Orders of the Day — Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 5:21 pm on 3 December 1996.

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Photo of Kenneth Clarke Kenneth Clarke The Chancellor of the Exchequer 5:21, 3 December 1996

The right hon. Gentleman is right to say that we have often referred to the Prescott option when considering borrowing for capital finance—but we regard what he used to advocate for railway rolling stock and so on simply as borrowing. He could never see why the Government could not just borrow to buy such things.

The private finance initiative is a little more complicated than that. It involves risk transfer from the public to the private sector, in a way far removed from the original Prescott option. Labour Governments were good at borrowing, and no doubt would be again—but the kind of borrowing that the right hon. Gentleman advocates is the kind that gets countries into crisis. Indeed, it is the kind that he was criticising five minutes ago.