§ Mr. Speaker
Before I call the Chief Secretary to the Treasury to move the Motion, I should inform the House that I have selected the Amendment in the names of the right hon. Gentleman the Leader of the Opposition and his colleagues, at the end of the Question to add:but, while welcoming the relaxation of earlier doctrinaire policies of Her Majesty's Government regarding the level of public expenditure, deplores the serious hardship already inflicted upon large sections of the people; and gives warning of the continuing danger to human and social needs and to the prospects for reducing unemployment if Conservative philosophy is accepted'.
§ 4.4 p.m.
§ The Chief Secretary to the Treasury (Mr. Maurice Macmillan)
I beg to move,That this House takes note of the White Paper on Public Expenditure to 1975–76 (Command Paper No. 4829).This is the third in the annual series of public expenditure White Papers, but it is, I think, the first to be debated in the autumn, as was originally envisaged by the Select Committee on Procedure and by the House itself. It is also the first to be written with the advantage of having as its background a Report from the Select Committee on Expenditure, and I use the word "advantage" advisedly.
During the February debate on the previous White Paper I quoted the late lain Macleod ashoping that a consensus would grow between the House of Commons and the Executive on the way in which these matters should be debated."—[OFFICIAL. REPORT, 22nd February, 1971, Vol. 812, c. 117.]I hope the House will agree that in this White Paper considerable progress in that direction has been made.
I am sure that we would all wish to congratulate my right hon. Friend the Member for Taunton (Mr. du Cann) on the report of the Select Committee of which he is Chairman, and to congratulate, too, the hon. and learned Member for Lincoln (Mr. Taverne), who is Chairman of the General Sub-Committee, for his expert report, which came at a timely moment and will, I believe, be helpful to the whole House.
1314 I should also like to pay a tribute to the work of the officials on whom the main burden falls of the considerable amount of work involved in meeting the recommendations of the General Sub-Committee's Report. As the result of all that, this is, inevitably, a rather longer document than usual, with a number of innovations in it, and I hope the House will bear with me while I explain, as shortly as I possibly can, what we have tried to do in this White Paper.
I will first review some of the main responses which we were able to make to the recommendations of the Select Committee, and if my hon. Friend the Financial Secretary is enabled to take part in the debate he will deal with these in more detail later.
The first of the main responses which we achieved was to get a full break-down of charges showing how much was attributable to each main programme block. The second was the estimate given of receipts closely linked to, or generated by particular blocks of expenditure, with the exception in this White Paper of the nationalised industries. The third change which we were able to make in response to the Select Committee's request was in the chapters in Part II of the White Paper which now show a comparison with the figures of the last White Paper, distinguishing between policy and estimating changes, and also showing, as far as is possible, amplified commentaries on the tables in relation to policy objectives, distinguishing provision for improvements, and also giving, as far as possible, physical measures of output achieved by the expenditures concerned.
We were asked to see whether we could make comparisons back in time between the figures in this White Paper and the previous one. We were able to do so, but only as far as the first year in this series of White Papers—that is, the financial year 1968–69—but with the intention of building up as the years go by into a full five-year back-list. We were able to make comparisons with previously published estimates now including analysis by economic or resource category, as well as in cash terms. Lastly, we have been able to analyse the total public expenditure by resource category not only up to the third year of the quinquennium but also for years four and five, and to make this analysis both with 1315 and without taking account of the relative price effect.
There was one other improvement, not so much made in reply to a special recommendation of the Select Committee but in reply to a general desire of the House as a whole. It was designed to make this White Paper the first in which a serious attempt is made to bring together what can usefully be said at this stage, to show not merely what the expenditures are but what is obtained by them and what is their effect. Obviously, there is no single measure suitable for the vast variety of activities in the public sector on which expenditure is incurred. The extent to which it is possible to identify results or estimate improvements varies equally widely.
The chapters in Part 2 of the White Paper attempt to explain the programme in these terms according to the present state of our knowledge. I hope that as our knowledge is built up from the deepening analyses that we hope to undertake it will be possible to improve in later years on the start made in this one. I hope that in this task we shall have the help of the Expenditure Committee in working together in the way that the late Mr. Iain Macleod suggested to achieve a degree of consensus between the Administration and the Expenditure Committee on how best to present and discuss these important matters in Parliament.
Not only is the range of public expenditure varied but the type and nature of public spending is also varied in a way which has considerable significance for this House because it is a variation in some sense affecting the different responsibilities of this House towards different aspects of public expenditure. For example, over half the total public sector spending is made by Government Departments and is financed through annual Supply Estimates and is therefore the direct concern of this House. A third of total public sector spending is the responsibility of local authorities, where the rights, duties and responsibilities of this House vary. Different parts of local authority expenditure are affected in different degrees by the mandatory and permissive legislation this House passes 1316 when dealing with local government activities. Therefore, it is affected in a different way by policies for which Ministers are answerable to this House.
The current expenditure of local authorities which in itself makes up about one-fifth of public expenditure is financed as to some 50 per cent. by grants from Votes for which this House is responsible. As well as these varying categories of public spending, those directly from Government Departments and directly or indirectly from local authorities, there is the remainder, about one-tenth of the total, made up by nationalised industry spending, financed either by their own trading surpluses or calls on the National Loans Fund. The meaning of a total made up of so many varied and disparate parts has been a familiar problem to those of us who have dealt with public expenditure over the years. What is the effect on the demand and the economy of this total of different kinds of public expenditure when it is added up?
Some spending, say on construction work or employing staff, gives a good indication in the expenditure figures of the effect on demand for resources made by the public sector. Other forms of spending, family allowances or other transfers, only create demand on resources to the extent that they are actually spent rather than either saved or paid back to the State in taxation. It is sometimes extremely difficult to see in all this a common factor in the effects which the public sector and its expenditure has on demand and on the economy generally.
This is the reason for the main innovation being introduced in the White Paper. We have tried to produce a solution to this problem by translating all the expenditures on different programmes into terms of the demand which they represent on resources after allowing for savings and the flow-back of taxes and so on. We have used this particular example because all forms of public expenditure, however varied, have some demand effect in various degrees. The technique for assessing the extent of demand in each case is difficult. However, used as we have used it, to express the rate of growth of large aggregates over a considerable period, it is reliable and the results seem to be consistent with the indications derived from past 1317 analyses. I hope that the Select Committee will find this is a valuable technical improvement over any previous method of expressing the rate of increase in public expenditure in terms of its real impact.
The General Sub-Committee has received a memorandum on the technical uses which I believe will help it in the proposed study it intends making of these various problems. I am not sure whether the House as a whole will find the technique a simple matter. But I hope that the House will find simple and easily understandable the final result of expressing the economic implications of the public expenditure programmes as a whole and will find the experiment of including this method in the White Paper useful and convenient.
This new form of expression enables the whole story of the long-term pattern of the programmes in the White Paper to be summarised in paragraphs 7 and 9 by saying that these programmes imply an average rate of increase in real cost to the economy between this year and 1975–76 of about 3.2 per cent. Whether this is too little or too much or just right is not a matter for precise calculation. It is certainly not a matter for deduction from statistical forecasting, but rather a matter for judgment in the light of the purposes which public expenditure in general and the particular programmes in the White Paper are designed to serve.
I turn now to the broader pattern of the programmes taken all together over the whole period and to examine the rôle they play in meeting short-term needs while continuing the longer-term pattern previously established by my right hon. Friend. I make only two points about the rate of increase in public sector expenditure. First, over the whole period the rate of growth of public expenditure is very much the same in real terms as that set out in the previous White Paper. That rate of growth is sustainable now, as it was then, even if the rate of growth of productive potential is no faster than it was in the past. It is now, as we said it was in previous debates and in the earlier White Paper, capable of improving the programmes when our policies have succeeded in improving the growth of productive potential.
§ Mr. Joel Barnett (Heywood and Royton)
Does the Minister intend to explain why the Government have settled for, and why he is arguing in favour of, this particular rate, given that the White Paper explains that there is a likelihood of increasing the level of growth in future?
§ Mr. Macmillan
If the hon. Gentleman will have patience, that question will be answered. I remind him that there are two days for this debate. I have no doubt that that and other issues will be developed. I do not see the necessity for the hon. Gentleman to interrupt me at this stage.
The second point I wish to make about the rate of expansion of public spending is that we shall, as the White Paper makes clear, continue to adjust our programmes to meet changing needs and priorities and to restrain unnecessary public expenditure. This approach to public sector spending—an approach which is flexible in the short run and constant in the development of programmes in the longer run—is basic to our concept of the use of public expenditure as an instrument of policy, both social and economic.
In this respect this White Paper is consistent with its predecessor which we put to the House in January and, indeed, with my right hon. Friend's first White Paper "New Policies for Public Spending" which we debated a year ago. In that debate I said:our savings have not reduced the resources available for mainline activities, nor do they cut capital programmes.I went on to say that they werethe first part of a considered policy—a policy designed to ensure that public spending increase, but at a level which is socially effective without becoming economically damaging; a policy to maintain a consistent levelof the economy. I said that we wereincreasing the real resources, public and private together, which will be devoted to education, health and welfare. We are making increased public provision for primary schools and the health and welfare services. I make no apologies to the House for these increases; we shall continue them."—[OFFICIAL REPORT, 5th November, 1970; Vol. 805, c. 1301.]So we have, as this White Paper makes clear. There is nothing new in these priorities. They were established and set forth in the previous White Paper, as my quotation from that debate makes clear. 1319 We said then that we would continue these priorities and increase these expenditures. We are, therefore, just continuing, to use the words of New Society of 2nd December, to think "intelligently about priorities" both as between and within programmes.
A great many rather harsh things have been said about my right hon. Friend the Secretary of State for Education and Science, but in the matter of thinking intelligently about priorities she deserves as much praise as my right hon. Friend the Secretary of State for Social Services—[Interruption.]—because if one examines the way in which, and extent to which, these programmes are continuing to carry out the priorities that we set last year and said that we would carry out throughout this year, one sees that, taking the average annual increase in real terms, the educational programme is rising at about 4½ per cent. per year whilst the health and personal social services are going up by over 5 per cent.
When last year I told the House that we would continue this increased provision I made it plain that we could do so only by the most careful control of public sector expenditure as a whole. That is still true. This White Paper makes it plain that that careful control has not been abandoned. It shows that public expenditure in the longer-term is being kept to a level only modestly higher, one which can be sustained without producing excessive pressure on demand when resources are once more fully employed. It shows, in fact, that public expenditure over the whole period is being contained.
This White Paper shows something more. It shows that in the short-term we have been, and are, prepared to use the level of public spending, and the programmes to which it is applied, to meet urgent and immediate needs as an instrument of policy for economic and social purposes. The Government are resolved to make sure that where resources are not now being fully used they should be brought back into employment as fully, as quickly, and as beneficially as possible.
My right hon. Friend the Chancellor of the Exchequer has made it abundantly clear that he is ready to take such action in the future as he has in the past proved himself willing to take. Indeed, the 1320 White Paper emphasises this when it says in paragraph 9:Policies will coninue to be reviewed, for the better direction of expenditure to needs, including those of the areas where unemployment is high, as well as those of more general kinds; and changes in the programmes may yet be made for these reasons, producing net increases or decreases in the totals, if in the developing situation the Government judge them to be required.These changes have been made, reflecting changing policies to meet changing needs—that is, both to meet the short-term requirement of dealing with the unemployment problem and to reflect long-term changes and developments in policy.
I come to the short-term changes. These are set out clearly in the White Paper, starting with four special programmes concentrated mainly on 1972–73 and 1973–74, though extending to some extent later on, and beginning this year. They are changes designed to provide employment as quickly as possible where the problems of unemployment are gravest.
Consider the measures set out in para11, table 1, of the White Paper: first, announced in the summer, new works in development and intermediate areas, and works to improve the infrastructure, totalling £164 million; second, also announced last summer, house improvement grants totalling £53 million; third, announced in the autumn, special acceleration of naval shipbuilding, giving help to hard-pressed yards in areas vitally important to full employment, as well as improving the fighting strength of the Navy, totalling £80 million; fourth—this is not shown in detail in the White Paper but was foreshadowed in it—the measures announced by my right hon. Friend on 23rd November, the acceleration of capital programmes and of road programmes, a further £163 million.
