HC Deb 11 May 1995 vol 259 cc876-8
7. Mr. Connarty

To ask the Chancellor of the Exchequer what is the latest estimate of the Public Sector Borrowing Requirement for the present Budget year; and if he will make a statement. [22231]

8. Mr. Nigel Griffiths

To ask the Chancellor of the Exchequer if he will give his latest estimate of the public sector borrowing requirement. [22232]

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

The Budget forecast of the PSBR for 1995–96 was £21½ billion.

Mr. Connarty

Given that the Bank of England is now calling into doubt the Chancellor's inflation forecast, and that the PSBR outturn was £1.3 billion more in 1994–95 than predicted, how can the British people be asked to have confidence in the Chancellor's predictions for the economy when he is turning into the Michael Fish of Budget forecasting?

Mr. Aitken

The hon. Gentleman is in danger of misrepresenting the views of the Governor, who clearly said today that we are in better economic shape than we have been for a very long time. I hope that the hon. Gentleman will at least acknowledge that the public sector borrowing requirement has been on a good downward trend for some time. It fell by £10 billion last year and is forecast to fall by £14 billion this year.

Mr. Griffiths

Does the Minister accept that the PSBR is being reduced only by imposing more Tory taxes? The latest—the transport tax, which is to take effect from 1 January next year and will add £10 each to some 12 million holidays—is the 21st Tory tax. Why does the Minister not listen to businesses and ensure that those proposals are withdrawn?

Mr. Aitken

The hon. Gentleman ignores the fact that one of the main reasons why the PSBR is falling at a satisfactory rate is that my right hon. and learned Friend and I managed to reduce public spending over the survey period by no less than £29 billion. That is a major contribution to bringing down the PSBR.

Mr. Nicholls

What representations has my right hon. Friend had from the Opposition about the need to reduce public expenditure—bearing in mind that their claim to be elected is now based on the fact that they can be safely elected because they are Tories as well?

Mr. Aitken

My right hon. and learned Friend the Chancellor referred a few moments ago to Opposition Front Benchers as a lot of silent stuffed ducks. That strange characteristic is repeated exactly in the case of my hon. Friend's point about public spending. The Opposition will not tell us whether they want lower public borrowing or what they intend to do about public spending. Away from the Dispatch Box, however, they are still the big-spending party: currently promising to spend more money on income support for 16 and 17-year-olds, on regional assemblies and development agencies, on an emergency employment programme, and on a defence conversion agency, more money from capital receipts, and more money on a growth strategy for Europe. All that adds up to much more borrowing and higher spending. It is about time that they stopped being stuffed ducks and admitted it.

Mr. Batiste

Does my right hon. Friend agree that reductions in public borrowing create resources which can be made available for other purposes? As the Opposition have called repeatedly for increased spending on education and hospitals, can my right hon. Friend think of any recent occasion when they have offered support for creating the economic circumstances that will make that possible?

Mr. Aitken

I can think of no such example. I have listened to wave after wave of sound bite waffle emanating from the Opposition, and I am longing to hear a single constructive fact or proposal from them. They have indeed been well named the stuffed duck Front Bench by my right hon. and learned Friend the Chancellor.

Mr. Mike O'Brien

Will the Minister confirm that, in 1994, public borrowing as a percentage of gross domestic product was higher in the United Kingdom than in any other European Union country, with the exception of Italy, Greece and Spain? Will he further confirm that that imprudent situation was dealt with only by the Government imposing on the typical British family extra taxes of £800, in breach of the Government's election promises?

Mr. Aitken

The hon. Gentleman draws a one-sided and erroneous picture. In fact, the British Government's borrowing is falling faster than that of any other major European country. Among European Union countries, we have the lowest general Government debt-to-GDP ratio, with the exception of Luxembourg. So our record on public borrowing is good by European standards.