Sajid Javid is putting forward a 10-minute rule bill next month proposing that the government legally caps the UK’s national debt.
Javid, who climbed the ranks at Deutsche Bank before joining in the Tory 2010 intake last May, wants the coalition to set net government borrowing at a certain percentage of GDP.
The idea would be to force successive governments to operate within a financial framework and end reckless spending. The Treasury would decide the level — Javid thinks it should be set at around 40 per cent of GDP — with the Office of Budget Responsibility in charge of monitoring compliance with the cap. Net government borrowing is expected to peak at 71 per cent of GDP in 2014.
“Some people seek to downplay the danger posed by the national debt, but the British people recognise the threat. Politicians should exercise the same prudence with the national finances as they do with their own family budgets,” he says. “There is no guarantee against fiscal irresponsibility.”
Javid, who did a stint on the work and pensions select committee before being appointed PPS for John Hayes, the further education minister, says the cap will ensure prosperity for future generations. He also believes that it would cement the Tories’ reputation for sound fiscal management.
But tying government’s hands in this way could backfire if there is another economic crisis or a need to build a huge bit of infrastructure, says one Tory-leaning business leader, who points out that debt is not necessarily a bad thing – as long as it is the Tories managing it, not Labour. You can read his thoughts on ConservativeHome.