This extra spending has injected some £600 million of public expenditure into the economy over the current year and the next two years to provide or maintain employment in specific situations, over and above the ordinary assistance to development and intermediate areas. It is designed to use resources which would otherwise be lying idle. It is confined in time to the earlier part of the White Paper period; and, where there is a spill over into later years, confined in space 1321 to areas where pressure of demand is likely to grow more slowly. The modest longer-term increase in public expenditure generally results largely from the same rate of increase as before but starting from a higher base caused by this additional short-term spending.
But, as I have said, we have been keeping under review the longer-term policies, too, and have developed these within the total. For example, we have accommodated in the totals shown in the White Paper the results of the latest review of farm prices, social security benefits and contributions to the European Communities. Second, we have accommodated the special reviews of policies for individual programmes: the addition of four battalions to the Army; an extra more than £200 million in the period for the steel industry; an extra £300 million for local authority lending for house purchase; and over £100 million for health and education services, over and above that which was done in the short-term infrastructure exercise.
To sum up, when one compares the short-term and longer-term policies, taken together, with those of last year, the pattern is quite clear. The rise in spending is more rapid in the early years of the period and it is no faster than it was before in the later years. And because of last year's policy changes which aligned expenditure more appropriately with the needs for it and which reduced expenditure where it was not needed while devoting more public money to areas where the need was greatest, our overall policy stands, and the overall average annual rate of increase of public spending is 3.2 per cent.
If the pattern is clear, so, too, are the impact and the development of the public expenditure programmes: in the longer-term, a shift of resources—as, indeed, New Society pointed out—to health and education; a continuation of the policy initiated by my right hon. Friend last October and made clear by myself and hon. and right hon. Friends in the course of our debates; a continuation of the policy of giving most help to those areas where need is greatest; together with improvement in our defence capability and extra provision for steel investment. That is the longer-term shift of resources.
1322 In the shorter term we have selective public spending directed progressively and more sharply to identified needs, taking account of the nature of the programmes concerned, their impact in time and in area, and their effect on demand and on the economy. If we examine the four special programmes I mentioned earlier, in conjunction with the analyses in the White Paper of the economic components of public expenditure as a whole and the analyses of the individual programmes of public spending, the position becomes even clearer.
Of course, in any cost-benefit analysis or assessment one has to take account of many factors, and not only of the economic return. There is the question of the results of public spending in human and in social terms. There is the effect on the environment. There is the question not only of social benefits but of social costs. Even on a straight economic criterion the position is not quite as simple or as clear as it sometimes seems to be. There is the problem of balancing the short term and the long term. There is the need to lay the foundations for the future for our essential basic—and new—industries, so important to our future, and even more so in the light of accession to the European Economic Community. There is the problem of avionics and electronics, of atomic energy, and so on—industries which may be essential for generations to come.
That is why in looking at those four special programmes one can see that we have tried in the first two to fit the general expenditure to the infrastructure, housing and so on, which can lay the foundations for a greater expansion of the economy. In the third, we have the acceleration of the naval shipbuilding programme, and so on, designed more closely to deal with the specific areas where need is greatest and where demand is likely to lag longest. In the fourth, we have the measures announced recently by my right hon. Friend, still more closely geared to particular parts of the country, to industries and, indeed, almost to firms.
It is really that sort of use of public expenditure for social and economic purposes in the long term and in the short term that the White Paper sets out, and it is in that spirit that I commend it to the House.
§ 4.36 p.m.
§ Mr. Dick Taverne (Lincoln)
A debate on the Government's White Paper on public expenditure should, perhaps, be first and foremost a debate on the Government's strategy because it is, after all, what is set out in the document. This afternoon I do not intend to deal with strategy. I say this rather reluctantly, but I must leave matters of strategy to my right hon. and hon. Friends. I want to deal mainly with the report of the Sub-Committee, which I had the privilege to chair, the way in which the White Paper has dealt with our recommendations, and aspects of the White Paper which need further exploration and elaboration.
It is customary to stress the vital importance of the White Paper. I do not intend to depart from tradition, and duly stress its central importance. One has to say this, because sometimes in their form these debates are not the most exciting, though on the last occasion the public expenditure debate was useful and perceptive. To some extent hon. and right hon. Members are put off by the technical jargon in the opening section—the General Review, with its references to constant prices, relative price effect, resource categories, demand on output, and so on. These are not calculated to turn the document into the top best seller of the year.
But Part 2 certainly lays down Government strategy for each individual programme. It contains the guts of what the Government are trying to do. There is no more comprehensive statement of the Government's strategy in relation to each of these functional programmes than there is in this document.
Again, the way in which the information is set out, and the kind of information provided, are vital to Parliament's control of the Government's expenditure plans. It is through the White Paper, and especially through Part 2, that one can get at the changes that have been decided, at the priorities between different programmes, and at the aims at which the whole operation is directed.
It was precisely because the manner of the presentation of the White Paper as well as its contents have such an important bearing on what Parliament can do to influence Government that our Sub-Committee was particularly keen at 1324 all costs to produce a report in time for it to have an effect. This placed a considerable burden on our Clerk, who served us nobly, and on our specialist adviser, Mr. Godley, whose contribution was invaluable; above all, it placed a very heavy burden on the Treasury. Indeed, if the work of the Public Expenditure Committee is to prosper, one should not ignore the time that will have to be spent on the Committee's work by civil servants. I hope that in the coming year the operations and procedures of our general Sub-Committee will be somewhat less hectic and that we shall be able to avoid chasing less hares that do not or will not run. Perhaps that occasionally happened last year. But inevitably it will still mean a very considerable burden of extra work for the Treasury.
In our report we made a number of recommendations, and I want to consider these together with the White Paper's answer to them. But one thing should be made quite clear. None of us can feel that we laboured in vain. In general, the response to our suggestions could not have been more forthcoming. Just about all our recommendations related to the White Paper have been implemented as far as they could be at present. In some cases, the response may be somewhat tentative and indistinct, but there has always been an intention to meet us as far as was possible at present. As a result, we have in the White Paper a mass of information that can do much to improve the discussion by Parliament of Government decisions and to improve discussions outside.
On behalf of the members of our General Sub-Committee, I express my genuine appreciation to the Treasury for its work, and it would be churlish not to thank also the Chief Secretary and his colleagues.
I come to the recommendations contained in chapters 2, 3 and 4 of our report. For convenience, I will take them in reverse order and deal only with the main ones.
For Parliament to know what Government are up to, one needs to know firstly whether what has been forecast has happened. One needs to know whether forecasts have changed and how discrepancies have arisen—whether from changes in policies or from errors in forecasting. We felt, therefore, that information to 1325 enable a comparison to be made of estimates with outturn and of estimates in one White Paper with estimates in a subsequent White Paper was absolutely essential. On the whole, Part 2 of the White Paper has been forthcoming. It gives both the provisional outturn for the last year and the estimates for the current and future years in terms of the forecasts of the old White Paper revalued to current year survey prices; and it shows how much of the changes since then are due to policy changes and how much to estimating changes.
This is not a technical matter solely of concern to the experts. It goes to the root of the assessment of Government policy. One has only to look at the areas where there is still ambiguity or lack of clear information about what the projections of Government expenditure mean to find out the importance to everyone of comparing estimates with outturn and comparing estimate with estimate.
There is, first, a general criticism. As Mr. Wynne Godley pointed out in his article in The Times Business News today, estimating changes can mean many different things.It could, for instance, mean that requirements have changed (for example, that there are now expected to be fewer children at school); it could mean that economies have been made so that the same output can be achieved at a reduced cost; it could mean that the previous estimate simply contained an error.One may add that it could also cover a reclassification of expenditure. If one looks at the changes which are announced at the back of the White Paper, one will find that a considerable amount of reclassification has taken place. Unfortunately, in most cases it is not clear what the explanation for an estimating change has been. Yet different explanations may reveal points of considerable importance. I hope that in future it will be possible for the Sub-Committee to have time to comment before the debate in the House. I realise the reasons why this debate followed so closely the publication of the White Paper. But detailed, considered comments would be extremely valuable.
I give two examples of this. There is a very confused picture in the part of the programme dealing with trade and industry. It is very difficult to see in some ways what has happened here. In 1326 his article, Mr. Godley refers to the difficulties of making any possible comprehensive assessment of changes of policy for 1974–75 and of allocating policy and estimating changes to resource categories, which is obviously a matter of the utmost importance in economic forecasting. But the position seems even more confused by the change from last year's White Paper estimates for 1971–72 and the current estimates for 1971–72.
For example, in Table 2.7 at page 25 we are told that, including investment grants, this programme has net policy changes of plus £102 million, and net estimating changes of minus £82.6 million, giving a total net change of plus £90 million. But in Table 3.9 at page 75 we are told that in this programme there will be net additional expenditure on transfers of £16 million, on resources of £46 million, and a reduction of £39 million in Government net acquisition of assets. So that is a total net change of plus £23 million. That is not a huge difference but we should like to know how it arose. It is important to allocate these changes between policy changes and estimating changes and to do so by sub-programme or, for that matter, by resource category.
We are told on page 9, where there is reference to the short-term policy changes, that amongst the short-term increase on the last White Paper programmes by policy changes there are figures of some £80 million for the Rolls-Royce RB211, some £30 million for Rolls-Royce (1971) Ltd., and £30 million for BP rights issue. That is for the current year. We are also told on page 28 that there are changes on Concorde, which include additional costs of some £60 million announced on 10th May. But we had no indication in that announcement on 10th May of phasing any additional payments, and the increase in the provision for Concorde cannot be gathered from the White Paper.
Estimating changes in investment grants forecast since the last White Paper are not shown, nor is it possible to discover what changes in the forecast for the coming year arise from the accelerated repayment announced last February.
On the Industrial Reconstruction Corporation we are told that the forecasts are somewhat lower than those contained 1327 in the White Paper, due mainly to an earlier realisation of assets than was expected, but we are not told how much lower.
On page 26, referring to the general support programme, we are told that it is expected that from 1972–73 onwards spending will be some £9 million to £10 million less than was envisaged, on a comparable basis, in the last White Paper; but we are told nothing about the current year. Therefore, it is difficult from the scanty information which I have described to move to the totals which are given on page 25 in Table 2.7 or the different total which emerges from Table 3.9 on page 75. It is in a pretty terrible mess.
A second area of obscurity is that of social security, though here the fog is much less dense. In view of the changes in the forecast of the current year compared with the last White Paper, one wonders whether the conventions may not need revising. A policy change which is described as a policy change in this area seems somewhat different from a policy change in other areas. It refers to a rise in pensions and other benefits which is more than the rise due simply to the restoration of purchasing power. This policy change was expected, and it was partly for this purpose that the contingency reserve was provided; so it is not really a policy change.
§ The Financial Secretary to the Treasury (Mr. Patrick Jenkin)
That argument is a wrong one. Mr. Godley in his article in The Times today makes the same point, and he is barking up the wrong tree.
§ Mr. Taverne
It is a different point. What happens in the case of these so-called "policy changes" is that they are provided for, because it is expected that something will be done. Policy changes generally are not foreseen. It is true that one does not know how much the real increase in the purchasing power of social security benefits will be, but it is expected that there will be an increase; so it is in a somewhat different category.
On page 54, no figure is directly obtainable for that part of the £70 million of policy change increase which is 1328 due to the related benefits other than retirement benefits. Again, there is in this area an estimating change leading to an increase of £94 million. Paragraph 2 on page 54 makes it clear that anincrease in accordance with demographic and other factors affecting the numbers of beneficiariesis provided for.
What was the £94 million? Was it an increase in the number of old people more than was forecast, or was it an increase in the number needing supplementary benefits? Did people live longer than expected, or did they become poorer than expected'? The make-up of the estimating change is of considerable importance.
