Clause 1 — initial duties

Part of Oral Answers to Questions — Prime Minister – in the House of Commons at 1:45 pm on 20 January 2010.

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Photo of David Gauke David Gauke Shadow Minister (Treasury) 1:45, 20 January 2010

I am grateful to the hon. Gentleman for his kind words and for raising that issue, because I want to make it absolutely clear that we believe that the structural deficit must be brought down and that a significant part of it must be brought down very quickly. We have said-and it remains our position-that we want to go further and faster than the Government on bringing down the deficit, and we would move earlier.

The hon. Gentleman does not agree, and he is perfectly entitled to that position, but wherever we are in the debate about trying to reduce the deficit, we should focus on the right measure. Whether one takes the view that Governments should spend and borrow more when the economy is slowing down, or that the automatic stabilisers should apply, the wrong measure is to aim at public sector net borrowing. We should focus on the structural element. Indeed, if we read what the Chancellor told the Financial Times, we find that he focuses on the structural deficit. So if the Bill is supposed to reflect Government thinking and, essentially, be Government policy, and the Chancellor talks about the structural deficit, why does the Bill not deal with the structural deficit? Instead, it includes non-cyclical elements.

I should point out that this is not in any way meant as some sort of Government trap. The projections that the Government have made in the pre-Budget report for public sector net borrowing and cyclically adjusted public sector net borrowing suggest that, in both cases, they should meet the targets that they have set out. Borrowing should fall in every year from 2010-11 to 2014-15. In both cases, the deficit will halve from 2009-10 to 2013-14. That does not make the duties more onerous or less onerous, as in both cases they should be met under the Government's own projections. We can have a debate about why we might need to be sceptical about those, but that does not fundamentally change the position.

Of course, the Bill still has huge weaknesses that we will debate over the course of the afternoon, including its lack of an enforcement mechanism and the fact that it is, in many respects, a fig leaf to cover the Government's failure to set out credible spending plans to address the deficit. However, we could at least introduce a relevant measurement, which would partly address some of the concerns about the Bill. We have some scepticism about the Government's actions, but if they are trying to do what they say they are, the amendments would assist them.