Prime Minister's Questions

During Prime Minister's Questions, Shailesh Vara challenged the Government over its U-turn on the Prime Minister's earlier Party Conference commitment that "we will not build the new Jerusalem on a mountain of debt".

Mr. Shailesh Vara (North-West Cambridgeshire) (Con): In his speech to the Labour party conference in 1996, the Prime Minister said:

"we will not build the new Jerusalem on a mountain of debt".

Why have the Government changed their mind?

Ms Harman: One of the biggest misapprehensions that the Opposition have been peddling is on the question of debt, and I want to address that. When we came into government, our debt as a percentage of gross domestic product, according to the International Monetary Fund figures, was 43 per cent. We paid that off year by year, taking it down to 37 per cent. We acknowledge that now we need debt to rise; we do not resile from that. If debt is not allowed to rise, and we cannot take the action that is necessary to back up the economy, there will be even more debt in the longer term, as a result of the bills for failure and for unemployment benefit. How can the hon. Gentleman's party put forward proposals for a so-called national loan guarantee scheme while saying that it would cut public spending and not allow debt to rise? It simply does not add up."