In neither case is there any direct criticism of the Treasury for not meeting our demands, because we did not specifically make a proposal about the nature of estimating changes. We said that they should be identified and perhaps did not point out sufficiently that they might well cover a multitude of sins.
I turn now to the question of the relation of expenditure to needs, with which we were concerned in Chapter 3. Here the aim is quite clear. We want the Government to provide sufficient information to enable Parliament to discuss Government expenditure plans intelligently. Parliament cannot do so unless it has a picture of the needs which the plans are supposed to meet.
Therefore, the first requirement is knowledge of the needs. Roads may be expanding at an average rate of 7.7 per cent. per annum and education at a rate of 4.5 per cent. per annum, but what are the criteria by which we can favour a more rapid rate of increase in one sector and a slower rate of increase elsewhere? Obviously to some extent the decision is one of value judgment.
It helps to know—indeed, it is essential to know—how great the needs are in each sector. Is congestion on major trunk roads likely to become worse with the latest increase projected, or better? Will the plans for new schools and more teachers lead to smaller classes, keep us where we are, or let things get worse? Until we know what the position about needs is we cannot start to judge rates of increase.
1329 A start has been made in this White Paper by providing more information on the output side. We know, for example, from paragraph 3 on page 49 thatthe number of pupils per teacher should be reduced from 22 in 1971–72 to about 20 in 1975–76".Therefore, we see an improvement; we have a picture of the needs.
In general, the information about needs is still very patchy and deficient. Sometimes it is explained that we just do not have this yet. We know what is projected for further increase in expenditure on sewerage, but the information is still to be obtained as to whether such increased expenditure will lead to an improvement in the pollution position of rivers.
Clearly, it is intended to provide information as it becomes available. I have no doubt that future White Papers will see a further improvement on this score, but it is a vital requirement.
The second requirement for intelligent discussion, after a knowledge of the needs, is sufficient information to enable us to look at alternatives and to judge priorities between them. What would policies alternative to those suggested by the Government actually cost? What would additional expenditures amount to? It is of the essence of a useful rôle for Parliament, if it is to discuss these matters rationally, to be able to choose and to choose knowledgeably and responsibly, not simply adding our own shopping list because the things are good in themselves, but seeing alternatives in possibly private expenditure forgone, possibly private consumption forgone through an increase in taxation. This point has been stressed repeatedly by my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon).
What we ask for in our report to help Parliament to choose goes to some extent beyond the White Paper, but it is crucial to a discussion of the White Paper. We ask that the results of programme analysis and review, which is a systematic look at alternative courses of action, should be published. We ask also for the publication of the results from the empirical research that is carried out—that is, the research into the technical aspects of individual expenditure programmes.
1330 It would be of enormous value to the work of the Sub-Committees—indeed, to the work of every Member of Parliament—if these results could be published; and I hope and trust that they will.
We also suggested that individual Sub-Committees dealing with very small subjects might call upon Departments successfully for such information as they require abouts costs, out-turns, assumptions underlying projections, outputs, and estimates of needs. They should be allowed to press for the cost of the proposals made by outside pressure groups.
If the Government are as forthcoming on this as they have been on our other proposals, the second requirement for the intelligent discussion by Parliament of their plans can be fully met and Members could then have some information at the time when policy decisions are being made rather than after they have been concluded and the House is faced with a fait accompli. I regard our recommendations in this field as perhaps the most important recommendations of our Sub-Committee.
The third requirement for intelligent discussion must be some knowledge of the total of resources available. We should be able to relate public expenditure, not only to the needs, but to resources. Priorities between programmes, alternatives to existing programmes—they all require a knowledge of the total resources available to meet the demand on resources of the courses of action considered or proposed. How can one judge one programme with a high demand content as against another unless one has this information? It would seem to follow logically from the recommendations in the original Plowden Report thatregular surveys should be made of public expenditure as a whole in relation to prospective resources.Last year we discussed the question of the non-publication of receipts. We did not look at the possibility of information on resources being supplied. We got from the Government the allocation of receipts to particular individual programmes, though not in the case of the gross trading receipts of the nationalised industries. I am not entirely satisfied with the reason why this was not given. We met strong resistance to the idea of the publication of receipts as a whole. However, I will not re-fight that battle now. It seemed to us that this was essentially 1331 something which should be considered together with the whole question of economic management and something to which we would return in the course of the current year. As we observe at the end of our second chapter, the House should recognise that at the moment it has little material on which to debate the merits or otherwise of the total amount of public expenditure published in the Command Paper series.
I conclude with a brief word about the whole Committee itself. Under the wise and delightful chairmanship of the right hon. Member for Taunton (Mr. du Cann), whose efforts we have all appreciated, we seem to have made a good start. My own view is that, without departing from the essential character of Parliament, we are moving and should be moving towards a new method of control of Government. It would be very strange and disappointing if we did not. There has been a fundamental revision, since the Plowden days, of the Government's control of public spending. The Government have replaced their control through annual estimates by their control through five-year expenditure surveys. Our parliamentary control is still exercised, in form at any rate, through the votes on annual Supply.
If the Public Expenditure Committee, through its Sub-Committees, can get at the guts of the Government's five-year strategy in key areas through question and answer, it is much more effective than a full-dress debate, and it could lay the foundation for better informed and more meaningful full-dress debates on the Floor of the House. This should be a very important democratic innovation. I see no reason why the first year's progress of this Committee should not be the start of a major change towards more effective democratic control.
§ 5.2 p.m.
§ Mr. Edward du Cann (Taunton)
I agree very much in the main with what the hon. and learned Member for Lincoln (Mr. Taverne) has said, and, in reply to the kindly things that he has said about me, nobody could have a more agreeable colleague than I have in him on the Expenditure Committee; nor, having crossed swords with him in various debates on many occasions, could I have a more doughty opponent.
1332 I wish to refer in a moment or two to some of the proposals which the hon. and learned Gentleman made, but first, I should like to acknowledge and express my gratitude on behalf of all the members of the Expenditure Committee to the Chief Secretary for the tribute that he has been kind enough to pay to us and the work which we are now attempting to do. I was especially glad that he singled out for mention the hon. and learned Member for Lincoln, who, in the report which has been referred to several times already, did a most significant job of work from the point of view of the House as a whole.
It is agreeable to feel that we are all working together with the Treasury for the good of the House, and I warmly welcome the co-operation and the help that we have had from Ministers and especially from officials, always willingly given and given continuously. Indeed, the hon. and learned Member for Lincoln also appropriately referred to this.
There is, however, a point which in this context of agreeableness should be remembered. We are on opposite sides. It is the job of the Expenditure Committee to be constructively critical, and we shall certainly not shirk at any time that responsibility placed upon us by the House.
Although I have the honour to be the Chairman of the Select Committee on Expenditure, I must make it plain at the outset that I speak personally, and not on behalf of the Committee as a whole, for an especial reason to which I will return in a moment.
I will not comment in detail on the White Paper, not in detail because, as the hon. and learned Gentleman indicated that the proper forum for a detailed study of this complex document is the Committee and will never be the Floor of the House. Indeed, I suggest that the Committee system, without, as he said, derogating from the rights or duties of this House, is probably the only convenient forum in which that can possibly be done. But I would say to hon. Members on both sides of the House that any comments that they have to make for our guidance will most certainly be noted.
The White Paper is to be welcomed most warmly. Its annual publication is 1333 or should be a great event. It is probably the most important State document of the year. Its relevance to the ordinary citizen in our country is in exactly inverse proportions to his total disinterestedness in it.
The Government, as my right hon. Friend the Chief Secretary indicated, is the biggest business in the kingdom. Add in some scraps, whether it is local government or the nationalised industries or whatever else it may be; make the calculation how one will; argue as a Socialist for its expansion; argue as a Conservative for its contraction; argue as a Keynesian and, in spite of the contemporary lack of fashion for Keynes and his ideas, argue for either or both at the particular moment; its existing size is formidable; indeed, perhaps terrifying.
The expenditure listed in this document is pervasive.
Words that I heard at a wedding on Sunday come to mind:… for better, for worse, for richer, for poorer, in sickness and in health …".By spending the taxpayers' money, by spending it shrewdly or carelessly, the Government of the day control the nation's destiny: they exert influences of the most fundamental kind upon individual habits and attitudes. I say that the White Paper and its presentation to this House is far more significant than any contemporary Chancellor's Budget Day Statement, and, heaven knows, we see plenty of those in these modern days.
It was most pleasing to see the Chancellor—indeed, the full team of Treasury Ministers—on the Treasury Bench during the opening speech, and it may well be for the Chancellor's judgment that he might himself present the White Paper in the future, for it is, as the hon. and learned Gentleman said, the only opportunity which this House has to debate the Government's strategy as a whole. Some might even argue that in years to come—I put it forward purely as a tentative suggestion—it will be the responsibility of no less a servant of this House than the Prime Minister himself to present that strategy to the House.
Be that as it may, for it is purely a speculative proposal, I warmly welcome this year's version. It contains, as the hon. and learned Gentleman has acknowledged, striking advances over its predecessors in the range and fullness of 1334 information provided, and, consequently, in its usefulness to Parliament and to public opinion as a basis for informed and timely discussion of the real issues of policy. I warmly congratulate my right hon. Friend the Chief Secretary to the Treasury on these advances and the extent to which, again I say, so willingly the comments and suggestions contained in the Third Report of the Expenditure Committee published last July have been taken into account.
As the hon. and learned Gentleman indicated, perfection is not yet. The White Paper may be—indeed, is—a better and more revealing document than any of its predecessors, but we still lack many necessary features and much essential information. I do not doubt that the Expenditure Committee will be reporting accordingly.
§ Mr. Tam Dalyell (West Lothian)
Will the right hon. Gentleman expand on what he thinks is likely in the future?
§ Mr. du Cann
The hon. and learned Member for Lincoln gave a catalogue of detailed matters. To them one might add the projection of receipts from taxation, a medium-term economic forecast, besides a catalogue of resources. These would be three very large examples. But I acknowledge that if the amount of information is greatly expanded there will be consequences, and I will return to those in a future answer to that intervention in a moment.
§ Mr. J. Bruce-Gardyne (South Angus)
My right hon. Friend made an important point, I thought, when answering the hon. Member for West Lothian (Mr. Dalyell). He said that among the material which he identified as being desirable was publication of the medium-term economic forecast. It is not clear to me from the Committee's report whether it regards that as essential. Do I understand my right hon. Friend to regard it as essential?
§ Mr. du Cann
In my view, it has great merit, and, to answer my hon. Friend in another sense, I echo what the hon. and learned Member for Lincoln said about our Committee having been short of time. I shall return to that point in a minute or two. The net result—I am sure that the hon. and learned Gentleman and other members' of the Committee will at once acknowledge it—was that we were not 1335 able necessarily to include at the outset all the matters, on which we should have wished to make recommendations.
I am sure that no one will deny that this White Paper, by so largely reflecting the findings of the Committee's Third Report, demonstrates the effectiveness of the work of our new Committee and, consequently, the wisdom of the House, acting on a recommendation of the Procedure Committee, in making this innovation in its arrangements. This is the more remarkable when we recall that, for a variety of reasons, the Committee was not set up until shortly before the Easter Recess, which considerably curtailed the amount of work which could be done during last Session. I make that point as the major part of my answer to my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne).
My colleagues on the Committee carried through a tremendous amount of work in that time, and I pay tribute to them for it. However, the more I reflect upon the Committee and its potential, the more do I recall the words of Tenny-son—so many worlds, so much to do,So little done, such things to be".The question is: How is the work to be done?
I should, I think, report on our new Committee in more general terms than is ever possible in our bald, largely factual published reports to the House, about its philosophy, the criteria by which it is making its judgments, its style, so to say, and how these aspects of its work are developing in the light of our short experience to date.
