Oral Answers to Questions
Debate between Lord Hammond of Runnymede and Jonathan Reynolds(6 years, 11 months ago)
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Mr Hammond
My hon. Friend is right. Our level of debt is too high, and there is a reason why that matters. In response to the financial crisis in 2009, the then Government were able to allow debt to rise. If we had a similar crisis now—God forbid—we would be struggling to be able to do that, because debt is already very close to 90% of GDP. It is urgently necessary that we get our debt level down to create the headroom that will enable us to deal with any crisis that comes along in the future, whether internal or external.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
It is amazing that the Government should want to plant questions about high levels of borrowing, given that they have missed every single one of their deficit reduction targets, and let us not forget that this Conservative Government have borrowed more than any Labour Government in history. Under Labour’s fiscal rules, we would close the deficit on day-to-day spending over five years, but exclude investment spending from that figure. Given the huge challenges that the country faces in relation to productivity, infrastructure and skills—challenges that he has already mentioned—does the Chancellor not recognise that that is a prudent and sensible way forward?
Mr Hammond
No, and neither do the Opposition. That is why they have already recognised that their plans would deliver the run on the pound for which they are wargaming. I will take no lectures from a party that oversaw a 165% increase in debt, and is proposing to add a further £500 billion to our debt level just when the Government are delivering a reduction in debt.
Oral Answers to Questions
Debate between Lord Hammond of Runnymede and Jonathan Reynolds(7 years, 2 months ago)
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Mr Hammond
No. Of course a Government need to be able to respond to an external shock, but a prudent Government have got the economy in good shape to respond before such a shock arises. The problem in 2008-09 was that the then Labour Government were borrowing tens of billions of pounds at the top of the economic cycle—grossly irresponsibly.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
The major cause of the deficit was of course the collapse in tax revenue following the global financial crisis in 2008, yet that is exactly what we will face again unless there is a transitional deal with the EU to allow our world-leading financial services sector—it contributes £66 billion a year in tax revenue—to operate legally within the single market. As my hon. Friend the Member for Nottingham East (Mr Leslie) has already said, we have been asking the Government all year to confirm that there will be a transitional deal. As today is the penultimate Treasury questions before the end of the year, the last Treasury questions before the Budget, and—if hon. Members have read the papers—perhaps the Chancellor’s last Treasury questions ever, will the Government promise UK-based firms a transitional deal guaranteeing market access before the end of this year?
Mr Hammond
As I have already said, the Government have made it clear—the Prime Minister set this out in the Florence speech—that we want to agree an implementation period as part of a deal with the European Union. We are greatly encouraged by the fact that, at last week’s European Council, the 27 agreed to start internal preparatory discussions on guidelines in relation to an implementation period. We are confident that that will give British businesses confidence that we are going to provide them with the certainty they require.