HC Deb 25 February 1965 vol 707 cc606-9
Q6. Mr. Ridsdale

asked the Prime Minister if he will have consultations with the Governor of the Bank of England, Lord Cromer, on the problems of the national economy.

Q7. Mr. William Hamilton

asked the Prime Minister what recent consultations he has had with the Governor of the Bank of England on the problems of the national economy.

Q12. Mr. Bruce-Gardyne

asked the Prime Minister if he will review the procedure for consultation between Her Majesty's Government and the Governor of the Bank of England with regard to the planning of economic policy.

The Prime Minister

Both my right hon. Friend the Chancellor and I made the Government's position on this question clear in speeches last weekend. We welcome advice from any quarter, particularly from those who have the right and duty to give it, as the Governor of the Bank of England has. The Government agree with him that the total expenditure of the country, public and private, capital and current, should not exceed the resources that can be made available. Within that total, the division between public and private expenditure is for the Government to decide, subject to the final authority of this House. On consultation, therefore, I see no need to change the existing arrangements which provide for informal consultation whenever necessary.

Mr. Ridsdale

In view of the wise advice given by the Governor of the Bank of England, will the Prime Minister do everything he can to see that money can grow in the pockets of the individual rather than in the coffers of the State? [Interruption.] Is the right hon. Gentleman really satisfied with the return on capital in the nationalised industries, which have had capital investment of £4,500 million over the last 10 years; that is, in the nationalised coal, gas and electricity industries?

The Prime Minister

I was interested to hear from the hon. Gentleman that Gladstonian doctrine of the fructification of private expenditure. I would have expected to hear that from the Liberal bench, but nevertheless we got it. The advice given by the Governor has been given by him and his predecessor to successive Chancellors of the Exchequer, but in fact I think that the position has always been in this House, if I may now quote Disraeli, that expenditure depends on policy, and the Estimates presented by the Government to the House earlier this week are the result of policies and of commitments which have been entered into over a period of years. If any hon. Member has really valuable suggestions to make for reducing expenditure, he must call in question some of the policies which, indeed, all parties in the House have accepted.

Mr. Hamilton

Does my right hon. Friend agree that, in so far as Lord Cromer was urging the Government to slash military expenditure overseas, he was talking jolly good, sound sense, but that in so far as he was talking about slashing home expenditure, my right hon. Friend may as well appoint Ted Hill to the post?

The Prime Minister

I hope that, despite that, my hon. Friend will re-table Question No. 5, which I am really itching to answer. As to his present supplementary on Question No. 7, I think that the whole House will agree, and all of us have said this in the debates on defence, that it is essential to get down to a minimum overseas expenditure, because it is not only a drain on Government expenditure; it is also a severe drain on our balance of payments.

As to home public expenditure, the situation was clearly explained by my right hon. Friend the Chancellor of the Exchequer on Monday. We have to see that the total call on resources matches the resources which can be made available. As between public and private, it is a matter of policy for the House to decide now and in successive Supply debates.

Mr. Bruce-Gardyne

Is the Prime Minister aware that the views expressed by the Governor of the Bank of England correspond precisely with those of our international creditors and that if he disregards these views he will have considerable difficulty in renewing the international credits which have been necessitated by the Government's mishandling of our economic affairs?

The Prime Minister

I did not quite catch every word, but I will do my best. The position is, as was stated very clearly by the Governor, that we faced a very serious situation last autumn on our balance of payments. The House has many times debated the responsibility for that state of affairs. As to the present level of expenditure, as my right hon. Friend the Chancellor of the Exchequer made clear, very, very large expenditure commitments were entered into by the party opposite when they were in power, which we have inherited. These were set out in a whole series of election promises, and although we have shown the very greatest effectiveness in pruning figures wherever we could, there is inevitably a very big increase this year.

Sir Alec Douglas-Home

The Prime Minister and the Government may be pruning now, but is it not true to say that all the Estimates which we made for programmes for the future were topped up by him at the General Election?

The Prime Minister

What I do remember of the General Election is that the right hon. Gentleman on that occasion said that his programmes have been costed. I do not know who costed them, or whether the right hon. Gentleman had a hand in it himself. All I can say is that when we came to cost them on their promises we found that they were far in excess of the figures published in their White Paper.