Rishi Sunak has insisted national debt is “on schedule” to fall – despite one of his ministers coming under fire for making the same claim.
Laura Trott, the chief secretary to the Treasury, was accused of not knowing the “basic facts of her job” after she repeatedly claimed debt is falling as a proportion of gross domestic product (GDP).
Her claims came despite the latest official projections which suggest there will be an increase in debt over the next five years.
The Office for Budget Responsibility (OBR) said in November that debt is forecast to climb as a percentage of national income from 89% in 2023/24 to 92.8% in 2028/29.
Reducing debt is one of the five pledges Mr Sunak made to the public at the start of 2023, along with cutting NHS waiting lists and “stopping the boats”.
Ms Trott was presented with the OBR forecast during an interview on BBC Radio 4’s PM programme – and responded by saying she had “different figures”.
She said the prime minister’s central pledge was that “debt needs to be falling over the five-year fiscal forecast as a percentage of GDP, which it is”.
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When challenged, Ms Trott appeared to say quietly “I’m not sure” – to which presenter Evan Davis said: “This is really basic… I’m amazed that you don’t know that debt is rising.”
The minister replied: “I think I need to have the figures. I’ve got different figures which… I think we just need to… yeah.”
Speaking to broadcasters on Friday, the prime minister appeared to defend Ms Trott.
Asked how the public could have confidence in the economy following the minister’s remarks, Mr Sunak said: “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.”
‘It’s terrifying these people are in charge’
The OBR forecast Mr Davis cited says debt will start to fall in the latter half of this decade, but it will still be higher in five years than it is currently.
The projection is that debt will rise from 89% of GDP now to 93.2% in 2026/27. It will then decline in the final two years to 92.8% of GDP by 2028/29.
This was highlighted by a Downing Street spokesperson when contacted for comment. They said it meant the government was “on track to meet our commitment to have debt falling in five years’ time”.
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What is fiscal headroom?
Mr Sunak’s description of debt as being “on schedule” to fall is different to the language he has used in the past, when he claimed it had already been reduced.
The claim earned him a rebuke from the statistics watchdog, which said he may have caused “confusion” and “undermined trust in the government’s use of statistics”.
To measure debt, the government tends to use public sector net debt (PSND) excluding the Bank of England (BoE).
Public sector net debt on its own 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 that is still higher than the 89% it is currently.
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Labour said it was “terrifying” that people like Ms Trott were in charge of the country’s finances.
The party‘s shadow chief secretary to the Treasury, 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.”