To begin with, we took the view that our remit and the material now before us, notably the Public Expenditure White Papers, had so widened the field of possible inquiry both as to time scale and as to subject matter that the best main use to which the short time remaining to us last Session could be put was a general reconnaissance of the respective fields of each of the sub-committees. This was not easy, for we were not, on appointment, even certain for how long we should remain appointed.
All the sub-committees have now completed these reconnaissances—again, much is due to officials—and, in addition, apart from the July report, they recently completed 1336 reports on the probation service—the sub-committee chaired by my hon. Friend the Member for Wycombe (Mr. John Hall); there is coming up, I believe, a report on the comparatively minor but none the less important subject of private practice in the National Health Service; work proceeds on the use of public funds in private industry, the sub-committee chaired by the hon. Member for Stockton-on-Tess (Mr. William Rodgers), which has already elicited, as the House will acknowledge, some remarkable information for the use of the House, notably about I.R.C. and Rolls-Royce; and there has been a general survey of the defence budget, the sub-committee in this case being chaired by my hon. and gallant Friend the Member for Eye (Sir H. Harrison). Work is now starting on further and higher education—the subcommittee chaired by my hon. Friend the Member for Banbury (Mr. Marten)—and on urban transport and the employment services—the sub-committee chaired by the hon. Lady the Member for Wolverhampton, North-East (Mrs. Renée Short).
Perhaps all that sounds like a great catalogue of work, but we still have some way to go before the White Paper, with all its excellences already achieved and to come, can be made fully to serve the purposes of Parliament, and I wish now to make some practical suggestions about that.
First, I suggest that we should still further adapt our proceedings to the time span of the successive White Papers and of the overall management of public finance, realistically considered, rather than as formerly presented to the House in the Estimates. I remain of the view that this calls for continuity of thought on the part of the Committee, which should, I believe, be reflected in continuity of existence. This means that the Expenditure Committee will work best if it is appointed for more than one Session at a time.
Now, my second suggestion, I said at the outset that I was not speaking with reference to the White Paper on behalf of the Expenditure Committee, and this is so, because, as the hon. and learned Member for Lincoln pointed out, the interval between publication of the White Paper on 25th November this year and the present debate has been far too short for the Committee to give it the kind of 1337 collective scrutiny which it deserves. I recognise the reasons why, possibly, this had to be, and I am certainly not in favour of too long an interval between publication and debate. These White Papers, as, perhaps, my noble Friend Lord Butler might have reflected, are hardly game birds, the better for being well hung. But I think that it would be for the advantage of the House if some arrangement could be made in future years whereby the Expenditure Committee had the opportunity quickly to examine the White Paper and report shortly on its salient features before it was debated. This is a function quite distinct from the continuing one of examining the policies and programmes reflected in the White Paper itself.
I am sure that we shall have the good will of my right hon. Friend the Chief Secretary and the Government generally on this matter, and I was much heartened by the answer which the Leader of the House gave me in reply to a Question on 2nd December.
Naturally, I am conscious that the more information the Committee and the House ask for, and the more information is supplied, the more complex will these White Papers become. It was appropriate, for example, that the Third Report included a glossary of technical terms. In future, informed comment and interpretation—guidance, perhaps—from the Committee before the debate on the White Paper will, I am sure, be increasingly necessary, and, I hope, helpful to the House. For instance, such a report might well have dealt with the question I was asked a few minutes ago by the hon. Member for West Lothian (Mr. Dalyell).
Third, we received in the Committee—I know that my colleagues will warmly acknowledge it—devoted and competent help from our specialist advisers, not least from our new full-time specialist adviser, and from the excellent Clerks of the House. All was willingly given.
So far, so good. But I must tell the House that, working as we are in this highly technical field, in a scene of vast complexity, we do not yet have the resources to do our work adequately. We are still a little too amateur in our approach. As our activity develops and matures, we shall need our own staff. If we are to 1338 succeed, provision must be made for it, and its development welcomed and assisted. To this end, I shall put forward recommendations in 1972.
Fourth, as I have already said, we should all greatly value the advice and counsel of the House regarding our future activities. As of now, specific topics apart, we are taking stock and deciding in the light of our reconnaissance what should be our criteria for determining new tasks. This process is not yet complete. I believe that it can be completed only over several years' experience—perhaps, not even then. But I can say, generally, that it is our intention to look at continuing programmes by which our findings may be available in time to help the House in its task of influencing policy—precisely, I think, the main line of criterion laid down by the hon. and learned Member for Lincoln. This was hardly possible, of course, in the days when all we had to go on were the Estimates and Supplementary Estimates, which came—and still come to us—too late for significant changes to be practicable. That is really the point.
I believe that it is desirable for the Committee to work towards and to establish a coherent overall programme, if that is possible. Thus, it is likely that the Government's general expenditure programme as contained in this and other documents to come will be the cover, so to speak, from which our quarry, our subjects for inquiry, will usually emerge.
The hon. and learned Member for Lincoln made a specific suggestion on which I now wish to comment. My colleagues on the Steering Sub-Committee are assuming additional responsibilities—there is, inevitably, a limited amount of time which any Member can spare for such work—in that it will carry out certain broad inquiries of its own, perhaps not only into some of the thinking behind this White Paper. I can also see—and this is the point which the hon. and learned Gentleman was asking for—the exploration of various Government activities other than those that are immediately apparent in the White Paper. For instance, there is the programme analysis and review work, or the work of the Central Policy Review Staff.
However that may be, it would appear that we are all agreed in the Committee 1339 that the basis of any major investigation must be heads of this character.
A subject must be of interest, and of interest beyond the academic. It must be topical, reasonably political and live. This brings problems in its train, for examination of figures is always dull work, and how to make them live is a question about which we shall have to search for answers.
Any subject chosen must be of reasonable size and scale. I do not think that we should concern ourselves with the candle ends.
If a Department is under examination regarding any programme, we shall inquire into its objectives and have alternative courses argued out before us and the reasons for a particular choice deployed. We shall inquire searchingly into the methods by which programmes are controlled, and will report upon the results measured against the original objectives—an out-turn with forecasts.
This in itself, besides straining our available resources, is a great and ambitious programme of work. We are well launched upon it. We shall persevere and we are determined to succeed.
In our heart of hearts, we know that just as, alas, the common citizen feels himself more remote than he truly is from the processes of Parliament and the Government of the day—and this in spite of all that any of us individually do in our constituencies or in any other way—so, too, is Parliament itself too remote from and too little influential upon the Executive.
Question Time is not the equivalent, whatever it may feel like to Ministers, of a searching, technically-backed cross-examination. Our debates, more often a series of set speeches than debates, with questions asked but not always answered—indeed, often not able to be in the general state of noisiness which seems to pervade so many of our debates—with their usually predictable results, have more the character of a mere interruption in a Minister's curriculum than a full, scientific appraisal of his policies.
This House of Commons, for all the conscientiousness and openness of Ministers in successive Governments, is too much an audience after the event of the decision of Ministers taken privately at 1340 meetings of the Cabinet or Cabinet Committees. We shall try to open the door a little—as much, that is, as is proper—and thereby re-establish somewhat the authority of Parliament and reinforce the responsibility of its Members to play the fullest possible part in advance of the formulation of policy implemented in our name. I can only repeat what I said at the beginning—that I speak for myself but such aims and ambitions are, I hope, those of us all and will be supported.
§ 5.24 p.m.
§ Sir Geoffrey de Freitas (Kettering)
I agree with the right hon. Member for Taunton (Mr. du Cann) that Parliamentary Questions are not a substitute for the detailed, technically-backed examination towards which we have to work. I have answered more Questions than I have asked, and I know that this is so. But I want to pass to something which the right hon. Gentleman illustrated from his reference to remoteness. I feel—and I should not have to feel—like an intruder in following fellow Members of the House who have spent a long time in detailed discussion in Committee. I agree with the right hon. Gentleman that the White Paper is potentially the most important document this House could have before it. I look forward to the day—I hope that I shall see it—when this debate is regarded as being more important than the presentation of the Budget.
Like my hon. and learned Friend the Member for Lincoln (Mr. Taverne), I am disappointed that I cannot look at this document with more priorities offered to me so that I could bring my influence to bear on decisions of Government. Priorities are very important—" Do you prefer this course or that? The consequences of this course will be so and so, and the consequences of that course will be so and so, as far as we can foresee." I recognise that we are at the beginning of an important parliamentary development, but until we have more on priorities, and until we have a report from the Expenditure Committee on the White Paper, I do not see how we can get much further. I hope that it will be possible to have a report from the Committee on the White Paper. We might even in time have a nominated rapporteur to give a summary of the different arguments occurring in the Committee. Since 1341 I have not before me the priorities or a report from the Committee, I can do no more than look at certain aspects of Part 2 of the White Paper which I find need clarification. In one case they are very much the concern of my constituents, whose money from time to time I help to vote for the running of the country.
On pages 38 and 39 of the White Paper, there is a reference to the expenditure for essential maintenance of the waterways. I hope that we can have some explanation from the Government about the financing of the canals after the British Waterways Board is broken up. The division of England and Wales into ten regional water authorities may be a good idea for the provision of water. It certainly makes sense to group the Nene and Welland, Lincolnshire, Great Ouse, Essex and East Suffolk and Norfolk into one water authority. But if the setting up of these ten water authorities is used as an excuse to change the financing of the canals, then the Government will be responsible for destroying the financial basis of the only national body running our canals.
My colleagues and I in the Inland Waterways Association were just beginning to believe that the Secretary of State had been converted to providing recreation for thousands in boats and canoes and for millions of anglers. But judging by what he said last Thursday, it looks as if the Government will not continue to provide the £3 million or so a year for the maintenance of canals but will eventually compel the regional water authorities to find the money. Many of my constituents, as well as those of other hon. Members, will suffer if the canals are not properly maintained so that they can enjoy angling and boating.
On pages 20 and 21 of the White Paper, there is reference to money spent for assisting British commercial organisations and firms and for conducting negotiations on international trade. Again I want more clarification. The second largest industry in my constituency, footwear, plays an important part in our export trade. It is a big industry. It employs nearly 7,000 people in four towns in the constituency—Kettering, Burton Latimer, Desborough, and Rothwell. Indeed, it employs one in four of the working population of these towns. 1342 Even in Corby New Town, it employs over 500 people.
In the last ten years, the British footwear industry has been overtaken in size by both the French and the Italian industries. Entry into the E.E.C. will be a great advantage to the industry. The Director of the British Footwear Manufacturers Federation has gone so far as to say:It is not so much a question as to whether we can survive in the Common Market, rather it is can the industry survive outside the Common Market?It is not only footwear but leather that is directly affected. Two nights ago, the Northamptonshire Evening Telegraph reported the director of a leather firm on the edge of my constituency, speaking to his 450 employees on the advantages to them of our joining the Common Market, as saying:We must make great efforts and I have no doubt if we do, our living standards will improve as they have in the other member countries.However, to return to footwear manufacture rather than leather; there is an important point on which the manufacturers' federation cannot understand the Government's policy towards the E.E.C. I referred to it in a supplementary question which I put today to the Secretary of State for Trade and Industry. I share the manufacturers' lack of understanding. It is a complicated matter, but I hope that it may be correctly summed up in this way.
This country, like the countries of the Common Market, is under an obligation to give certain preferences for manufactured goods from developing countries. It all began in 1964 at the U.N.C.T.A.D. Conference, the aims of which were accepted by the Conservative Government and then by the Labour Government and are still accepted by the present Government. Those aims were to help developing countries, and they were accepted by British footwear manufacturers.
The leaders of the Federation are wise men with ideas about the world and they are not just one-industry men. They acknowledge the problems of the world and of the developing countries. But now they want to go over to the E.E.C. system and not to wait for a few years. Unfortunately, the Government have not met that request and the manufacturers feel that there is a possibility that the 1343 industry will suffer as a result. I ask the Government to listen to the footwear manufacturers on this.
