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The Economy

I do not think that the hon. Gentleman was listening; I said that I thought it a sensible idea. It is rapidly becoming redundant, of course, because if banks are nationalised, as some of the major ones now are, why would we want to guarantee their loans? That would be the state guaranteeing the state. None the less, the concept is right, and I have supported it and do support it; I hope that it comes into practice as quickly as possible. Let me turn to the issue of public debt. Of course it is right—and the Conservatives are right to stress this—that, looking forward, there is a serious public financing problem. There is a major structural deficit arising from the collapse of income from the City and the housing market, and any Government will face very serious difficulties in reining in public expenditure in those circumstances. However, acknowledging that point is different from arguing that there is a legacy of excessive public debt. The Government can make their own case, but it is simply a matter of fact that at the beginning of this crisis the level of public debt to GDP was less than it was at the end of the golden legacy of the right hon. and learned Member for Rushcliffe (Mr. Clarke). The shadow Chancellor said that such debt was potentially—he was talking about 60 or 70 per cent. of GDP—higher than ever in British history. I have a chart that covers the past 200 years, and it shows that only in the past 30 years have we gone anywhere near 50 per cent. of GDP. National debt has been way in excess of current levels for much of our history. I was brought up during the era of Harold Macmillan; those were my formative years. [Interruption.] Actually, it was quite a good era for Britain; living standards rose. There is a lot to be said for that period of government. Supermac pointed out at the time that we had never had it so good. When he said that, public debt as a share of GDP was more than 100 per cent., twice the current levels. [Hon. Members: "That was because of the war!"] Of course it was an inheritance from the war, but it was not a crisis in itself.