Rishi Sunak insists debt is 'on schedule' to fall despite minister's confusion

09 February 2024 , 12:52

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Prime Minister Rishi Sunak says the country's debt is "on schedule" to fall" (Image: PA Wire/PA Images)

Prime Minister Rishi Sunak says the country's debt is "on schedule" to fall, after a senior Treasury minister seemed to faulter when she was questioned about the same thing.

He expressed his belief that "economic conditions are improving" when asked about the Government's view of the public finances. According to the Office for Budget Responsibility's forecast last November, debt excluding the Bank of England will rise as a portion of national income from 89% in 2023/24 to 92.8% in 2028/29.

But ministers stand firm that it's shrinking as a share of GDP since then, despite warnings that this could be misleading. In an interview on Thursday, chief secretary to the Treasury Laura Trott had to face tough questions after repeating the claim.

After hesitating, Ms Trott seemed to begin saying "I'm not sure", which led BBC Radio 4's PM presenter Evan Davis to reply: "This is really basic... I'm amazed that you don't know that debt is rising."

When asked how people can have faith in the economy following the senior Treasury minister's comments, the Prime Minister reassured broadcasters: "Debt is on schedule to fall as measured by the independent Office of Budget Responsibility, which they've affirmed at the last autumn statement that the Chancellor gave."

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"But our plan for the economy is working inflation has come down from 11% to 4%. Mortgage rates are starting to come down, wages are rising and because economic conditions are now improving, we've been able to start cutting people's taxes."

There are different ways to measure debt public sector net debt (PSND) and public sector net debt excluding the Bank of England (BoE), with the latter usually used by the Government. The forecast says that PSND will drop by around 4% as a share of GDP over the next five years. However, the underlying debt excluding the state bank is expected to rise by around 4% in the same period.

PSND excluding the BoE is predicted to drop slightly at the end of the five-year projection from 93.2% in 2027/28 to 92.8% but this still means it would be higher than it is now. The Prime Minister's claim on Friday that debt is "on schedule" to fall is slightly different from what he said last November, when he claimed it had already reduced.

The UK statistics watchdog criticised his previous remarks, saying they "may have undermined trust in the Government's use of statistics and quantitative analysis in this area". Chairman of the UK Statistics Authority, Sir Robert Chote, said the average person "would likely have assumed that he was claiming that debt was already falling or that the Government's policy decisions had lowered it at the fiscal events neither of which is the case".

Labour has said that it's "terrifying" that people unaware of "the basic facts" are managing the nation's funds. Ms Trott’s opposite number, Darren Jones, said "The Tories have crashed the economy and doubled the national debt over the last decade.

"This evening we discover that Laura Trott, Jeremy Hunt's number two, doesn't even know the basic facts of her job. It's terrifying to think these people are not just in charge of the country's finances, but still think they can lecture anyone else."

Lawrence Matheson