My Lords, the Government’s fiscal policy takes a balanced approach, getting debt as a share of GDP falling but also investing in key public services and in areas that are critical for productivity and growth. The latest forecast for public finances shows that we are on target to start reducing debt as a share of GDP next year.
I thank the Minister for his response. I am sure your Lordships will wish my noble friend Lord Bird a speedy recovery. As we all know, he is famous for launching the Big Issue and looking at matters through the prism of poverty. The Chancellor has said the age of austerity is all but over. Given that the day-to-day deficit has now been eliminated, will the Minister outline which new long-term and preventive investments Her Majesty’s Government will now make? Further debt reduction should not merely be the extension of the age of austerity. Will the Minister agree that, as we have learned from today’s Equality and Human Rights Commission report entitled The Cumulative Impact of Tax and Welfare Reforms, austerity has hit the poorest and most vulnerable the hardest, with those with disabilities, certain ethnic groups, women and lone parents all bearing the brunt? Is there light at the end of the tunnel?
I believe there is. First, I join the noble Lord in wishing a speedy recovery to the noble Lord, Lord Bird, who has done so much for alleviating poverty and giving people hope, a chance and a future in this country. Of course it is welcome that the OBR forecasts are now showing that debt will begin to fall from next year as a percentage of GDP, but it is still at the very high level of 85%. The interest we have to spend on that debt represents the combined amount combined on police and defence services. It is critical that we improve our productivity, which is why we have the £31 billion National Productivity Investment Fund, which is designed to do that by investing in R&D, housing and technology. But perhaps the best thing we can do for the poorest in our country is what we have been doing. We have seen an increase in employment to near-record levels, with 3 million new jobs, and the pay of the lowest paid has been driven up so that they are now experiencing, as a result of the national living wage, the fastest growth in real income that they have had for 20 years.
My Lords, can my noble friend explain why the Government insist on making the national debt appear even bigger than it in fact is? Is he not aware that as a result of quantitative easing—QE—a good quarter of the outstanding national debt is in fact owned by the Bank of England. In other words, it has been bought back. In the private sector, if a company buys back any of its debt, it is written off. Why do the Government not do the same?
My noble friend, who comes to this with immense experience, makes an interesting point. Even if the element of total debt covered by the quantitative easing programme initiated by the Bank of England—about £120 billion—is taken out, the debt figure is still continuing to fall. That is the point we are trying to emphasise: debt is beginning to fall and we are beginning to live within our means, which is the right thing to do.
My Lords, the greatest asset which any country has is the capacity and willingness of the people to work. Construction workers have been waiting for this Government to recognise and act on the housing crisis for several years. Does the Minister agree?
I wonder whether the noble Lord heard last week when we discussed the national infrastructure plan and announced the initiatives that we were taking to boost the housing market—some £43 billion over the spending period. We recognise that housing is a huge issue, not only of intergenerational fairness but also in terms of driving forward the economy. That is why we have announced the very substantial initiatives that we have to get that sector moving, including from the National Productivity Investment Fund, a large chunk of which is dedicated to housing.
My Lords, do the Government recognise that borrowing that arises from excess day-to-day spending and borrowing that arises for investment in infrastructure and other capital projects are two entirely different issues? Any corporation treats them that way and this Government surely should. Would that not allow them to take the borrowing cap off local authorities, which could then invest in the social and affordable housing that no other programme is currently delivering and which would underpin economic growth in future?
My Lords, while we welcome the reductions in national debt, will the Minister confirm that household debt has been going in the opposite direction and that over the last five years there has been a 7% increase in personal debt to a staggering £1.6 trillion? Given that this is quite an albatross around the necks of many of the poorer families to which the Minister has referred, what are the Government doing to try to reduce the levels of personal debt?
There are two things that we can do. One we have done already: the action that we took on payday loans, placing a cap on the appalling rates of interest that were being charged, was the right thing to do. Extending that to other areas of financial services is also right. But ultimately, the best thing that we can do for people who are struggling with debt is to provide work and opportunities so that they can repay that debt and provide a living and a hope for the future of their families.
My Lords, time is up.