Public Borrowing (Hansard, 15 December 1994)

§ 3. Mr. Gallie
To ask the Chancellor of the Exchequer what assessment he has made of the likely effect on the economy of a continuation of public borrowing at current rates.

§ The Chief Secretary to the Treasury (Mr. Jonathan Aitken)
The Government have taken firm action to reduce public borrowing. That should ensure sound public finances and the strengthening of the UK's economic recovery.

§ Mr. Gallie
I thank my right hon. Friend for that answer. Is he aware of the recent successes by Jetstream Aircraft of Prestwick in selling Jetstream 41s overseas? Does he consider that the reduction in our long-term borrowings will assist future exporters?

§ Mr. Aitken
I am indeed aware of the considerable successes in the export market of the Jetstream company in my hon. Friend's constituency. It recently sold aircraft to South Africa and to Korea, both of which are new markets for that company. It is part of the mounting success of Britain's exports, which are at the record level of a 14 per cent. increase this year.

§ Mr. Malcolm Bruce
What is the Government's policy on future borrowing? Does the right hon. Gentleman have a view on whether, on the upturn of the cycle, the 1056 Government should eliminate borrowing, or is it his and the Chancellor's intention to ensure that Government debt continues to increase even when the cycle is on the upswing? Will he make a clear statement on the Government's plans for borrowing? Do they believe in a balanced Budget?

§ Mr. Aitken
The hon. Gentleman should study the Red Book, where all those matters are set out in some detail. In general terms, it continues to be our policy to reduce public borrowing in accordance with the graphs and curves set out in the Red Book, and that will remain our policy.

§ Mr. Congdon
Does my right hon. Friend agree that only by taking a tough approach to public spending has it been possible significantly to reduce the public sector borrowing requirement and, at the same time, to achieve an impressive 4 per cent. economic growth? Does he also agree that that is in stark contrast to the Opposition, who urge more and more spending and do not have a clue how they would reduce the PSBR?

§ Mr. Aitken
My hon. Friend is entirely correct. As usual, the silence from the Opposition on those subjects is absolutely deafening and embarrassing. They will not say at what level they intend to reduce public borrowing or whether they intend to reduce it at all. In more general terms, sound public finances are absolutely central to the economic recovery, which is going well, with growth rates of more that 4 per cent. I am grateful for my hon. Friend's endorsement of our successful recovery.

§ Mr. Andrew Smith
While the Chief Secretary to the Treasury has the graphs and curves from the Red Book in mind, will he confirm that, on debt interest alone, the Government propose to spend £35 billion extra over the next five years, compared with what they spent over the past five years? Is the projection in the Red Book for 1996–97 of a PSBR of113 billion a firm target? If that is not a firm target, what is his target?

§ Mr. Aitken
All targets are intended targets, and we are aiming for them, so there is nothing different about that. I am delighted that the hon. Gentleman is at last taking a serious interest in reducing public debt. The cost to the taxpayer of gross debt interest payment is almost £1,000 a household. Therefore, at long last, after the embarrassing silences from the Opposition, we are glad to have a signal that they are interested in reducing public borrowing. That is a first for Labour.

§ Mr. Brazier
Will my right hon. Friend confirm that the welcome reduction in borrowing will help to ensure that we continue to have one of the lowest absolute levels of borrowing as a percentage of gross domestic product of any country in the developed world? However, at a time when private sector borrowing is falling, I urge my right hon. Friend to be very chary about further rises in interest rates.

§ Mr. Aitken
My hon. Friend is quite right to commend Her Majesty's Government for their good record on steadily reducing public borrowing, which has halved in two years and which is exemplary compared with that of many other nations. As he knows, Treasury Ministers do not comment on rises or falls in interest rates, but I have listened carefully to his advice.