PSBR

HC Deb 28 November 1991 vol 199 cc1062-3

11. Mr. John Evans

To ask the Chancellor of the Exchequer what he estimates the public sector borrowing requirement will be for 1992–93.

Mr. Norman Lamont

The actual PSBR for 1992–93 will be set in the Budget. A working assumption of a PSBR of 3 per cent. of GDP was used to construct the autumn statement forecast.

Mr. Evans

Will the Chancellor confirm that the large increase in the public sector borrowing requirement planned for next year will be to pay for the massive increase in unemployment which has been brought about by his own economic incompetence?

Mr. Lamont

Of the £6 billion increase in the planning total, it is true that £4 billion is for social security, but not all that—indeed, I think that only about £2 billion—is the increase in unemployment benefit. There is another £2 billion for other benefits. There is also a large increase in the financing programmes of nationalised industries. I thought that Opposition Members wanted more investment in infrastructure. That is what they are always telling us and that is what they have got.

Mr. Tim Smith

What would the public sector borrowing requirement be today if it was running at the same proportion of GDP as in 1975–76?

Mr. Lamont

My hon. Friend, remarkably, has those figures at his fingertips. He knows that it was 9½ per cent. of GDP. That would be in excess of £50 billion today. As my right hon. and learned Friend the Chief Secretary pointed out, when the Labour party was in power the fastest-growing item of Government expenditure was debt interest. They would certainly have had no chance of financing their programme without large increases both in taxation and in the borrowing requirement.

Dr. Marek

Will the Chancellor have a word with his Chief Secretary and tell him the facts of life, which are that the burden of taxation is much higher than it was in 1970 when the Labour party was in office? As the Chancellor has decimated British industry, how will he pay for all the public borrowing? Has he a secret agenda to put VAT, for example, on items which bear no VAT at present, such as railway fares, books and periodicals? Has he a secret agenda to increase VAT to 22 per cent? Has he a secret agenda to do both?

Mr. Lamont

The hon. Gentleman's question makes no sense. He asked how we are going to pay for the borrowing. We shall pay for the borrowing by borrowing—that is the normal way in which one pays for it.

Sir Ian Stewart

Does my right hon. Friend agree that if the Labour party implemented even a fraction of the spending priorities that it has been spreading around over the past year or two, to the tune of £30 billion or £40 billion extra expenditure, it would not only have to face the problem of raising taxation, but would have to resort to massive borrowing, which would increase interest rates and greatly damage the economy?

Mr. Lamont

My right hon. Friend is absolutely right. The Labour party seems to have a new-found concern about the level of borrowing, but I must advise the Opposition that if they are serious about that, they could pay for their programme only by increases in taxation. There is no other way.