National Debt (Hansard, 16 January 1997)

§ 7. Mr. Spring
To ask the Chancellor of the Exchequer if he will make a statement on the ratio of national debt to gross domestic product, relative to those of other EU member states. [9522]

§ The Chief Secretary to the Treasury (Mr. William Waldegrave)
The United Kingdom's ratio of gross debt to gross domestic product at 53.75 per cent at the end of March 1996 is one of the lowest ratios of general Government gross debt to GDP in the European Union.

§ Mr. Spring
Does my right hon. Friend agree that his answer simply serves to underline the British economy's stunningly good performance relative to that of the rest of Europe? Will he confirm that our ratio also compares well with those of Japan and the United States?

§ Mr. Waldegrave
The country's debt figures represent a main source of pride for the Government. We must consider what has happened during the past 20 years. In 1970, we had the worst debt to GDP ratio of the big countries in Europe. In 1975, we were still the worst performer. We began to catch up in the 1980s and in 1996 we were the best performer. I confirm the accuracy of my hon. Friend's comments about Japan and the United States: we have a lower debt to GDP ratio than both of those countries.

§ Mr. Geoffrey Robinson
Will the Chief Secretary confirm that national debt has doubled under the present 447 Prime Minister and now costs every taxpayer about £1,000 a year? Does he agree that that represents a disgraceful mismanagement of the country's finances?

§ Mr. Waldegrave
The hon. Gentleman makes a silly point. The base year of 1990 saw the lowest level of national debt since 1915, when the Liberals joined the national coalition and began to finance the war by borrowing. It was not until 1990 that we had debt under control again. Another way of putting it is that, in 1990, we had by far the lowest debt level of any western country. That enabled us to look after public services during the recession and, at the end of it, still have the lowest debt of any big European country.

§ Mr. Yeo
Will my right hon. Friend confirm that if the European countries that are hoping to form the first wave of a single currency were able to meet the debt to income ratio required by the convergence criteria only through a gross fudging of their financial accounts, that would be an unsustainable basis for a single currency and it would be highly desirable for this country to have no part of it?

§ Mr. Waldegrave
My hon. Friend is entirely right. If countries were to think it wise to try to join a single currency by using accounting devices that counted for one year only, they would join an ultimately unstable single currency. I am sure that that will form part of the judgment that Ministers take in the Council of Ministers at the appropriate time.

§ Mr. Malcolm Bruce
Will the Chief Secretary acknowledge that, under the present Prime Minister, British national debt has risen faster than that of any other member state in the European Union except Germany, which is coping with reunification? Against that background, and as the Conservative and Labour parties have pledged to reduce or abolish taxation, there is a natural question in the minds of the electorate about how they will keep debt down without introducing other measures of taxation. We want an exchange, not of insults, but of information regarding exactly which taxes Labour and the Conservatives will put up.

§ Mr. Waldegrave
The hon. Gentleman is right to contrast the approaches of the Government and the Opposition. The Government will maintain low tax and debt burdens by controlling expenditure. There is not the slightest chance of the Labour party's doing that.

§ Mr. Wilkinson
Is not it remarkable that this country probably nearly meets the convergence criteria for joining the single currency but, according to polling data in The Daily Telegraph, is the country most vehemently opposed in principle ever to joining the single currency? Is not it a fact that good management of the economy, as evidenced by the statistics on national debt, is a good in its own right to be pursued in the interests of the British people, not the interests of creating a single currency in which they have no confidence?

§ Mr. Waldegrave
My hon. Friend is exactly right. The policies that my right hon. and learned Friend the Chancellor has been following are right for the economy and are pursued because they are right for the economy. One of the things of which the Government can be proud 448 is the fact that we will have an entirely free choice, thanks to the Prime Minister's opt-out, about whether to go into a single currency. The economic strength of the country will mean that we shall be able to choose on the basis of wider considerations.