HC Deb 08 November 1979 vol 973 cc599-600
8. Mr. Adley

asked the Chancellor of the Exchequer why he deems it necessary to equate national expenditure with national income.

Mr. Lawson

Any attempt by the nation to spend above its income is likely to lead either to a worsening current balance of payments and higher overseas debts or to a lower exchange rate and faster inflation. Neither is a viable course in the long run.

Mr. Adley

Has not my hon. Friend merely identified the situation that pertained when the Government took office, namely, that the previous Government were spending more money than the nation was earning? Does he agree that most people dislike the taste of the medicine as it goes down but know perfectly well that what the Government are doing is the only means of reversing the economic course upon which the previous Government set the nation?

Mr. Lawson

The answer is "Yes, Sir".

Mr. Skinner

Does the Minister recall that under the previous Administration some of us below the Gangway advocated that the PSBR should be equated, in percentage terms, to the gross national product, taking into account inflation? We argued that the rise in PSBR should be calculated on that basis. Since PSBR will rise again this year, and thus fail to pacify Tories both in Parliament and in the country, may we have a categorical assurance that the Chancellor and his fellow Ministers will not use the argument about calculating PSBR as a percentage of the GNP?

Mr. Lawson

The hon. Gentleman was a persistent critic of the previous Government. I know of his keen interest in the public sector borrowing requirement. As my right hon. and learned Friend the Chancellor of the Exchequer has said, we shall make an announcement about the PSBR for the forthcoming year at the appropriate time.