Public Sector Borrowing Requirement (Hansard, 25 May 1978)

§ 12. Mr. Ian Gow
asked the Chancellor of the Exchequer what is his latest estimate for the public sector borrowing requirement for the year ending 5th April 1979.

§ 14. Mr. Ridley
asked the Chancellor of the Exchequer what proposals he has to restore the borrowing requirement to the amount intended in his Budget statement.

§ 16. Mr. Canavan
asked the Chancellor of the Exchequer whether he will make a statement about his future policy in view of amendments which have been made to the Finance Bill.

§ Mr. Healey
In my Budget Statement I estimated that the public sector borrowing requirement would not exceed a figure of £8½ billion. I shall be watching the growth of the PSBR closely throughout the year. If at any time it should prove necessary to take corrective action to maintain the £8½ billion limit, as a result of the Opposition's amendments to the Finance Bill, or for any other reason, I shall not hesitate to do so.

§ Mr. Gow
Is it not becoming increasingy clear that a borrowing requirement of £8,500 million is dangerously high, that it will lead to an accelerating rise in interest rates, and that it pre-empts resources from the job-creating and wealth-creating sector on which the Chancellor ought to be concentrating?

§ Mr. Healey
I know that the hon. Gentleman sincerely takes that view, as do some of his hon. Friends, but I. was criticised by the Opposition for producing a ridiculous mouse of a Budget, and the hon. Gentleman himself has voted for amendments to the Finance Bill which increase the public sector borrowing requirement. I wonder how he reconciles that with his conscience and with the views which he has just expressed.

§ Mr. Ridley
Is the reason why the Chancellor will not reduce the public sector borrowing requirement—whether the level be caused by over-optimism on his part or by the fact that he has lost control of the House of Commons to deal with his tax proposals—that he is frightened that to increase indirect taxation or cut spending might be electorally unpopular, although that is the right thing to do in the national interest?

§ Mr. Healey
I am slightly baffled by the hon. Gentleman's attitude. He, too, is a great insister on fiscal purity and keeping the public sector borrowing requirement down, but he voted for increases of nearly £500 million in the PSBR. I have no intention of being stampeded into panic measures by his current shame at his past irresponsibility.

§ Mr. Jay
Have not all the Opposition amendments to the Finance Bill had the 1738 effect of increasing the borrowing requirement?

§ Mr. Healey
Yes, Sir, but I fear that the contrast between the Opposition's actions and their words, as typified by that behaviour, is characteristic of their behaviour in almost every field.

§ Mr. Lawson
As the Chancellor has already said in his new Letter of Intent to the IMF that he will not allow an increase in the borrowing requirement over £8½ billion, it implies that he will cut public expenditure by £½ billion this year or find other increases in taxation of £½ billion. Which will it be? Will the right hon. Gentleman please stop dithering and tell the House now?

§ Mr. Healey
If the hon. Gentleman had managed to keep the tremolo out of his voice when he asked that question, he would have been more credible in asking me to stop dithering.
If I may quote back at the hon. Gentleman what he told me in the debates on the Finance Bill, there is an average margin of error of £2 billion in estimates for the PSBR. That is why Governments find it necessary to monitor the development of revenue and spending throughout the year to determine what action is required in order to ensure that a limit is not exceeded.