What recent assessment his Department has made of the extent to which levels of public debt and borrowing comply with the Government's fiscal rules.
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Yesterday, the OECD warned that the Government's Budget deficit will exceed 3.5 per cent. of national income. It stated that
"these figures suggest that the sustainable investment rule could be breached in 2009" and it blamed the Treasury's "excessively loose" fiscal policy over the past 10 years. Does the Chancellor agree that it would be entirely wrong to blame him for this situation, when responsibility so clearly rests next door?
The discipline that we imposed on ourselves almost 10 years ago has served our country well. Among other things, it has enabled us to make up for the huge lack of investment in the transport system, education and health. As a result, we are now able to spend far more in investing in those services, which help each and every one of us.
In relation to what the hon. Gentleman says, as I said to the shadow Chancellor earlier, the Opposition would have far more credibility on this issue if it were not for the fact that, for the past few years, they have been calling not for less but for more public expenditure on every possible occasion, without being able to show how they would pay for it. So our rules are right and they have ensured that we have been able to make up for a massive backlog in public investment. That would never have happened under a Conservative Government.
As I said, the rules provide us—and, indeed, any Government—with the right disciplines to ensure that, over the cycle we borrow to fund investment and that we keep debt at a sustainable level. The fact that our debt levels are historically low is hugely beneficial to us, especially at the moment.
The Prime Minister has criticised banks and other institutions for carrying assets and liabilities off balance sheet, thus giving a misleading impression of their financial health. Does it matter that if the Government included their own off-balance-sheet liabilities, such as Northern Rock and private finance initiatives, they would be carried way through the fiscal rules?
I am not sure that the Conservative party policy at the moment is to argue seriously that we should take Northern Rock on to the balance sheet. If we did that and applied the rules on the back of that, it would distort the economy, especially at the present time. It would make no economic sense and no sense whatever. I find it hard to understand why the hon. Gentleman is arguing that.