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Government Borrowing

Volume 718: debated on Thursday 8 April 2010


Asked By

To ask Her Majesty’s Government what is their estimate of government borrowing per capita in 2009-10.

My Lords, the Government publish estimates of public sector net borrowing in billion-pound units as a percentage of GDP. The Budget 2010 forecasts show that borrowing in 2009-10 is estimated at £1,067 billion or 11.8 per cent of GDP. The Fiscal Responsibility Act 2010 puts a legal obligation on the Government to halve the deficit over four years and have debt falling by 2015-16.

I thank the Minister. I always notice that when he gives us statistics such as these, he smiles as though they are a triumph. I just wonder if these are a triumph. The Government inherited a public sector debt of £347.2 billion in 1996-97. I remind the Minister that the latest forecast is that it will be £1,406 billion—an increase of 305 per cent—in 2014-15. The figures are mind-boggling. Is this a triumph? Surely, if the Minister thinks it is a triumph, that is an insult to our collective intelligence.

My Lords, we entered the recession with the next lowest borrowing as a percentage of GDP of any G7 country, according to the OECD—evidence of the wise husbandry and prudence of my right honourable friend the Chancellor of the Exchequer at that time. We come out of this recession with a forecast from the OECD that we will have the strongest rate of economic recovery in Europe in 2010 and the second strongest in the world. Those are statistics of which we are rightfully proud.

My Lords, does my noble friend recall that in 1997 we had a legacy of 3 million people unemployed, and that there was severe unemployment during the 1980s and—induced by our own-made recession in the early 1990s—right through the 1990s. Have the Government made any estimates, from the flip-flop economic policies of the Opposition, of what the likely levels of unemployment will rise to?

My noble friend raises a very important point. Had we not taken the action that we did to support the economy during this global recession, we undoubtedly would have had higher unemployment, higher rates of business failure and higher levels of repossession. In fact, our experience in all three dimensions has been significantly less than would have been forecast on the basis of past experience. That speaks commendably of the Government’s efforts to ensure that this global recession has had minimal impact on those who are most vulnerable in our society.

My noble friend’s Question was about borrowing per capita. The Minister gave us some interesting statistics; will he now answer my noble friend’s Question?

The Financial Services Bill, which we will look at later this morning, includes an important provision to create a new responsibility for the FSA to foster education about financial matters. I can see that many Members on the opposition Benches will be signing up. We need to look at borrowing in the context of the use made of it. I remind noble Lords that the borrowing that we have incurred over the past 12 months has been to build schools, hospitals and roads, to support infrastructure and continuing employment in a global recession.

My Lords, two weeks ago the Conservatives rubbished the Government’s claim in the Budget that they were going to make £11 billion of efficiency savings. Days later they produced £13 billion of their own efficiency savings. Is this not a total insult to our intelligence? Is it not deeply dishonest to claim that you are serious about cutting the deficit when you are making spending commitments all over the place, as the Conservatives are, with no idea how they are going to pay for them?

The noble Lord, Lord Oakeshott, makes an extremely good point, as he so frequently does on these matters. The flip-flopping of the Conservative Party on economic matters is a wonder to behold. Its concern about cutting taxation is a relatively new one, driven perhaps by the necessity of the moment, but we will remember how clearly we were being prepared for an age of austerity until it became evident that that political message was not receiving the outcome that the Conservative Party sought. There is a real inconsistency in almost everything that the Conservatives say about the economy, and that, no doubt, will be rumbled when the electorate come to vote.

My noble friend reminded us just now of the policies that the Government have undertaken to secure economic growth and a stable economy. Can he remind those of us with fading memories like myself what support the Government got for that programme from Her Majesty’s theoretically loyal Opposition?

My right honourable friend the Prime Minister normally says, “Wrong on the banks, wrong on the economy, wrong on supporting those in need”. I think that he is correct. Quite clearly the Conservative Party has been wrong on almost every matter of important judgment when it came to the global financial crisis and the global economic recession.

My Lords, I can see that the Minister, and indeed many other noble Lords, are trying very hard to avoid the Question that was put by my noble friend Lady O’Cathain. Let me tell the House that on the basis of the Government’s plans—

I will come to a question, my Lords. Every child born by 2014-15 will be born with a debt of £23,000. Will the Minister confirm that that debt of £23,000 will be doubled by the time we have added off-balance sheet liabilities that have been created by this Government and unfunded pension liabilities?

The noble Baroness has not answered the Question that the noble Baroness, Lady O’Cathain, had asked, which was not the totality of—

You ought really to be familiar with your own Question. I thought for a moment I was being rude in suggesting that the opposition Benches might need some financial education, but you cannot even remember the Question that you asked. The noble Baroness asked questions about borrowing in 2009-10. The noble Baroness, Lady Noakes, answered an entirely different question.

My Lords, is not the Minister rightly fearful about the threat of front-line service cuts if there is a change of government and the consequent Bullingdonisation of the British economy?

We need to address the very real issue that premature cutting of the fiscal stimulus that the taxpayer is providing to support the economy would undoubtedly place employment at risk, not only in the public sector—not only our teachers, nurses and others who work so well for us in the public sector—but in the private sector, which depends on its connections with the public sector. That is why it would be wrong to make early adjustment to the fiscal situation until the economic recovery is firmly established.