My Lords, between 2009-10 and 2013-14, public sector net borrowing fell from £157.3 billion to £107 billion, or from 11% of gross domestic product to 6.6%—a fall of more than a third. The independent Office for Budget Responsibility forecast in March this year—2014-15—that underlying public sector net borrowing will fall to £95.5 billion, or 5.5% of gross domestic product, half its peak in 2009-10.
Does my noble friend agree that the reduction in the deficit over the past four years has been crucial in generating economic growth and employment? Does he also agree that it is therefore vital that the deficit reduction programme continues? Can he give the House some indication of when we might expect the deficit to be eliminated and the nation’s finances returned to balance?
My Lords, on the current forecast we expect there to be a surplus in 2018-19. At the moment, as my noble friend points out, the economy is growing; we are the fastest growing economy in the G7 in the year to Q1 2014. The most recent employment figures showed that in the past year employment had risen by 780,000 and the claimant count had fallen by 406,000.
Do not the figures used by the Minister somewhat obscure serious facts about the years to which he referred? In the last four years of the Labour Government, including the crisis years 2008 to 2010, total net borrowing was £329 billion, while in the four years of the current Government total net borrowing has been £104 billion higher at £433 billion. Is not that rise in borrowing over those years a very serious indictment of government policies which have actually retarded growth, increased inequality and shrunk the economy? Is it not time for the Minister to offer something of an apology, rather than a pat on his own back?
My Lords, it is an indictment of the previous Government. In the first year that we were in office, £1 of every £4 spent by Government was borrowed. That was completely and utterly unsustainable, and that is why we are sorting things out.
My Lords, will my noble friend be very careful and encourage others to be careful in their use of the expressions “borrowing”, “deficit” and “debt”? The ghastly facts before us show that debt is rising remorselessly, and it will be, as he has said, some time yet before the enormous pile of debt incurred by the previous Labour Government can be brought under control and reduced?
My Lords, I agree with the noble Lord. The relationship between debt and GDP is set to rise for a number of years more, even as we continue to reduce the deficit.
My Lords, given that the Minister answers for the whole House, and given that this Question is about savings and the economy, can he please tell us why a Statement has not been made to the House, yet the Prime Minister spoke this morning at the Farnborough air show about budgetary savings that have led, apparently, to extra expenditure on counterterrorism and cybersecurity? The Prime Minister said that these were very important announcements, and they were indeed. Should they not have been made to Parliament?
My Lords, there are always questions when statements are made outside the House as to whether they should have been made inside the House.
If the noble Baroness is concerned about it, she of course has the option of asking an Urgent Question.
My Lords, is the Minister prepared to take this opportunity, in view of the questioning, to move from the short to the long-term and comment on last week’s report by the Office for Budgetary Responsibility, which states that by 2050 the public sector borrowing requirement will be more manageable than it would have been were it not for the actions of the coalition since 2010?
Yes, my Lords; my noble friend is absolutely right. The report to which he refers demonstrates two things: first, with an ageing population, there will over a long period be significant pressures on the public finances, everything being equal; secondly, that a number of steps which have been taken with cross-party support, such as raising the retirement age, are making those long-term additional burdens more acceptable and possible to deal with in a sensible fiscal framework.
My Lords, did not the Government promise in 2010 to balance the books by 2015, and is it not now the case that they will be lucky—well, they will be out of office, but they would have been lucky—to have balanced the books by 2018? Is the Minister aware that in the early months of this year borrowing was £2 billion higher than in the same period last year? So it is not getting better.
My Lords, it is getting better. It has got better in the year up to now. The OBR says that we are on track to reduce borrowing during this year. As the noble Lord knows, there were substantial economic headwinds from the euro area crisis, high commodity prices and the ongoing impact of the financial crisis. I am not sure whether he is really proposing that we should have cut the deficit more quickly by cutting public expenditure further or putting taxes up.