I referred to the good export record, and it is impressive. It is directly related to the money which we are voting for the promotion of trade. In the first seven months of this year, the latest figures available, in spite of world conditions, exports to Europe went up considerably. Alas, those to the United States, for various reasons which most of us know, went down. But in the E.E.C. we stand to gain much from the fact that in recent years we have developed a middle-grade quality of footwear which appears to be what people in prosperous industrial countries want. There are formidable marketing problems, because on the whole on the Continent there tend to be luxury retailers and retailers of cheap shoes, and we have to get our sales in the middle.
The Government seem reluctant to put enough into the promotion of the export of footwear. They must be forthcoming in helping to promote British industry at exhibitions and trade fairs abroad. It looks as though Dusseldorf, Paris and Milan will become the great shoe markets for British shoes. Let the Government start by making a good British footwear exhibition at the Dusseldorf show in March. If there is more Government money and more Government display, more will be forthcoming from private firms, but it needs a positive lead from the Government and, inevitably, more money. However, I am convinced that it will be worth it.
I hope one day to be able to say, "And do that at the cost of so and so", but I cannot do so tonight because of the way in which the White Paper is now arranged.
§ 5.34 p.m.
§ Colonel Sir Harwood Harrison (Eye)
We are today discussing expenditure which concerns all of us as individuals. We are all concerned about living within our incomes, although it may be easier to do that than to live within what one has left after paying taxes, after paying what goes to the Government. But if the State finds that expenditure is too high, it can simply rely on higher taxes.
1344 But it is right to inquire whether the expenditure by the Government is wise, prudent, and giving the best results and to consider those results, not only in profitability, but in the way in which they meet social needs and other human requirements. Unfortunately, Governments generally are open to much criticism in this respect, as are Departments and local authorities. Indignant letters are written to the newspapers about one or other aspect of overspending, but we all say that it does not matter because the Government or the local authority will pay.
I therefore welcome not only the debate, but the setting up of the Expenditure Committee with six Sub-Committees to consider various aspects, to bring home, not only to Parliament but to the whole nation, the fact that it is the country's money and that the country at large is responsible for how it is spent. It is still early days in the life of this Committee. However, I should like to pay my tribute to the clerks who have worked so hard on our behalf, as my right hon. Friend the Member for Taunton (Mr. du Cann) said.
I agree with my right hon. Friend that we are working under some handicap in not having at our service the tools for the trade—expert advice to guide us. This will be essential. Those of us who have visited Washington know of the enormous staffs that senators and congressmen have to help them with similar committees. We may not want to aim as high as that, for to do so would be too expensive, but we must progress a long way from what we now have if we are to do our job to the best of our ability.
I am the Chairman of the Sub-Committee considering the whole of our defence expenditure and the overseas expenditure of the Foreign and Commonwealth Office, a matter of £3,000 million, rather a big order. That may be why the Sub-Committee has not yet reported. I should like to thank all my colleagues who have given such excellent a service on it. We have not been any less active than any other Sub-Committee. There was a good reason for the hon. and learned Member for Lincoln (Mr. Taverne) being able to make his Sub-Committee's report quickly. We have been painting on a rather bigger 1345 canvas. But I hope that there will be a full report in about ten weeks.
In working these Sub-Committees we are greatly dependent on the civil servants who give evidence to us, and I pay tribute to the many who have done so. In my Sub-Committee we have also examined serving personnel in the Ministry of Defence and in commands. These are the men who have to use the tools to do the job, who have to provide the deterrent against anyone attacking us, the task given to them by Parliament.
When the history of the twentieth century is written, the formation of the Expenditure Committee—if it succeeds as I hope and believe it will—will be regarded as a turning point in restoring to the House some power over general expenditure and forecasting. Government has expanded in many aspects and yet we still run the country with much the same number of Ministers.
With all the day-to-day work of answering their colleagues' letters, it is probably difficult for them to go dispassionately into all the facets of expenditure. It is, I suppose, natural for Departments to vie with one another in getting more money, and for the Treasury to come in and put on the brake here and there. In this highly technical age one wonders whether our civil servants, able as they are, are sufficiently trained on the mathematical costing side. The Expenditure Committee, overlooking objectively the expenditure of the Departments, having no axes to grind in favour of one Department contrasting one policy with another, will be able to report dispassionately on all these problems.
I am not trying to anticipate any report, but I should like to make a few general observations on defence. We are looking at expenditure in the 1980s. An incredible amount of time elapses between the conceiving of an idea, putting it on the drawing board, the trials for the prototype machine, aircraft, tank or missile, final production and bringing into service. In my experience, when the final product is put into service certain adjustments become necessary. During this period, owing to a scientific advance, the article may have become out of date. That is why, very wisely, there are certain break-off points, and the Department says, "We have gone far enough, this is no good, it has cost £5 million and we will break it 1346 off here." The Ministry of Defence does costings in stages and does not apply the cost in the one particular year when the article is completed.
I find that I have to get used to the jargon by calling on Army experience of many years ago. One hears "D.A.G." and one realises it means Deputy Adjutant-General. Sometimes even service personnel have forgotten what these initials mean. One has to indoctrinate oneself into the language.
A fortnight ago we paid a fascinating visit to Germany where our forces are doing a most important task. I do not think anyone realises the enormous number of dependants who are with our soldiers and airmen in Germany, and the enormous amount of time and money that has to be spent on them. People think of the Defence Vote as being concerned entirely with weapons and fighting personnel, whereas, for example, the education of these children in Germany is carried on the Vote and is not borne by the Department of Education and Science.
Now that everyone comes of age at 18, young people are marrying earlier. They are encouraged to do so. But we have to provided houses for them, and medical care. I have been asked why we do not employ more civilian doctors to look after all these dependants, as if the unit is called away to Ulster, the medical officer goes with the unit. Who is then to look after the health of the wives and children? The Ministry of Defence Vote is not spent entirely on armaments; much of it is spent on welfare which, if there were no Army and Air Force, would be borne by other Departments.
We have not yet moved into the modem age in the way we do our accounts. It may be that the Chancellor of the Exchequer is looking at this. This is still done rather on a cash basis with insufficient credit arrangements for capital expenditure.
One aspect of our resources which is not confined to the Ministry of Defence is the use we make of land. Land in this country, as elsewhere, has become of great value. The Ministry of Defence has always had a lot of land, and the question arises whether the best value is being got out of that land. A committee 1347 has been set up under Lord Nugent of Guildford to look into this aspect. To give an example, in Colchester or Salisbury there may be a barracks adjacent to a town, and next to it a field which has always been used for the parking of vehicles. The field may be close to a road, and the building value of the land may be as much as £10,000 an acre. It would pay the State to sell that land and garage the vehicles on another field of not such high value. The same applies to our nationalised industries.
When I was in Germany I asked many staff officers whether they were satisfied with the accounting system, and whether they thought it was too tight. We try to save £1 by spending £100 on checking everything up. The staff officers agreed that this was so. It is a reflection on our moral standards today that one of our biggest stores each year writes off 2 per cent. of its turnover on dishonesty. There should be little dishonesty in compact units. We should give greater power of write-off to the generals who are out there.
When I returned to this country I was given a copy of the Civil Service Department O. and M. Bulletin for 22nd November, from which I read that a team had visited a variety of military establishments at home and abroad who worked throughout on the principle that it does not protect the public purse to spend £10 to ensure that £1 is not mis-spent. It was reckoned at the end that the team study had cost £10,000 and that it could result in savings of £500,000 a year. This illustrates how the work of my Sub-Committee and other Sub-Committees, can bring profitable results in the years to come.
I wonder whether all our Departments are as up to date as they should be. I know that computers are now being used, but there is still a reluctance within the Civil Service to employ the professional advice that is needed. On the expenditure side one thinks of chartered accountants and cost and works accountants. There is one Ministry which has no one with those qualifications on its payroll. I am not making out that the chartered accountants are the best people in the world, but they are the best people in the world for presenting figures and knowing how to handle them rapidly.
1348 I remember once when I was connected with a Department that it was someone's turn to be the financial adviser to the Department. He knew nothing about finance, although he knew a great deal about many other matters. But it was his turn. He could not add two and two together. I remember that he put a Cabinet paper before a Minister where, literally, he had made three into four. That did not make him less able of course. He was simply not the right man for that job. I relate that experience to illustrate how expert professional advice is necessary to look at the size of the figures and to present them to Committees and to this House.
I say only a brief word on the Defence Estimates in this White Paper. They are very short. On page 17, attention is drawn to the extra expenditure involved in setting up four new infantry battalions. We welcome this action, and we see the need for them in view of the tragic situation in Ulster. They have been made possible by better recruiting figures.
As for bringing forward the building of new naval ships, is my hon. Friend the Financial Secretary quite satisfied that this policy has the full approval of the Chiefs of Staff Committee? Will it, for example, upset the balance between surface ships and submarines? Is it in line with the policy of the Chiefs of Staff? From the pure defence point of view, I do not think it is right to take this action simply because of the importance of creating employment in certain sections of the shipyards, although we appreciate the need for it.
I come finally to the amount of money that we give in aid to underdeveloped countries. Some of it goes into agriculture. However, I do not think that we tie up our aid sufficiently to ensure that agricultural colleges give instruction to people who often are working under archaic conditions and who hardly know how to use fertilisers. In many cases, twice, three times or four times the amount of crops could be grown if only the people concerned had the know-how. Often they are prejudiced against using that know-how, for various reasons, but I should like to see that emphasis placed on the aid that we give because, in all too many of the underdeveloped countries, getting the right quantity and type of food is the most important need of all.
1349 I welcome the setting up of the Expenditure Committee. In future years, this occasion should become one of our most important debates. It may be a turning point in the history of this House.
§ 5.53 p.m.
§ Mr. Robert Sheldon (Ashton-under-Lyne)
The hon. and gallant Member for Eye (Sir H. Harrison) has told us about the forthcoming report of his Sub-Committee. I am sure that we all look forward with interest to receiving it. He also mentioned his great hopes for the Public Expenditure Committee. This has been reiterated in almost every speech that we have heard so far. However, I cannot help recalling that I, too, have attended all these debates and that everyone has said this in debate after debate, from the very first one that we had on the Report of the Select Committee on Procedure. Time and time again it has been said how important the matter is and how it will become one of the crucial issues of the year. I notice that each time we say this we have fewer and fewer hon. Members attending these debates, and today's attendance has reached almost rock bottom for a matter as important as this.
Our attitude to this discussion, unfortunately, is mirrored by the interest in the country as a whole. It is not sufficient for us to condemn the attitudes of other people to the public expenditure debate without examining what it is that we have not yet done, unless we can show that in time, what we are doing will achieve the importance that the subject deserves.
As a result of all these debates, I do not think that there have been many changes of opinion. I do not think that people outside this House have been much influenced, and I do not think that hon. Members have been much influenced. In these terms, up to the present time, there has been no great success to record. However, it is possible that we may record success in the future, and, quite rightly, a great deal of our work has gone into that.
In the newspapers that I read this morning, there was no leader referring to this great debate. There was nothing like the interest shown in it that we are accustomed to seeing shown about the Budget. To make a comparison of that 1350 kind is almost laughable. But we are seeing some sort of debate about public expenditure taking place regularly in the Civil Service. There is now a proper debate within the Government. It may not be adequate, but it is there. However, the kind of debate that we are having in this House is not adequate. Even less adequate is the debate in the country as a whole.
The Public Expenditure Committee will require time between the publication of the public expenditure White Paper and the debate to issue some sort of report by which this House can be briefed. That is essential, and I look forward to seeing it come about. The Public Expenditure Committee will be required also to present issues to the House on which it will have to decide.
The most interesting development that we have seen is the Amendment to the Prime Minister's Motion, on which I am sure that this House will divide tomorrow evening. It is when we have a division on an important matter of this kind that we see the issue beginning to be treated with the seriousness that it deserves.
