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Public Sector Debt

Volume 493: debated on Tuesday 9 June 2009

10. By what date he next expects public sector debt to fall below 40 per cent. of gross domestic product. (278513)

In the current global environment of uncertainty, our focus is on ensuring that debt is on a downward turn in the medium term, and we have set out clear plans to do precisely that.

Does the Minister accept that the huge increase in Government debt in the UK represents significant extra tax rises for the British people in the future, and that the interest on that debt also represents massive amounts of public spending forgone in future years?

We have been very clear about what precisely we project and anticipate in the years to come. We have been candid and open about the tax and spending implications, and the efficiency implications. I know the hon. Gentleman will forgive me if I tell him that the future costs of today’s downturn would be far more significant if we let it cut deeper and longer, and taking £5 billion out of public spending right now would guarantee exactly that.

I am sure the Minister is aware that on-balance-sheet debt is likely to rise to 79 per cent. of gross domestic product by 2013-14. I am sure he is well aware that, the Government having acquired several banks, that debt amounts to roughly £2 trillion, currently held off-balance sheet, in addition to another £1 trillion of public sector pension liabilities. Can he confirm how much debt is currently held off-balance sheet by the Government, and what percentage of GDP that represents?

We can be open about what the costs are of the current financial crisis, and those costs were set out clearly in the Budget. Both the International Monetary Fund and the Bank of England have welcomed the degree of transparency about the kind of costs we have projected.

When calculating public sector debt, can my right hon. Friend assure me that the whole cost of private finance initiative schemes will be included? He talks of transparency; we need transparency in relation to PFI, which is at best a murky scheme, and at worst a failed scheme.

I know that I will not be the first Minister to answer that question by reminding the House that that is of course a matter for the Office for National Statistics.

Will my right hon. Friend reflect on what the alternatives might have been if we had not intervened in the banking system? My constituents—pensioners with savings, and people with mortgages and businesses—are relieved that the Government have taken the action that they have taken. Complaints from Conservative Members about the level of debt that that has given rise to demonstrate that they would have done absolutely nothing to assist those people, or to deal with the dire consequences that people would have faced as a result.

My hon. Friend is absolutely right, and I would tempt him to go further. Of course, if the rescue for the banks had not taken place, not only would the economy be in a far more serious situation now, but its potential for growth would be in a far more serious position. That, in part, is precisely why the IMF has congratulated the Government on the bold and wide-ranging programme we have put in place, and indeed on the international leadership we have shown.