Oral Answers to Questions

George Mudie Excerpts

Tuesday 11th September 2012 Commons Chamber

[Mr Gauke]

I am pleased to say that my hon. Friend is right. Our policy will reduce complexity in the tax system and reduce the need for high marginal rates for pensioners through the taper system.

[Mr George Mudie (Leeds East) (Lab)]

5. What assessment he has made of the implications for his policies of the public sector net borrowing figures in the current fiscal year.

[The Chief Secretary to the Treasury (Danny Alexander)]

Public sector borrowing figures have been higher than expected, primarily because of short-term factors, including lower corporation tax receipts caused by the Elgin shutdown and the lower than expected oil price. With eight months of the year remaining, it is too early to draw conclusions about the year as a whole, but the Government remain committed to returning the public finances to a sustainable path, while allowing the automatic stabilisers to operate in response to the weakness in the global economy.

[Mr Mudie]

The Chancellor boasted in his 2010 Budget speech that the borrowing requirement this year would be £89 billion. The Office for Budget Responsibility is suggesting that the figure will be £120 billion—a 33% overshoot. Can we have an explanation of why the Chancellor got it so wrong?

[Danny Alexander]

The hon. Gentleman, as he knows, is referring to the OBR’s forecasts. Of course, a number of problems in the global economy, not least those in the eurozone, have become more serious since those forecasts were made. I would have thought that he would applaud the fact that our plan is sufficiently flexible to allow the automatic stabilisers to support our economy when there is weakness in the global economy.