One of the crucial parts of the exercise is the questioning of the executive by Parliament. That becomes harder to achieve as time goes on. As a result of the Fulton and other reforms, the Civil Service is becoming more proficient, more professional, that much more difficult to follow and that much more difficult to examine. We have all seen developments in that direction, and one minor one took place only the other day with the announcement of increases in Ministerial salaries and the possibility of greater patronage by the Prime Minister and the Government. That requires to be redressed by the power of Parliament. A number of hon. Members owe their existence and the realisation of their hopes, dreams and ambitions to the power of the Government. As more and more of them come under that influence, so the power of Parliament must be increased to compensate for it. As less inquiry into public expenditure comes from within the Government machine as a result, a greater examination from outside is required. By that, we think in terms of Parliament. We need to question civil servants again and again so as to force them to justify their actions to us.
1351 One of the memoranda that the Public Expenditure Committee received came from Mr. Peter Jay and Mr. Sam Brittan, who also gave evidence to us. One of the important matters raised was the need to parallel the procedures followed in Whitehall. That means that the way in which Whitehall comes to its decisions on public expenditure should be paralleled by the kind of examination which we undertake. This is important, because it is necessary to challenge at each point in the argument. If the procedures are different, although one may come out with an answer which is compatible, one will not be able to challenge at each point in the argument.
The consequence of this view is that we know that the medium-term tax revenue is estimated and used by the Treasury to determine total public expenditure. I should like the Financial Secretary, who I understand is to wind up the debate, to confirm whether that is so. In their evidence to us Messrs. Jay and Brittan said that they knew that this was so. If it is used by the Treasury as an important tool in working out the amount of public money which is available and may be spent and it is available to the Government, in the same way it ought to be made available to us.
My particular interest in public expenditure was highlighted by the events of 1968 and the economic changes consequential upon devaluation. I believe that was the wrong way to carry out reductions in public expenditure. The actions on the school-leaving age and prescription charges were a lesson to us all about the deficiencies in the examination of public expenditure. It was a lesson which burned into all of us a determination that these methods could and should be better arranged so that we avoid the kind of decision whereby we tried to save £30 million out of £20,000 million expenditure and a few weeks later came up with £500 million on the Supplementary Estimates.
§ Mr. Dalyell
Does not the Government's decision on school milk in 1971 have all the symptoms of what happened to us in 1968?
§ Mr. Sheldon
That is parallel. There is an even better example to which I hope to draw attention later.
1352 In my view, it all comes down to the question of choice and the establishment of priorities. The Expenditure Committee, in paragraph 47 of its Third Report, said:We consider that it is of crucial importance for Parliament to be able to discuss alternative public expenditure programmes. We agree with Mr. Peter Jay, Mr. Samuel Brittan and Professor Prest that sufficient information should be made available for alternative programmes to be costed.This lies at the heart of everything which we are doing. This will never be much of a debate if it is to be conducted in this way with specialists talking to specialists. Our task, if it is to be adequately performed, is to prepare the information for pressure groups both within and without this House so that they can bring to bear the political pressures to which we are very responsive. This is what party politics are all about. We should not get that kind of decision to save £30 million out of £20,000 million or the nonsense about school milk when there are so many easier and more acceptable ways of raising money—better choices, if one likes. The whole purpose of the White Paper, if it is adequately to perform its function, is to provide straw which we can make into bricks which perhaps, to extend the analogy, pressure groups might possibly wish to throw at each other.
§ Mr. John Nott (St. Ives)
Will the hon. Gentleman explain, because I do not go along with what he is saying, how the White Paper could possibly be altered in such a way that it would change the procedure under which the Government would make a decision on whether to stop school milk? I am at a loss to understand how these statistics, which I think are quite valuable, are in any way related to the Government's policy on school milk.
§ Mr. Sheldon
Surely the main task of the Expenditure Committee is to prepare the arguments which other people and we ourselves may use. The task of the Committee, as I see it, is divided into two parts: first, to discuss the ways in which this information might best be made available, and, secondly, to take part in the arguments resulting from an understanding of the various kinds of expenditure. School milk is an example. If the information is available one can 1353 see how much that will cost and compare it with the cost of an urban motorway, the cost of defence, or the cost of some other programme which one likes least. Putting it another way, a pressure group interested in these matters is able to look down the Government's programme and say, "In this order I make my preferences in such a way." This cannot be done at the moment. Obviously it will never be possible to do it fully, but we can make an approach to it.
If we are successful we can turn a rather indigestible report into something which is easier to look at, easier to examine, and easier to use to assess the various kinds of expenditure in terms of the priorities which an individual may establish for himself. When that individual is in a position to establish in his own way the priorities which he particularly wishes to see, he will be able and perhaps prompted to bring pressure upon his Member of Parliament, and Members of Parliament may be able to bring pressure upon the Government or upon their own parties. In consequence, we can achieve—this is a long-term business—the kind of fork which is necessary in a responsible legislature. We can at least make some progress towards avoiding that kind of speech in which everybody is in favour of a particular expenditure but is never forced into the dilemma of saying what they are prepared to forgo to achieve that object.
Although that may be a little too much to expect, we can at least achieve a kind of embarrassing evasion because an hon. Member knows that in a debate of this kind he can be asked a question like that and he will not be out of order as he is, for example, in so many of the debates on the Finance Bill. He is forced into a corner and has to consider on what he is prepared to spend less in order to spend more on his priorities. If not, as my hon. and learned Friend the Member for Lincoln (Mr. Taverne) said, he will be forced into asking for an increase in taxation.
§ Mr. Edmund Dell (Birkenhead)
Is it not already difficult enough for Members of Parliament to change the balance of public expenditure in ways which they think desirable without also taking on the responsibilities of Government and deciding what should be cut instead?
§ Mr. Sheldon
Yes. The difficulty about the present situation is that we are able readily and easily to escape from that kind of dilemma. Although we do not have to accept the necessary responsibility, we ought at least to be put into a position of saying, at least in general terms, what we would forgo. Fully conscious of my responsibilities, and reacting to my right hon. Friend's suggestion, I intend to proceed in that direction.
The Treasury memorandum, on page 53, refers to the public expenditure survey being used by Ministers to decide whether reductions should be made, or whether priorities should be changed. The memorandum goes on to say that:sophisticated techniques exist for comparing one road scheme against another: but there is no comparable technique availble for determining whether more or less resources should be used on roads compared with, say, hospitals.That is right. There are no techniques, and there cannot be, for doing that, but what we can do is to bring the public into the matter, and to bring the general debate to a point at which influence can be brought to bear on those responsible for making decisions. There are no sophisticated techniques to enable one to say what is desirable, but there is a public will which can be exercised in this House and through Members of Parliament.
I do not want to do too much party bashing, but there is a need for a political angle to be introduced into this issue. The report shows that some important changes have been made. The 1970 Tory Party manifesto said that there would be reductions in the weight of Government spending, and that policy was reflected in a number of statements and speeches by right hon. and hon. Gentlemen opposite, but we have seen the learning process at work and hon. Gentlemen opposite are adopting a rather different attitude from that put forward in 1970.
We have seen, too, that the cuts in public expenditure which were announced with such a flourish in the autumn of last year have been fully restored. The figures in the White Paper show that to be so. That represents a fundamental change of policy, and it is one about which we have not heard a great deal. We need to know the reason for this change of policy by the Government, 1355 apart from the fact that they have been getting cold feet about the economic situation and are making use of the one economic weapon they have to hand, their control of public expenditure.
One thing that I wish to see is a tax expenditure budget. We received evidence about this from Messrs. Peter Jay and Sam Brittan. That would be an important development, and it is one which we should encourage in order to reduce the distinction between allowances and expenditure. There is the obvious example of investment grants, as against tax allowances. In America they have dealt with the problem in a sophisticated way, and in an attempt to discover how much the Government are spending they tend to regard these two kinds of payment, be they remissions of receipts, or actual payments, as the same for expenditure considerations. It is important that the Government should forgo some of their dogma about this and regard the two items as similar for planning purposes, and identical in certain circumstances.
I feel particularly sad that the housing programme has been handled so badly. It is a matter of great regret that it will increase by only 0.2 per cent. over one period which I considered. If I were forced to say how I would find the money to restore the housing programme to something like that of the Labour Government's I should reduce expenditure on defence, because it is there that the Government intend to spend more than their predecessors did.
My hon. Friend the Member for Salford, East (Mr. Frank Allaun) the other day elicited from the Ministry that our defence expenditure was running at the rate of 5.7 per cent. of G.N.P. while that of our N.A.T.O. partners was running at 4.2 per cent. of their G.N.P. In the context of the establishment of a closer relationship with Europe, we can save £600 million on defence by putting ourselves into a position similar to that of our N.A.T.O. allies and Western Europe as a whole. We are not rich enough to make grand gestures on arms expenditure and defence, and we are needy enough in social terms to warrant such a change in our priorities. Like many other hon. Members I, too, am awaiting next year's report by the Public Expenditure Committee 1356 to clarify many of the issues which have been raised. In the meantime, the expenditure on arms and defence is one piece of wrong Government planning which ought to be put right.
§ 6.16 p.m.
§ Mr. Peter Rees (Dover)
Not having been privileged to be a member of a Public Expenditure Committee, and having no experience of public administration, I do not feel competent to criticise the layout of the public accounts or even the forecasts for the next five years. I hope, therefore, that the House will forgive me if I descend from the general to the particular and concentrate on the nationalised industries, because we have forecasts for the next five years of the capital requirements of those industries.
If I may so put it, the nationalised industries are the joker in the pack, because they are supposed to be commercial entities, and yet we have to judge them by political criteria. Indeed, we are told in the forecasts that their capital requirements are to be judged largely by commercial considerations, and it is a curiosity—and it perhaps throws doubt on the validity of the forecasts in that respect—that the gross trading surpluses anticipated are excluded from the forecasts, so that the forecasts for the nationalised industries are largely meaningless.
I am not one of those who are so pessimistic as to conceive that over the next five years no nationalised industry will realise a gross trading surplus. I hope—and I trust that my hon. Friend the Financial Secretary will consider the possibility—that the nationalised industries may raise some of their capital on the market over the next five years, because it would be healthier for them and for the country if they were to do so.
It seems to me that at present the nationalised industries are too often used as an engine for economic manipulation or even, perhaps, for the provision of social benefits. Their projections are not often judged by commercial criteria. They may be advanced because the Government wish to stimulate the economy in some regard. Equally, good commercial projects for nationalised industries may be choked off because they do not fit in with the economic climate of the time.
It would be difficult for anyone at this time to suggest in detail how the nationalised industries should raise capital. I 1357 am not suggesting this as a policy of "creeping denationalisation"—there are all sorts of principles which could be discussed on another occasion. It would be worth the Government's while undertaking some exploration here to see, for instance, whether loan stock or convertible debentures or participating preference shares could be issued at a certain point of time. It may be that the main structure of the nationalised industries is not susceptible to this kind of treatment but it is possible that subsidiaries could be formed.
We have the interesting precedent of British Railways under Mr. Richard Marsh which have set up a company along with other members of a consortium to take advantage of its capital allowances. No doubt that kind of company could be floated off or certainly raise some of its capital on the market. I hope that the next time we debate these forecasts, instead of finding the nationalised industries looking to the Exchequer for the foreseeable future for their capital requirements they will at least in part be expected to raise some of their capital requirements from other sources, with the hope eventually of meeting all their requirements in this way.
§ Mr. Patrick Jenkin
May I be clear about what is in my hon. Friend's mind? Does he envisage that any future borrowing from the market by the nationalised industries would automatically have a gilt-edged guarantee?
§ Mr. Rees
I do not. This is of course one of the ways in which it could do. But I want to see a much more flexible capital policy for the nationalised industries. There is no reason why they should not hive off part of their activities on the lines of the British Railways precedent. British Railways are to hire their stock from a company set up with a consortium of outside backers. I do not see why that should be conceded gilt-edged status for capital borrowing. It would be a useful discipline if they did have some kind of equity capital—[Interruption.] Does the hon. Member for Salford, West (Mr. Orme) wish to intervene?
§ Mr. Stanley Orme (Salford, West)
I was simply remarking "Shades of Hugh Gaitskell" when I heard the hon. Gentleman 1358 talking about equity capital and the publicly-owned industries.
