The 2004 Budget set out the detailed Government forecast for the public finances up until 2008–09. These showed that the Government are on track with our borrowing figures to meet both our strict fiscal rules over the economic cycle.
The Governor said that the automatic stabilisers had worked during a period of a world downturn, so when tax revenues were lower and social security needs were higher, borrowing was higher. That is, after all, what has happened in every country around the world. The only difference is that our levels of borrowing are lower than those in most other countries. The Governor of the Bank of England said that he supports the fiscal discipline that we have shown over the past seven years.
My constituents are delighted that we are enjoying the longest period of sustained economic growth on record and the longest sustained investment in public services for a generation. In the light of that fantastic economic success, how do debt levels under this Government compare with those under the last Conservative Government?
My hon. Friend has been powerful in her advocacy of both international aid to be raised and the scientific community to be given the money that is necessary to invest in this country's future. I cannot think of anything on which there is greater consensus than the issues of investment in science, infrastructure and transport. Only one group is outside the consensus—the modern Conservative party.
As for debt levels, the Conservative party talks as if there were some golden years a few years ago, but borrowing went up to the equivalent of £80 billion and debt was at 44 per cent. of gross domestic product. We have reduced that to 34 per cent. of GDP, one of the lowest rates in the industrialised world.
Will the Treasury make up the difference that will result from the loss of European Union structural funding to the United Kingdom regions post-2006? If so, will that add to borrowing requirements?
We are committed to no loss for the regions as a result of any changes, although they have not yet been decided in the structural funds. It is interesting, however, to hear a Conservative Member advocate more public spending by the Government. How does the hon. Lady square that policy with that of the shadow Chancellor, who wishes to cut spending on trade and industry and regional development, while also cutting spending on defence, law and order and international development? Perhaps the shadow Chancellor can tell us how he will add up his figures?
I am grateful to my hon. Friend, who is a distinguished member of the Treasury Committee, for that question. The neglect of investment under the Conservative Government was such that there had to be, and still has to be, a major programme of investment in health, education and transport. Members of the Conservative party know perfectly well from their constituencies about the need for new investment. Entering a general election with a pledge card of "Cut defence, cut law and order and policing, cut international development, cut science and transport spending, and put all the money from the NHS into private health care" is not a winning formula for the Conservative party.
Our public spending programmes are properly funded. In fact, because of our economic success, the choice that we had in the Budget was whether to cut taxes or to put money into public services. We decided—rightly, in my view—to put the money into the public services that desperately need it. The shadow Chief Secretary talks about the difficulties that the economy faces. Will he confirm that his view is still the one that he expressed just a year and a half ago when he said that we were facing an economic crisis, analogous to the 1930s?
I am pleased that my right hon. Friend has placed great emphasis on the need for public investment in the future of our country, to make up for the damage caused by the Tories. Given that we now have an historically low, and internationally low, level of public borrowing, is there not scope for my right hon. Friend to relax his constraints on public borrowing for investment purposes and for him to replace some private investment with public investment, to the benefit of the Treasury?
No, we are going to keep to our fiscal rules. I believe that the country will support a Government who not only set fiscal rules that make sense of what should happen in an economy over the cycle but meet those fiscal rules. Of course we will get the balance right between private and public investment. Net public investment was 0.8 per cent. of gross domestic product when we came into power and it is now above 2 per cent. of GDP, so we are investing more in the future. I am really surprised that the shadow Chancellor, who has now put forward all his proposals on public expenditure, cannot even come to the Dispatch Box to answer questions about them.