Rishi Sunak has insisted debt is “on schedule” to fall, despite a senior Treasury minister having been challenged over the same claim.
The Prime Minister said “economic conditions are improving” when pressed on the Government’s portrayal of the state of the public finances.
According to the Office for Budget Responsibility’s November outlook, debt excluding the Bank of England is forecast to climb as a percentage of national income from 89% in 2023/24 to 92.8% in 2028/29.
But ministers have continued to insist it is reducing 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 was challenged after repeating the claim.
After a pause, Ms Trott appeared to start saying “I’m not sure”, to which BBC Radio 4’s PM presenter Evan Davis replied: “This is really basic… I’m amazed that you don’t know that debt is rising.”
Asked how the public can have confidence in the economy following the senior Treasury minister’s remarks, the Prime Minister told 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.
“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 measures of debt – public sector net debt (PSND) and public sector net debt excluding the Bank of England (BoE), the latter being the figure usually used by the Government.
PSND is forecast to drop by around 4% as a share of GDP over the next five years, but underlying debt – excluding the state bank – is set to rise by around 4% in the same period.
PSND excluding the BoE is forecast 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 insistence 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 (UKSA) 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 said it was “terrifying” that people unaware of “the basic facts” are in charge of the country’s finances.
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.”