§ Mr. Rees
I am not aware of what suggestions of the late Mr. Hugh Gaitskell the hon. Gentleman had in mind. I see no reason why the entire capital requirements, if raised on the market, should necessarily have any fixed coupon. There are all sorts of variations, and I would like to see a much more flexible approach. There seems to have been the conception that either they look to the Exchequer or issue fixed interest stock like 3 per cent. Electricity Stock. This is an area in which this Government particularly could introduce some new thinking so that next time we debate these forecasts we shall not find that the nationalised industries are envisaged to the end of time as a charge on the Exchequer but are set up in their own right as autonomous commercial institutions.
§ 6.23 p.m.
§ Mr. Reg Prentice (East Ham, North)
This is in some ways a curious debate in that many hon. Members have expressed the wish that the House should elevate this debate into one of the most important of the year. More than one hon. Member has said that this ought to be regarded as a more important occasion than the Chancellor's annual Budget, and I believe that is right. Yet somehow everyone has been remarking on the fact that so far in this debate and previous debates on the two other White Papers we have failed to rise to the occasion. This may be partly because many hon. Members have shown an obsession with detail which I would have thought was wholly appropriate to the work of the Public Expenditure Committee, but not necessarily to the Floor of the House.
I listened with great interest to the right hon. Member for Taunton (Mr. du Cann) talking about his plan for the Committee, and I congratulate him and his colleagues on what they have done so far and on what they propose. On the Floor of the House we should be debating the broad priorities involved, the relative priorities of different parts of the public expenditure pattern and the major question of the degree of priority to be given to public expenditure as against private expenditure during the 1359 period under review, which is from now until April, 1976, the end of the period covered by the White Paper.
I remain an enthusiastic supporter of the ideas put forward by John Kenneth Galbraith in "The Affluent Society" in the mid-1950s. His phrase "Public squalor in the midst of private affluence" represents a danger facing every modern developed society, and I believe that the danger is greater and more urgent now than when he wrote that book. Against that background, if we look back to the record of the Labour Government in dealing with public expenditure it will be seen that the most important achievement of that Government, certainly in my view, was the rapid expansion of public expenditure, particularly in the years up to 1969. From the financial year 1964–65 to the financial year 1968–69 the annual growth in public expenditure was 5.9 per cent. It took a great deal of political courage to do that in an unfavourable economic climate when the kind of Budgets that had to be introduced involved of necessity very high Government surpluses and made it difficult to expand public expenditure.
The fact that it did expand in those years meant a great deal in terms of human happiness and dignity. I regret that in many ways towards the end of the Labour Government that impetus was lost. I particularly regret the decisions to postpone the raising of the school leaving age and to reintroduce Health Services charges and, striking a personal note, the failure to expand overseas aid as a proportion of the gross national product. There are many other examples, but the period of the Labour Government as a whole was one of expanding public expenditure, and this meant a great deal.
The general strategy as set out in the White Paper a year ago, preceded as it was by the October mini-Budget, is a strategy for reducing the growth of public expenditure, and, although it has clearly been upset by the unemployment figures and the Government's panic reaction to them, nevertheless when the Chief Secretary spoke this afternoon that remained the Government's central strategy. I took down his words; he said that the Government's strategy was flexible in the short run and constant in the long run, that 1360 they had reintroduced in recent months some increases in public expenditure but that they would apply more to the first part of the period under review than to the latter part and that the general intention was consistent with the White Paper. We should examine that as being the central political strategy of the Government. That is why my right hon. Friends have tabled the Amendment.
If I have a criticism of the debate so far it is that it has been too cosy and we have been concerned too much with detail and the techniques involved in examining public expenditure rather than these central questions of priorities. These are the priorities that have involved the Government in the last 18 months in redistributing income in favour of the more prosperous sections of the community through tax reliefs. The other side of the coin has been the decision on school milk, the increase in National Health Service charges, the abolition of the first three days' benefit for those who are sick and unemployed, and a number of other mean and miserable decisions which we deplore.
I want to look at the White Paper in the sense that it continues those decisions for the next four and a half years and in doing so provides a straitjacket for the kind of expansion that we would otherwise wish to see in the main spending departments and in the social services dependent upon them.
I will give three examples of this. The first I take from the section in the White Paper on social security, with particular reference to retirement pensions. Last week we debated the urgent and immediate need for an improvement in the position of retirement pensioners this winter. People throughout the country were shocked by the negative response of the Government to the case made not only by my hon. Friends but even by some hon. Gentlemen opposite.
If one looks at the forward projections on social security in the White Paper one is bound to reach two conclusions. The first—this is allowing for the fact that there is scope for changes of policy, as spelled out in the introductory paragraphs—is that over this four and a half year period there will be a review of benefits only every other year. In other words, there will be a review in the autumn of 1973 and the autumn of 1975 and at 1361 no other time during the four and a half years under discussion.
The second conclusion one must reach is that, if the Government are to keep to these figures, each of those reviews will be a cost-of-living review only, and any increase will be a cost-of-living increase only, for we are told in paragraph 3 of this section that after takingaccount of the fact that benefits lose their value as prices rise … The cost of any real improvement over and above the restoration of their value at any particular uprating would be a charge on the contingency reserve.If one looks at the figures given earlier in the White Paper relating to that contingency reserve, one discovers what a modest sum is involved compared with the provision for social security, which represents about one-fifth of total public expenditure, while about three-quarters of the social security figure is made up of the benefits about which I am speaking.
This means that any adjustment to give a real improvement in the living standards of retirement pensioners and other groups must involve a serious change in the pattern of figures in the White Paper; that is, if the Government are to make a substantial improvement in the value of pensions between now and 1976.
The Government envisage that there will be over this period a certain amount of economic growth. Presumably, therefore, there will be a certain growth in the real wages and salaries of the rest of the community. They therefore envisage—they should come clean over this—that there will be a decline in the relative share which pensioners, the chronic sick and others will get from the national product during the period ahead. This will not do, and it is vital to discuss this point in the context of the four and a half years that lie ahead.
My second example is from the section of the White Paper dealing with education, in which we are told that the growth in provision for education in real terms during this period will be about 3 per cent. per year. The explanatory section on education gives rather less information about the growth of demand on the education system than did the White Paper of last year or the Labour Government's White Paper of two years ago.
We are told that the secondary school population is likely to rise from 3.6 million to 4.43 million, mainly, though 1362 I think not exclusively, as the result of the raising of the school leaving age. We are told later that the rate of increase in the school population will decline after 1974.
But this obscures the point that in recent years there has been a considerable increase in the school population due to demographic trends and to the inclination of more pupils to stay on longer at school. Indeed, in the White Paper of two years ago we were told that between then and now the secondary school population would increase by about 9 per cent.
I emphasise the fact that all these increases in the school population will lead in the period under review to an explosive increase in demand for facilities for higher and further education. Indeed, we have surely learned from our experience in recent years that all previous estimates, including those accepted by the Robbins Committee a few years ago, have proved to be under-estimates and that there is a situation in education in which expansion feeds on itself and demand feeds on expansion, and we are likely to get increased demand on every front.
These figures presumably mean the abandonment for the foreseeable future of any prospect of meeting the Robbins' objective of providing higher education for every young person qualified for it and wishing to have it. It will mean also that the further education system is not likely to be able to meet the growing demand which will result from the growing sophistication of industry, the operation of the Industrial Training Act and so on.
I am just as worried about further education prospects for the non-student teenager as for those who go on as a result of qualifying for higher education. I believe that the whole concept of an expansion rate of 3 per cent. per year in real terms means that the standards available are likely to decline and that we are likely to fail to meet in numerical terms the extra demand which will be generated in the period under review.
My third example comes from the section on overseas aid, and hon. Members may not be surprised to hear me welcome at least two aspects of this section. The White Paper announces, first, an increase of £9 million over the 1363 figure that was announced previously for the year 1972–73. The second figure that I welcome relates to the final year, 1975–76. This is a fresh figure which has not been announced before. It is proposed in that year that the overseas aid programme in real terms will be 9 per cent. higher than in the preceding year. I welcome any upward trend in the programme, although in my view the figures remain grossly inadequate.
I will not inflict on the House the sort of speech I have made many times in the last two years on this subject, except to remind the Government that the central point of the argument in the context of these years ahead flows from a series of resolutions passed at the United Nations General Assembly a year ago. In those resolutions the General Assembly designated the 'seventies as the second United Nations development decade and set out a number of objectives for that decade—hard and difficult objectives for the developing countries but relatively moderate objectives and fairly easy to fulfil on the part of the developed countries, including the United Kingdom.
Among those objectives was one urging a flow of Government aid, not including private investment, equivalent to 0.7 per cent. of our annual gross national product by 1975. That 0.7 per cent. target has been accepted by many European countries, including Germany, Belgium and Holland, and by many donor countries of the Commonwealth, such as Canada and New Zealand, though not by the British Government. We should accept it. Considering our likely gross national product by 1975, we should, I suggest, be providing about 0.5 per cent. by that date. I again ask the Government to reconsider the matter. I put it to the Government that, quite apart from the moral aspects, nothing would be better for British interests and British prestige in the world than to accept this target and to announce figures moving by stages towards it by the middle of the decade.
I have referred to three spending programmes but I could go on, as could any of my hon. and right hon. Friends, to discuss other programmes in similar terms, but we have been reminded that no one is entitled to do that exercise without saying what he would forgo. My view 1364 is that we have to increase the total volume of public expenditure as part of the gross national product and that this is something that we should not duck.
I do not take a puritanical view of private expenditure. I do not object to people having larger motor cars, colour television or holidays in the Mediterranean: I want my constituents to enjoy more of these things than they do now—and most of them do not enjoy many of them yet. But I am quite prepared to say that these things do not have the same priority as giving a better deal for the aged, or providing better services for the mentally sick, or providing better educational opportunities for young people, and the other items in the main expenditure programme.
Many charges can be levelled against the Government, but perhaps the most serious charge is that before the last General Election the Conservative Party campaigned, among other things, on the basis that public expenditure was too high and that taxation should be brought down. The Government have not brought down public expenditure and there never was any real chance that they would, but they have fulfilled that election promise to the extent that they have made marginal changes in the public expenditure programmes that do damage to the programmes to which I have referred, and to many others described in the White Paper.
I believe that one of the major political problems is how far we are prepared as a community to spend on collective welfare, and how far politicians have the courage to say to the people whom they represent that public expenditure may be more in their interests than increased private expenditure. At the moment we are not saying as much as we should. No one is saying that the new primary school round the corner may be as big an improvement to the real living standards of the family as is a new car in the garage. This is the message that we must get across, and it contains the difference that has, I hope, clearly emerged in this debate between this side of the House and the other.
§ 6.43 p.m.
§ Mr. Peter Hordern (Horsham)
The right hon. Member for East Ham, North (Mr. Prentice) and I agree on one matter at least, and that is, until at any rate his 1365 concluding remarks, on the cosiness of this debate so far; and even his strictures upon the Government were couched in such friendly terms that I do not believe that the atmosphere in the Chamber is perceptibly cooler.
But I must take issue with the right hon. Gentleman on some of his concluding remarks. He is quite open and honest about his preference for the expansion of the public sector. I do not know how popular he thinks his policies will be with the country at large, or even with his constituents, but when one looks at what his Government did in increasing public expenditure it does not seem to have gained them great popularity at the decisive test of the General Election. Whilst it is true that public expenditure so far planned by my right hon. and hon. Friends is not being reduced as much as they had formerly hoped, what is in sharp contrast is that the present Government have reduced taxation by £1,400 million whilst his Government increased taxation by some £3,000 million.
The debate has been couched in terminology which not all of us—and I certainly include myself—understand. It had at the start a certain academic quality and flavour about it, and I hope that my right hon. Friend the Member for Taunton (Mr. du Cann) will forgive me for hoping that future debates on public expenditure will not be confined to the afficionados of the Expenditure Committee. The remarks of the right hon. Member for East Ham, North showed that the debate should not be so confined. But I was greatly impressed by the report produced by the Sub-Committee of the Expenditure Committee, and, if I may say so, by its quality.
