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Public Services

Volume 502: debated on Tuesday 15 December 2009

18. What recent assessment he has made of the likely effect on the economy of maintaining present levels of Exchequer spending on public services. (306860)

The combined action of the Bank of England and the Government is supporting up to half a million jobs at the moment. The Government believe that, as there are still risks to the economy, it would be risky to consolidate too quickly.

The Government have done a lot to try to help young people during the recession, particularly with the guarantee of a job or training after six months of unemployment. Does the Chief Secretary agree that any attempt to reduce spending immediately would scupper the chances of economic recovery and impact in particular on young people coming into the jobs market?

There are those who believe that we ought to be cutting public spending faster, even now, before recovery has been locked in. We think that that would be a risk and that the price would be paid in higher unemployment and more repossessions. That is why last week the Chancellor set out further measures to help to combat youth unemployment and why we think that the right approach is to say to our young people that if they have been out of work for six months they will be offered a job, a place in training or, of course, community service.

What does the Minister think of the work by the International Monetary Fund showing conclusively that the higher the proportion of public spending in an economy, the slower the growth rate?

If the right hon. Gentleman looks at other economies in the OECD or the G7, he will see that the levels of debt forecast among them are pretty much in line with our own. This recession has hit us all. However, we are probably the country that has set out the clearest plan to halve that deficit over the next four years.