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Public Sector Borrowing Requirement

Volume 979: debated on Thursday 21 February 1980

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asked the Chancellor of the Exchequer what increase in the public sector borrowing requiremnt is directly attributable to the increase in unemployment since May 1979.

I regret that I am unable to give the hon. Member the estimates he requests, for reasons set out in the Minister of State's answer to him of 11 February.

Since the public sector borrowing requirement is central to the Government's economic policy, is it not time that the Government made a prediction of the effect of increased unemployment upon it? Can the Minister deny my prediction that if unemployment reaches the level of 2 million by the end of the year—which has been predicted elsewhere—that will result in an increase in the public sector borrowing requirement of at least £2 billion which is the amount of money that the right hon. Lady the Prime Minister is attempting to save in public expenditure cuts? Is that not crazy?

I cannot confirm the hon. Gentleman's prediction, not least because it has been the practice of successive Governments, irrespective of political colour, not to engage in forecasting levels of unemployment.

Will my right hon. Friend agree, however, that unemployment is likely to continue to increase, with its attendant effect on the PSBR, until the gigantic overseas job creation scheme, in which the British consumer participates, is corrected by Government intervention which would be fully in accord with the ancient traditions of our party?

I acknowledge that my hon. Friend is a long-standing supporter of import controls, but there must be a balanced judgment on the extent to which British industry today needs more protection, rather than more competition.

While I understand why the right hon. Gentleman is unwilling to verify or endorse the predictions published by his Department about the massive increase in unemployment which is now under way, surely he has made some estimate of the effect of an increase of 100,000 unemployed on the public sector borrowing requirement? Is it not a fact that the main reason why we now face three years of unparalleled austerity—or, as his right hon. and learned Friend the Chancellor of the Exchequer told the press this week, a steady fall in real living standards for at least three years—is that the Government's fiscal and monetary' policies ensure that the massive increase in oil revenues, which will amount to £4 billion this year, will entirely finance increases in unemployment caused by the Government's policies?

I am following well-ordered precedent in declining to forecast levels of unemployment.

As to the wider issues, the success of the United Kingdom economy will turn largely upon its becoming more competitive and being able compete realistically in world markets. That will involve pursuing policies which have a degree of monetary realism to enable the supply side of the economy in its turn to be a great deal more effective than it has been over the past decade.