Public Sector Borrowing Requirement (Hansard, 15 November 1984)

§ 10. Mr. Wrigglesworth
asked the Chancellor of the Exchequer what is his latest estimate of the public sector borrowing requirement for 1984–85.

§ Mr. Lawson
Approximately £8½ billion.

§ Mr. Wrigglesworth
As we now have the lowest percentage public sector borrowing requirement in Europe and the highest level of unemployment, will the Government direct any adjustments that are made in the tax system towards reducing the cost of labour and increasing the level of employment by, for instance, reducing car tax? Will the Government consider much more sympathetically the CBI's proposals for investment in infrastructure, which would have a much more direct impact upon levels of employment?

§ Mr. Lawson
The hon. Gentleman has asked a curious string of questions. He is wrong about the level of employment. Unemployment, although too high in the United Kingdom, is even higher in a number of other European countries. Secondly, the effect on unemployment of investment in the infrastructure would be slight even in the short term. Infrastructure projects have to be 786 decided on their merits—for example, whether they will earn a proper rate of return. If they will produce that return, they should go ahead. As I have said, I shall frame my next Budget firmly with a view to what, in my judgment, will offer the best prospects of lower inflation and rising employment.

§ Mr. Beaumont-Dark
Does my right hon. Friend accept that we all agree that the PSBR is important, as is keeping down Government borrowing? Does he agree that there would be a danger in directing indirect taxation to energy costs, so raising energy costs to industry and stultifying the recovery that is now taking place in industry?

§ Mr. Lawson
I know that my hon. Friend will be pleased to be reassured that there is no question of any form of tax on energy.

§ Mr. John Morris
How does the Chancellor's recent statement that this has been another good year affect the more than 5,000 unemployed in my constituency, particularly those who have been unemployed for a long time?

§ Mr. Lawson
I share the right hon. and learned Gentleman's concern for those who are out of work. The plain facts are that the vast majority of the people in work are enjoying record living standards, that output is at all-time record levels and that fixed investment is running at an all-time high. I wish that Opposition Members would give a balanced picture of the economy. The Government are ready to acknowledge the acute problems of high unemployment, and we make no secret of that. The Opposition, however, show no readiness to acknowledge that anything could conceivably be going right in the United Kingdom.

§ Mr. Maples
Has the projected over-run in this year's PSBR had any effect on interest rates?

§ Mr. Lawson
It is fairly clear that interest rates are higher than they would otherwise have been. As my hon. Friend will be aware, interest rates went up particularly sharply in July. We have been able to regain most of the lost ground, but interest rates are still higher than they should be. I hope that, before long, they will come down further.

§ Mr. Terry Davis
If the Chancellor can increase this year's PSBR by £1.5 billion to fight the miners, why does he refuse to increase next year's PSBR by the same amount to provide jobs for the unemployed?

§ Mr. Lawson
I think that most people reckon that the cost of keping the power stations going, despite the miners' strike, is well worth incuring. I am afraid that the hon. Gentleman will have to wait until my next Budget to discover what will be done to next year's PSBR. The Government's policy of progressively reducing the PSBR as a percentage of GDP is one which we shall continue and one by which we have secured a continuing fall in inflation and a continuing recovery.