HC Deb 30 March 1995 vol 257 cc1169-70
4. Mr. Spellar

To ask the Chancellor of the Exchequer what is his latest estimate for the public sector borrowing rate for this financial year. [15278]

The Chief Secretary to the Treasury (Mr. Jonathan Aitken)

We anticipate that the PSBR for 1994–95 will be in line with the Budget forecast of £34.5 billion.

Mr. Spellar

I am not surprised that the Chief Secretary did not want to elaborate on that answer. This is one of a long series of deficits: under the current Prime Minister, the national debt has almost doubled, from £155 billion to £285 billion. Are not the Government living on tick?

Mr. Aitken

My reply to the hon. Gentleman is that people and parties living in glass houses should not throw stones—[HON. MEMBERS: "Oh!"] Let me remind him that under the last Labour Government the PSBR averaged 6.8 per cent. of GDP, reaching 9.4 per cent. at one stage. That was the moment at which the bailiffs had to be called in, in the shape of the International Monetary Fund. Under the present Government, the PSBR has averaged 2.75 per cent., and we are on track to eliminate it completely before the end of the decade. Our Government are a Government of good housekeeping, and they are doing well in reducing public borrowing.

Mr. John Townend

As a believer in a balanced budget, my right hon. Friend will appreciate my pleasure in congratulating him on the speed with which the PSBR is falling. Does he agree, however, that the best way to bring it down in the future is to cut spending rather than increasing taxation? Will he launch a crusade against waste, overmanning and extravagance in the public sector at both local and national level?

Mr. Aitken

I am certainly willing to join my hon. Friend in his admirable crusade. Indeed, we have already made progress. I remind my hon. Friend that in the last Budget my right hon. and learned Friend the Chancellor announced cuts in public spending which have reduced our spending plans for the next three years by £29.5 billion. That included a great deal of rooting out waste and cutting unnecessary bureaucracy: for example, Government running costs over the next three years have been reduced by 10 per cent. in real terms, and we now have the smallest civil service since 1939. We are progressing in the direction that my hon. Friend recommends.

Mr. Harvey

If the Government's determination to reduce excessive borrowing is the reason why they are going ahead next week with tax rises equivalent to 1p on the basic rate, and if it is responsible and necessary to put taxes up next week, could it possibly be responsible to bring them down again in November?

Mr. Aitken

The PSBR reduction has been a difficult process involving tax rises as well as spending cuts. The PSBR is now on a virtuous downward path. The Government would very much like to return to their core belief of reducing taxes and we shall do so as soon as it is prudent and right to do so.

Mr. Congdon

May I congratulate my right hon. Friend on his success in reducing the PSBR and urge him to continue his efforts to reduce public spending, which is still too high? Does he agree that people—and not the state—know best how to spend their money?

Mr. Aitken

I could not agree more with my hon. Friend. The crusade that has been announced by one Back Bencher this afternoon is gaining recruits fast. It is essential that we reduce public spending to allow more money to be kept in the pockets of our citizens and taxpayers.

Mr. Andrew Smith

Given the importance of the right hon. Gentleman's responsibilities for the PSBR, and the importance of his office, does he believe that he now has the confidence of the country?

Mr. Aitken

Yes, I do, and I believe so because the facts are clear. I welcome this opportunity to reiterate them, since the hon. Gentleman has challenged me. Let me make it crystal clear that at no board meeting of the company that I was on the board of seven years ago, and in no board paper of that company, was I ever given the slightest indication or information which could suggest that the company's wholly legitimate contract with Singapore might subsequently result in components being shipped to Iran. My view of these matters has now been publicly supported by four former directors of the company, including General Isles, who was responsible for the contract, and the managing director, so the deposed and bitter chairman is now isolated on his own in making irresponsible comments. What we are seeing is an unholy alliance of a failed chairman and a failing newspaper: it is no reason to challenge my integrity or my position in the Government.