Economy: Deficit Reduction

Lord Blackwell Excerpts

Thursday 15th December 2011 Lords Chamber

[Lord Sassoon]

My Lords, the Government are on track to meet the fiscal mandate which was set by my right honourable friend the Chancellor. The mandate requires the Government to bring the cyclically adjusted current balance into balance at the end of five years. The Opposition may not like it but that fiscal rule means that there is an ability for us to be flexible in the face of very difficult economic conditions; it means that we can preserve the infrastructure expenditure, which is so important, to underpin long-term growth; and it means that the automatic stabilisers can operate. If the noble Lord, Lord Barnett, is suggesting that we should abandon all of that, I wonder what his policy would be.

[Lord Blackwell]

My Lords, does my noble friend accept that the primary reason for our current deficit is the fact that public expenditure as a percentage of GDP grew from less than 40 per cent to close to 50 per cent in the first 10 years of this century? Will he confirm that the Government’s primary focus is therefore to get public expenditure back down below 40 per cent, where it can be supported by an affordable level of taxes?

[Lord Sassoon]

I certainly agree with my noble friend that we inherited the worst peacetime deficit situation that this Government have ever known, and that getting the budget back into balance is indeed the priority of this Government.