HC Deb 10 December 1992 vol 215 cc989-90
9. Mr. Hall

To ask the Chancellor of the Exchequer what are his latest proposals to help the United Kingdom meet the convergence criteria on Government deficits as laid out in article 104c of the treaty of Rome proposed under the Maastricht treaty.

Mr. Portillo

The Government are determined to return their budget towards balance as the economy recovers. On the expenditure side, the autumn statement set out firm plans for public expenditure to grow over the medium term at a rate within the average rate of growth of the economy. This will help to ensure that fiscal policy remains consistent with the requirements of article 104c.

Mr. Hall

The Minister will be aware that in my constituency of Warrington, South there are 4,139 people out of work and claiming benefit. Does he agree that the convergence criteria of the Maastricht treaty represent the economic agenda of the 1980s, which was a deflationary agenda, and do not meet the needs for growth of the 1990s? Will he therefore give a commitment that he will place at the top of the Government's agenda the eradication of the fear of unemployment?

Mr. Portillo

I believe that the Government's policy on spending and borrowing is appropriate to the 1990s. The Government have allowed for the extra spending required during the recession to meet additional Government obligations in respect, for example, of the unemployed. None the less, the Government cannot borrow on the never never and it is extremely important that our borrowing should he reduced as the economy recovers. That is why it is our determination that the budget will return to balance as the economy recovers.

Mr. Brazier

I welcome my right hon. Friend's commitment to meet the convergence criteria on the fiscal side by moving our budget into balance, but we should reconsider the full-funding rule. We have substantially lowered the price of money, but we need to increase its availability by easing the liquidity in our over-tight banking system.

Mr. Portillo

I know that that is my hon. Friend's view. He will know that my right hon. Friend the Chancellor of the Exchequer is following a full-funding policy. That is the clear policy of the Government.

Mr. Denzil Davies

Is it not a fact that the convergence criteria in the Maastricht treaty are a recipe for deflation, depression and higher unemployment in Europe? Is there not a contradiction between support for the Maastricht treaty on the one hand and calls for a co-ordinated European policy of economic growth on the other? After all, one cannot worship God and mammon at the same time.

Mr. Portillo

I am extremely surprised that the right hon. Gentleman believes that the ambitions to bring down rates of inflation and interest rates and to keep tight control of national debts and borrowing are to be regarded as in some way harmful policies. If we were to allow our borrowing to get out of control, it would mean that year by year more and more public spending would be pre-empted by debt interest payments. and less and less would be available for priority public spending programmes. I cannot believe that that is what the right hon. Gentleman seriously wants.