Public Sector Borrowing Requirement

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 27th June 1985.

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Photo of Mr Peter Pike Mr Peter Pike , Burnley 12:00 am, 27th June 1985

asked the Chancellor of the Exchequer if he will make a statement about the funding of the public sector borrowing requirement.

Photo of Mr Peter Rees Mr Peter Rees , Dover

The Government's practice is to finance their borrowing requirement in a non-inflationary way.

Photo of Mr Peter Pike Mr Peter Pike , Burnley

Will the Government, in pursuance of their monetarist policies and their desire to contain the PSBR, make further cuts in public expenditure, or will they sell more public assets?

Photo of Mr Peter Rees Mr Peter Rees , Dover

The Government's policy has always been to maintain firm control over the level of public spending and to maintain it at a broadly constant level in real terms.

Photo of Mr William Clark Mr William Clark , Croydon South

Does my right hon. and learned Friend agree that under the last Labour Government the public sector borrowing requirement as a percentage of GDP increased to 9·2 per cent., while today it is 2 per cent.? Even at 2 per cent. of GDP it is costing the taxpayer £18 billion to service the national debt. Is that not high enough? Would it not be folly to increase the PSBR?

Photo of Mr Peter Rees Mr Peter Rees , Dover

I entirely agree with my hon. Friend's conclusions. As a consequence of the profligate policies of the last Labour Government, the IMF had to intervene to restore us to solvency.

Photo of Mr Richard Wainwright Mr Richard Wainwright , Colne Valley

Does the right hon. and learned Gentleman not understand that the Government's policy of persistently overfunding and borrowing substantially more than public borrowing requires makes nonsense of their claim to the Opposition parties that more borrowing would lead to even higher interest rates?

Photo of Mr Peter Rees Mr Peter Rees , Dover

I think that the hon. Gentleman misunderstands our position. Overfunding is not expansionary. Like previous Governments, we use a mixture of interest rates and funding policy to maintain monetary control.