---

Finance Bill

I am grateful for that intervention, as it takes me nicely on to the issue of the magnitude of the problem. The NIESR says that there is a real possibility that GDP will fall more this year than in 1931, stating:""The pace of decline to date shows a remarkable resemblance to that of the depression of the early 1930s."" That is bad enough, but if the governing party and those responsible for managing the economy acknowledged that we face such a dire GDP situation and that the scale of the problem in general is so great, we Conservative Members would have some sympathy. As we all know, however, there is very little recognition on the part of the Prime Minister and his Treasury team that we are in such a situation, even though it is evident to all independent commentators that that is the case. It therefore becomes increasingly challenging for the Government to find their way out of this problem. The impact of the poor forecasting can be seen in the Red Book estimates and projections for public sector net borrowing as a proportion of GDP. As the hon. Member for Edmonton said, projecting several years ahead is prone to considerable statistical error, but the Red Book makes a stab at it and comes up with a figure of 5.5 per cent. for 2013. That is based on the highly optimistic, rather than realistic, forecasts that the Chancellor set out in his Budget speech. The variance between the 5.5 per cent. cited in the Red Book and what the NIESR says is more than 50 per cent. The NIESR forecasts that public sector net borrowing will be 8.6 per cent. of GDP in 2013-14. There will be a significant shortfall in Government funding should the economy not grow as the Chancellor has forecast. If it does grow as he has forecast, some estimates have identified that there will be a black hole of more than £40 billion—I believe that the figure is £45 billion—in the Government's finances. If the growth is as poor as independent commentators are suggesting and the debt as a proportion of GDP is as I have just indicated it might be, even that figure will be a significant underestimate. There is a colossal hole at the heart of this Government's public finances that can be met, in the short term, only through public borrowing. As the right hon. Member for Birkenhead (Mr. Field) bravely said, there is a significant question mark over this Government's ability to fund the debt with which they have saddled this country. The credit rating agencies have put the UK's triple A rating under review. All the Government's borrowing forecasts are predicated on the assumption that that rating will remain. Should it be reduced to a double A rating, for example, that would, in itself, have a significant impact on the cost of funding existing Government debt and would raise significantly the cost of the future Government debt that we need to raise in order to meet these enormous borrowing figures. I urge the Financial Secretary to give some indication as to the thought process that the Government have gone through and the cost involved should that unfortunate reduction in rating arise—of course, none of us wishes that to happen.