§ Mr. Kenneth Clarke
The public sector borrowing requirement for 1994–95, was £10 billion lower than in the year before. Government borrowing is falling faster, here in the United Kingdom, than in any other major European economy.
With permission Madam Speaker, I will publish the detailed information requested on other countries in the Official Report.
§ Dr. Spink
Does my right hon. Friend agree that paying taxes is fundamental to keeping down the public sector borrowing requirement and to the financial well-being of everyone in the country? Will he therefore join me in deploring the fact that some of the newly elected Labour councillors on Castle Point borough council are facing committal proceedings—
§ Madam Speaker
Order. That is hardly the responsibility of the Chancellor of the Exchequer. Much as I am devoted to Castle Point, I doubt whether the Chancellor has any responsibility for activities there.
§ Mr. Clarke
I believe that all citizens should pay the taxes to which they are legally liable, properly and on time. I also believe that taxation should be kept down to the lowest possible level consistent with the public spending required to provide good high-quality services.
§ Mr. Enright
Will the Chancellor compare and contrast the differing definitions of public sector borrowing in different countries in the European Union?
§ Mr. Clarke
It is a perfectly fair point, and it is done as part of monitoring the convergence criteria under present arrangements within the European Union. Attempts are made to compare like with like across the European Union. We follow international definitions. The conventions that we follow are recognised to be in line with the best of international practice, and the PSBR figures that we produce are trustworthy and reliable, and show what remarkably good progress we are making in getting our public sector borrowing under control, in contrast to the total failure of the last Labour Government to deal with the public sector borrowing problems following recession when the International Monetary Fund eventually had to sort them out.
§ Mr. Tim Smith
Does my right hon. and learned Friend agree with the European Monetary Institute that continuous efforts towards reducing—[HON. MEMBERS: "Reading."] I am quoting. [Interruption.] I am paraphrasing. Does my right hon. and learned Friend agree that continuous efforts towards public sector borrowing are needed if we are to have a growing 876 economy and improve the supply side? Is it not the case that most European Governments are overspent and over-borrowed and that only the British Government have a clear programme for reducing spending and borrowing as a percentage of national income?
§ Mr. Clarke
My hon. Friend is right. There is a growing international consensus that in current circumstances a low level of fiscal deficits, low inflation and low debt to gross domestic product ratios are essential to keep an economy on course. That is wholly consistent with the policy of the Conservative party over the years. All the members of the European Union are committed to achieving those goals. As I have just said, Britain is reaching them rather faster than any of the major economies on the continent.
Following is the table:
Sources: United Kingdom, 1 March 1995 excessive deficits return; other EU, European Commission forecasts, European Economy November 1994.
Changes in general government financial deficit (GGFD) (as a percentage of GDP) 1Year-on-year change in GGFD/GDP ratio Austria +0.3 Belgium -1.1 Denmark -0.1 Finland -2.5 France -0.2 Germany -0.4 Greece +0.8 Ireland -0.1 Italy +0.1 Luxembourg -0.2 Netherlands +0.5 Portugal -1.0 Spain -0.5 Sweden -1.6 United Kingdom -1.9 1 1994–95 compared with 1993–94 for United Kingdom 1994 compared with 1993 for other EU.