HC Deb 18 December 1963 vol 686 cc1256-9
The Chancellor of the Exchequer (Mr. Reginald Maudling)

With your permission, Mr. Speaker, and that of the House, I wish to make a statement on public expenditure.

In the debate on the Address I gave some figures illustrating the prospective growth of public expenditure on the basis of the Government's policies and programmes, and I undertook to consider amplifying them in a White Paper. This I have now done, and a White Paper on Public Expenditure in 1963–64 and 1967–68 will be available in the Vote Office at 4 p.m. today.

The White Paper covers, in addition to central Government expenditure, local government capital and current expenditure, the gross outgoings of National Insurance funds and investment expenditure by nationalised industries and public corporations.

The figures are grouped under main headings. They compare an estimate for 1963–64 with an approximate calculation of the prospective figures for 1967–68 at constant prices and on the basis of present policies. They will be seen to fall in line with the 4 per cent. economic growth target accepted by the Government and the other members of the National Economic Development Council.

Mr. Callaghan

I thank the right hon. Gentleman for joining the ranks of the long-range forecasters. Will he tell us the total increase proposed for 1967–68 as compared with 1963–64? Do these forecasts include items such as defence, agricultural subsidies and, for example, part of the cost of implementing the Robbins Report? Can we identify what items of Government expenditure are included or excluded by looking at the figures?

As the right hon. Gentleman correctly says, these increases are possible on the basis of a 4 per cent. growth rate. What changes are proposed in Government policy in view of the fact that we have had a 4 per cent. growth rate for only four out of the last twelve years?

Mr. Maudling

The figures cover defence as a specific heading, and agricultural subsidies are also dealt with. The effects of the Robbins and Newsom Reports are also included. The total is certainly included and I hope that in due course the hon. Member for Cardiff, South-East (Mr. Callaghan) will give us his total, too. He need not be too gloomy about the 4 per cent. growth rate.

Mr. Callaghan

As it is the key figure, can the right hon. Gentleman tell us what is now the total for 1968?

Mr. Maudling

It would be a mistake to give any figures from the White Paper until all are available, but the hon. Gentleman will find that total expenditure between 1963–64 and 1967–68 advances by roughly 4 per cent. per annum in real terms.

Sir H. d'Avigdor-Goldsmid

While thanking my right hon. Friend for what will obviously be most desirable Christmas reading, may I ask him whether his figures include estimates of the gross national product, so that even the most ignorant among us can judge what proportion of the gross national income is to be spent by Her Majesty's Government in future years?

Mr. Madling

In the White Paper we have given figures, as a percentage of the gross national product, of what has been taken by public expenditure in recent years. What we are giving for the future is our calculation of the increase in public expenditure of all kinds, in real terms, and if the gross national product expands by the 4 per cent. target which we have accepted, the proportion will, of course, remain roughly the same. There is a footnote on one page to cover this.

Mr. Grimond

Is there any indication in the White Paper of what might be the effect of the already agreed increases in incomes, salaries, wages, and so on?

Mr. Maulding

No, Sir. The White Paper does not cover that. But I would say that the most prominent threat to the realisation of these programmes, to which we all attach importance, is the rate at which incomes are expanding at the moment.

Sir G. Nicholson

Is my right hon. Friend aware that his statement will give great satisfaction to members of the Estimate Committee, whose recommendations of some years ago are now being carried out?

Mr. Maulding

I am always happy to give satisfaction to my hon. Friends and to Hon. Members from both sides of the House who serve on the Estimates Committee.

Dr. Bray

To what extent are these estimates being taken into consideration by Departments in the preparation of their Estimates for next year? Will the right hon. Gentleman provide the House with an early opportunity to debate the White Paper?

Mr. Maudling

The question of a debate is for my right hon. and learned Friend the Leader of the House. The figures are estimates for 1963–64, but one clearly cannot give estimates in the same concrete form for 1967–68. The latter figures are calculations which are the best we can make on our current knowledge of the amount of real resources needed to meet these programmes.

Sir C. Osborne

Since these vast increases of expenditure are certain and definite and a 4 per cent. increase in national productivity is uncertain, unknown and not definite, can my right hon. Friend assure us that he has reasonable evidence that this great increase in expenditure will not result in further inflation?

Mr. Maudling

I have no doubt that it is within the capacity of our economy to achieve the 4 per cent. growth rate at which we are aiming, but this depends not on the Government alone, but on Government, management and unions together. Unless there is a combined effort towards this mutual objective, we shall not succeed.

Mr. H. Wilson

Now that the right hon. Gentleman has said what can be achieved over the next three or four years in Government expenditure, given a 4 per cent. growth rate—and the whole House welcomes the statement—and as presumably the Government accepted the idea of a 4 per cent. growth rate quite a time ago, will the right hon. Gentleman tell us why he and his predecessors could not have said two years ago that these programmes could have been started then?

Mr. Maudling

I think that the right hon. Gentleman has failed to observe the progress towards these programmes which has been made during the last two years.

Mr. Wilson

Is the right hon. Gentleman aware that not only have we observed what has been done in 1963, but that we forecast that after three years of stagnation there would be a boom in 1963? Would he like to turn up the HANSARD in which we made this forecast? Will he now tell us why it has taken so long to get these very necessary and desirable programmes and why the Government should not have aimed at a 4 per cent. growth rate in earlier years, either in this or in the two previous Parliaments?

Mr. Maudling

The right hon. Gentleman's previous speeches always make agreeable and often profitable reading, but I have observed that on more than one occasion recently he has himself announced targets which we have already achieved.