Public Expenditure (Hansard, 18 July 1967)

§ 7. Mr. Boyd-Carpenter
asked the Chancellor of the Exchequer what action he has now taken to curtail public expenditure in 1968–69.

§ Mr. Callaghan
The Government are examining forecasts of Departmental expenditure in 1968–69 as well as in later years in the course of the scrutiny of public expenditure programmes to which I referred in my Budget statement.—[Vol. 744, c. 989–92.]

§ Mr. Boyd-Carpenter
Surely, if the Chancellor is to convince anybody that he is going to take effective steps to curtail expenditure in the next financial year he must already have reached some decisions? Is the only reason for not disclosing them his desire to get the House up before he does so?

§ Mr. Callaghan
I doubt whether anything I say will ever convince the right hon. Gentleman who asked the Question. He will know from his past experience that the examination of Departmental Estimates is now taking place, and will no doubt reach its fruition during the autumn months.

§ Mr. Barnett
Will my right hon. Friend confirm or deny reports that the decisions are being taken and are not to be announced in a comprehensive form? Should he perhaps consider issuing a White Paper setting out the various alternatives, so that the House can come to an informed view based on the facts and figures of the situation?

§ Mr. Callaghan
No, Sir. It is not my responsibility to confirm or deny statements in the newspapers, but I see no reason to depart from the normal manner of examination of the Estimates.

§ Mr. Iain Macleod
The Chancellor will be aware from the two supplementary questions from each side of the House of the anxiety in this matter. Will he or will he not make a statement in the House on public expenditure before the House rises?

§ Mr. Callaghan
I should have thought that it was highly unlikely, because the process of Departmental examination of Estimates for 1968–69 will certainly not be completed by that time.

§ Mr. William Hamilton
Is my right hon. Friend aware that he will get unanimous support on this side of the House if the bigger proportion of the reduction in public expenditure is in defence rather than the social services?

§ Mr. Callaghan
Yes, Sir. I am aware that there is a feeling that our defence commitments are too heavily stretched. But I am not altogether convinced that the operation on which I am engaged in examining the Estimates will result in cutting expenditure. It is more a case 1690 of how far it shall be allowed to grow, and the Government took a decision in February, 1965, that it should grow at 4¼ per cent. per annum. That broadly remains the Government's policy.

§ Sir G. Nabarro
The Question relates to public expenditure. Did the Chancellor of the Exchequer deliberately refer to Departmental expenditure in his reply in order to exclude the crass extravagance of the nationalised industries, which come within the ambit of public expenditure but not of Departmental expenditure?

§ Mr. Callaghan
No, Sir. There was no deliberate omission. It is well known that the nationalised industries are now making a reasonable return on capital employed, and there is absolutely no justification for the hon. Gentleman's strictures.

§ Mr. Iain Macleod
Would the Chancellor clear up a most important statement he has just made? He said that the Government's intention was that public expenditure should rise by about 4¼ per cent. per annum. But that was based on growth projections which have now been abandoned by the Government. Do we understand that it still remains?

§ Mr. Callaghan
There is no particular connection between the growth rate—[An HON. MEMBER: "There ought to be."]—it is a matter of political philosophy whether there ought to be. There is no particular connection between the growth in public expenditure and the growth in the national product. One may be either faster or slower according to the political philosophy involved.