§ 10. Sir C. Osborneasked the Chancellor of the Exchequer, in view of the increased spending on public services of 9 per cent. this year and of a further 9 per cent. next year as foreshadowed in Command Paper No. 1849, and the expected increase of national production of only 3 per cent. each year, what new steps he proposes to take to avoid further inflation; and if he will make a statement.
§ Mr. MaudlingThe increase in expenditure to which my hon. Friend refers relates to investment in the public services, not to total expenditure on these services. The Government took the decision to authorise this increase in expenditure after considering the ability of the economy to absorb it without inflationary consequences.
§ Sir C. OsborneDoes not the Chancellor agree that more than half of this capital expenditure shown on page 5 will be non-productive work? Does it mean that the Government, by accepting this, are accepting inflation as inevitable?
§ Mr. MaudlingNo, Sir; certainly not. We thought, in view of the prospects for 1963, we could without danger of inflation increase public investment, particularly on such things as housing and schools, where I think it is very much needed.
§ Sir C. OsborneBut if my right hon. Friend expects national productivity to increase only by that 3 per cent., at the most, if we are to spend 9 per cent. more on special items of non-productive work, surely it must result in inflation?
§ Mr. MaudlingWe have to take all claims on the national economy together, and I think we can safely accommodate this increase without inflationary pressure.