “ constituents” being at the centre of everything they do, a bit like the golden-haired child. When elected the constituents are then relegated to the status of punters, not so much the golden-haired child, more like the red headed step-child. Still it’s nice that we punters know our place. Perhaps the polling cards that go to each registered voter should carry a warning that they must be used by punters only.

Anne-Marie Colgan,

10 Castle Wynd, Bothwell.