Oral Answers to Questions

John Stevenson Excerpts

Tuesday 21st June 2011 Commons Chamber

[Mr Gauke]

For a moment, the hon. Lady got quite close to supporting the policy the shadow Chancellor announced last week, but she did not quite do so. The fact is that the Bank of England says the main causes of inflation are to do with the devaluation and rising global commodity prices. That is the truth; that is the reality—[Interruption.] Well, that is what the Bank of England says, and I suspect it has a bit more expertise than the hon. Lady.

[John Stevenson (Carlisle) (Con)]

5. What recent estimate he has made of the size of the structural deficit.

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

The independent Office for Budget Responsibility published its latest forecast on the structural deficit in the March economic and fiscal outlook. The OBR forecast shows the structural deficit was 7.4% of GDP in 2010-11.

[John Stevenson]

I thank the Minister for that answer. Does he agree that one of the main reasons we are experiencing financial difficulties and the large budget deficit is the simply that for a number of years prior to the recession the Labour Government were borrowing money while other, prudent economies were repaying debt, and that has exacerbated our problems now?

[Danny Alexander]

I am grateful to my hon. Friend for that question, and he makes an important point. This country was running a structural deficit from 2002 onwards, so his analysis is exactly right. However, that was not the only problem with the previous Government’s policy, of course; another was their abject failure to regulate the banks and deal with the financial system. That is a further major cause of the problems we face.