Government Debt

HC Deb 26 January 1978 vol 942 cc1572-4

3. Mr. Gow

asked the Chancellor of the Exchequer what was the total of Government debt on 1st March 1974 and on 1st January 1978; and by how much he estimates that debt interest in the current financial year will exceed that for the year ended 5th April 1974.

Mr. Healey

Government debt outstanding has fallen as a percentage of GDP from 70 per cent. in 1974 to 64 per cent. in 1977. Excluding official holdings, general Government debt was £51 billion at the end of March 1974 and is provisionally estimated at £87 billion at the end of September 1977.

Debt interest payments in 1977–78 on the definitions used in the public expenditure White Papers are expected to be some £1.3 billion more than in 1973–74.

I take this opportunity to inform the House that the Government intend to repay shortly the equivalent of $1 billion to the IMF. A copy of an explanatory notice to the Press is being placed in the Library.

Mr. Gow

Does the Chancellor agree that an increase in the National Debt of 30 per cent. while he has been Chancellor is something of which he ought not to be proud? Will he take this opportunity to tell the House that he will use a substantial part of the revenue from North Sea oil to repay Government debt and also to ensure that the next generation will not be saddled with the profligacy of his Chancellorship?

Mr. Healey

The hon. Gentleman talks about profligacy. I would refer him to the first part of my answer, which shows that Government debt outstanding in 1974 was substantially higher as a percentage of GDP than it is today. The present Government should take credit for reducing the proportion of GDP involved in Government sector debt.

With regard to repayment of debt out of North Sea oil, if the hon. Gentleman looks at the magnitudes involved he will realise what an ill-calculated question that is. If he is referring to our external debts, my own view is that we should during the coming period seek to spread the schedule of repayment of external debts well beyond the date on which our current obligations expire.

Dr. Bray

Can my right hon. Friend say how our repayment to the IMF affects the conditions imposed by the IMF and whether he is planning any further repayment which would finally enable us to escape from the impact of those conditions?

Mr. Healey

The repayment of debt to the IMF in no way affects the commitments which the Government made to the IMF when we negotiated the loan in December 1976. I presume that that is what my hon. Friend is referring to. Those commitments expire the moment the Government decide that they want to dispense with the standby agreement. We shall be considering with the IMF staff in May whether the time has come to cancel that arrangement.

Mr. Cope

Is the Chancellor proud of the fact that, under his management, payments of debt interest on the total public sector debt are for the first time larger than the total expenditure on the National Health Service and personal social services?

Mr. Healey

I am not proud of the debts which in large part I inherited from the previous Administration. [Hon. Members: "Oh."] Oh, yes. I have given the figure, which shows that the debt which I inherited from the last Administration was £51 billion. I hope that the hon. Gentleman is not particularly proud of that figure.

Mr. Ron Thomas

May I ask my right hon. Friend to ignore the pontifications of the militant monetarists on the Benches opposite and listen to what the TUC is saying? It is urging him to inject at least £3 billion into the economy now if we are to have any hope of bringing unemployment down to below the 1 million mark.

Mr. Healey

I never ignore any contribution to general knowledge by any hon. Member of the House. I can assure my hon. Friend that I have taken careful note of the points put to me by the economic committee of the TUC when we met on Tuesday. The results of my deliberations will be made plain when I introduce the next Budget.

Sir G. Howe

Returning to the point made by my hon. Friend the Member for Eastbourne (Mr. Gow), may I ask whether the Chancellor accepts that the real burden of debt interest at the end of last year was 15 per cent. higher than it was at the end of 1974? Does he not acknowledge that the main reason why it has become possible for him to start repaying the IMF debt is the strength contributed to our economy by North Sea oil and not the policies of this Government? Finally, will he accept that the country has every reason to be grateful to the IMF, because without its firm discipline this Government would have taken the country into bankruptcy? We have every reason to be fearful of the prospects of what the Government would do if tomorrow they were free from that discipline.

Mr. Healey

I would agree with the IMF staff rather than with the right hon. and learned Gentleman. The staff pointed out during our discussions some months ago that the staggering turn-round in the performance of our economy, particularly in our performance on inflation, was due to the steps taken by the present Government and the support for the present Government through the patriotism and common sense of our trade union movement—a patriotism and common sense which is consistently derided by hon. Members opposite.