It was the purpose of the Committee to establish the options which the Government had themselves selected, and the reasons for and methods of their selection. I do not think that my right hon. Friend would disagree with me if I suggested to him that the Committee had been less than succesful in establishing how these options had been arrived at. Indeed, the point which he made, and which the hon. and learned Member for Lincoln (Mr. Taverne) made, was that the Government should provide a great deal more material than they have so far done about the methods by which they reach their decisions.
1366 The stumbling block which the Expenditure Committee very soon came up against is likely to recur, however far and deep its researches go, and in this connection I should like to quote from the evidence of Lord Diamond who said:I think every Government would be less successful in achieving Parliament's purpose of containing public expenditure within a desirable figure if each Minister's discussions and each Minister's achievements were to be search-lighted and a searchlight turned upon him in this way. The embarrassment I refer to is the embarrassment of the Minister having to justify what he has been compelled to do before an audience which would be unlikely to take the trouble to go into all the details of knowing all the pressures which resulted in this.I have disagreed with Lord Diamond on many occasions but I must say that there is a good deal of substance in those remarks, because for all the enthusiasm and proper concern about the rights of the House to examine public expenditure and the Government's intentions towards public expenditure, what is it that the House really wishes to achieve? Is it the advancement of democracy? Is it that more people should be involved in the decision-making process? Or is it that the decisions themselves should be of the best possible quality? Some may say that those decisions will be better if they are arrived at through the fullest possible consultation with experts and with the general public—indeed, we have heard one hon. Member suggest just that—but I do not believe that the most successful outcome will be ensured by a wider sharing of knowledge of the way in which these decisions are reached. I do not believe that that is by any means proved, but, what is perhaps even more important, I do not believe that any Government of any political complexion will do it in any case.
The work of the Sub-Committee seems to me to have been most useful in establishing how the Executive goes about its work, but there are some decisions which cannot satisfactorily be determined in any case by cost analysis techniques. In saying that, I do not mean those cost analysis techniques which are used within the Department of Defence or in the Home Office; the point is that when considering one batch of policies against another there is no means by which these decisions can properly be evaluated by any cost analysis techniques.
1367 It is true that Lord Rothchild's unit is bound to present the options available to the Government in a more rational way, but that does not mean that the decision at the end of the day has not to be taken—indeed, it must be taken—by the Cabinet on issues and for reasons which are very far removed, very often, from cost analysis techniques.
On page 35 of the Report of the Expenditure Committee my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) said thatthere is a lack of a rational method of weighing one side of expenditure against another for innovations. Let me give you an example from my own time at the Treasury. There was the question of raising the school leaving age and also the question of the Concorde. They were not weighed against each other, they were wholly separate decisions.For better or for worse—indeed, I think that it is for worse—that is still the position today.
Whether we like it or not, the Government retain the right to make their decisions, and to make them behind closed doors. What Lord Rothschild's unit cannot do, and only the Government can do, is to assess the human, social and political factors in coming to a decision on any one programme and as between conflicting programmes. The House will recall that in the report of the Expenditure Committee the Treasury said, in a Minute, that it was not competent to make a decision as between one programme and another by cost analysis techniques. It is much easier, in retrospect, to find obvious examples of what could be called Government enterprise which would never have been undertaken if the cost had ever been guessed.
To me, Concorde is the most obvious example. If the speculation about the pricing policy of Concorde is correct—and whatever my right hon. Friend said today I should think that it would ultimately prove to be correct—the greater part of £900 million will have to be written off. But, even supposing that the initial estimate of £150 million had been nearer the mark, what alternative uses for the money were ever presented at the time? In evidence my right hon. Friend the Member for Kingston-upon-Thames said that no alternatives were presented at the time.
1368 What alternative uses are now being considered for the £900 million which will be written off jointly between Britain and France for the Concorde project? What alternative uses are being considered for the money that this House has agreed to vote for the support of the computer industry, or the coal industry or, as we have now heard, for further support for the steel industry?
All these industries have one common factor; namely, the need for further capital and the increasing amount of time that it takes for any of these advanced capital projects to reach fruition. The casualties that the House hears about month after month become greater and even more expensive—Upper Clyde, Rolls-Royce, and now the steel industry, with £200 million to be written off what was called the public dividend capital and a further £150 million written off its public debt. The only satisfactory policy in these circumstances is the adoption of a posture of continuing disengagement by the State, whether it is done by sharing the costs with other countries or overseas firms, or by manufacture under licence.
I cannot help but wonder whether there is any Government Department that can say at once what is the practice in these industries in other countries, what is being done in capital intensive industries abroad, what are the costs of those programmes, and whether co-operation is practical and, if so on what terms. I doubt whether any such organisation exists within the Government today.
Again—on quite a different matter—when the C.B.I. took its initiative on prices, what calculations were made of the consequences of holding price increases to 5 per cent.? How much would prices otherwise have risen? My hon. and learned Friend the Member for Dover (Mr. Peter Rees) referred to the fact that the gas, electricity, steel and rail industries will all show losses, and that the policy of making them self-supporting has had to be abandoned. This means that there has been a conscious decision to transfer support for these industries from the consumer to the taxpayer, which in my eyes is a thoroughly retrograde step. I hope that that decision is temporary.
I am not one of those who welcomed the C.B.I. initiative unreservedly. Had all things been equal I would not have 1369 welcomed it at all, but they never are equal. In the circumstances of the rip-roaring inflation that we inherited, I suppose that there was something to be said for an initiative which appeared to moderate the rate of inflation—although whether that initiative has done so or not is quite another question. There are signs that the rate of inflation is now moderating, for whatever reason, and the sooner market forces are able to operate once more the better are the chances of controlling inflation.
It is right that public expenditure should be used to moderate the social effects of economic movements but it should not be used to frustrate the workings of a market economy. In my opinion, it is right to use it to moderate the harshest effects of the market but it should not be thought that the working of a free market system is always harsh.
In the debate that took place a year ago I criticised the decision of the Secretary of State to close down many small cottage hospitals. I had one in my constituency, at Petworth. The policy was to close it, and eventually the Secretary of State had his way and the hospital was closed. There was no need for a fully comprehensive hospital at Petworth, but there was a severe need for a home to which old people could go to be looked after. The hospital was ordered to be closed and the building to be sold, and it was. But the person who bought it handed it to trustees with instructions that it should continue to be used as a home where old people could be looked after. That has been done. The free movement of the economy is not always opposed to what needs to be done on social grounds.
All Governments give aid to the development areas, but it should not be thought that only in the development areas sudden deterioration takes place in the standard of living to which people are accustomed. In the small villages in my constituency things have been changing for the worse for some time. The roads may have been improved, widened and straightened but that merely allows cars rushing to the coast to make life even more impossible for people in the villages. At Southwater, Billingshurst and Petworth it is not better roads but bypass roads that we need, and with the 1370 spare capacity now available, this is the time to build them.
That is not the only deterioration in village life. Post offices have been closed and, much worse, local bus services have been withdrawn. I had a letter only today telling me about two old ladies thumbing a lift in order to keep a dental appointment. That sort of experience is a disgrace. We should not concentrate so much of our resources on improving our cities while life in our villages suffers so rapid and marked a deterioration.
§ Mr. Prentice
Does the hon. Member agree that in order to build his bypasses, keep open his uneconomic village post office and subsidise his country bus services there must be higher public expenditure? Does he realise that that is what he is asking for—quite reasonably?
§ Mr. Hordern
I accept that, without question. The burden of my remarks leads to that conclusion. I have no objection to public expenditure, provided that it is used to help where it is most urgently required, and to soften the burden that would otherwise fall on certain people when economic forces come into play. I mentioned that fact earlier in my remarks.
It is bound to be the case that when new and sensible policies are introduced there is upheaval. The Government have done their best to recognise that. The fair rent scheme is admirable. I know that the old system of rate support grants for housing would not have been continued under the previous Government. My right hon. Friend has made most generous provisions, covering 90 per cent. of the deficit on local authorities housing revenue accounts in the first year, falling to 75 per cent. in the fifth year. I accept that the deficit is in any case only temporary. Nevertheless, some authorities will be particularly affected during this transitional phase, and I expect that Crawley, in my constituency, will be the most harshly affected of all. This is because of its unique character in having only a small stock of old houses and a very large building programme in relation to the number of people. My right hon. Friend should take powers in the present Housing 1371 Finance Bill which would give him discretion to increase the grant where special hardship was being created. This power existed in previous housing Bills and should be included now.
I am a fervent believer in reducing the total size of the public sector. It gives me no pleasure in principle to see the growth of public expenditure rising above the previous forecast. I wish I could share the view expressed in the White Paper that the decline in volume terms in the growth rate will be to 1.4 per cent. in 1974–75. It is all very well for the White Paper to show a decline in the growth rate at that time ahead. I shall believe it when I see it in 1974.
The great difference between this White Paper and its immediate predecessors is that it looks as though public expenditure will be accompanied by the highest rate of economic growth we have seen for very many years—far exceeding the rate of growth of public expenditure. Hon. Gentlemen opposite forget that the rate of growth of public expenditure which they were carrying out was 3.2 per cent., and that rate would have been exceeded had it not been reduced by my right hon. Friends.
Though it is true now that the rate of public expenditure is due to rise to 3.2 per cent., what is different is that the rate of growth of the G.N.P. will rise far faster than that. When it does rise, it will allow for not only further reductions in taxation but an increase in public expenditure where that is most needed. Nor will growth come about by accident; it will come about by deliberate Government policy to reduce taxation and to provide incentives. We have reduced taxation by £1,400 million, but the previous Government increased it by £3,000 million.
With all the arguments about definition and allocation that the White Paper presents, our main concern must be to do our best to encourage economic growth—and that is what we shall get. That is what scares hon. Members opposite most of all—that the Government's policies will succeed. Hon. Members opposite are right—they will.
§ 7.2 p.m.
§ Mr. Tam Dalyell (West Lothian)
Well, I do not know what scares us 1372 most of all, but I hope that I shall be forgiven for wondering whether one of the major differences between the hon. Member for Horsham (Mr. Hordern) and some of us on this side of the House is that when it comes to the crush he considers bypass roads in Sussex to be of greater priority than housing in the constituencies of my hon. Friend the Member for Willesden, East (Mr. Freeson) and my hon. Friend the Member for Glasgow, Gorbals (Mr. McElhone). It is simply a difference of value judgment. I could detect in that part of the hon. Gentleman's speech no other type of difference.
I was a little shocked at the hon. Member's opening remarks against my right hon. Friend the Member for East Ham, North (Mr. Prentice), because what the hon. Gentleman seemed to be saying was that what was wrong with my right hon. Friend was that his policies were not sufficiently popular, at any rate in June, 1970. This introduced value judgments. According to the value judgments of the hon. Member for Horsham, his Government's achievement seems to be a reduction of taxation by £1,400 million. This seems a very strange criterion of success to those of us from the North. In the Committee on the Finance Bill I said that I am conscious that whenever the hon. Gentleman speaks—I do not say that he is evil, wicked, or anything like that—it is apparent that he comes from a different part of the country from many of my hon. Friends. There are 141,000 unemployed in Scotland, and a similar situation exists in the North of England and in Wales. With that situation one does not exactly consider the greatest achievement of one's Government is the reduction of taxation by £1,400 million.
§ Mr. Hordern
My remarks to the right hon. Member for East Ham, North (Mr. Prentice) were about noting the consequences of carrying out his policy of increasing public expenditure and that they were not very popular when the test came. They will remain unpopular and ineffective in the sense of getting further public expenditure. We get growth in the economy by reducing taxation. The Labour Party increased it by £3,000 million. That is why the previous Government could not afford the public expenditure that they were carrying out.
§ Mr. Dalyell
I do not want to be too glib, but it seems that the hon. Gentleman 1373 wants popular policies and we on this side of the House want correct policies. I go further. In a sense, this is simply low, vulgar electioneering. We have to face that. If a party keeps saying at great length, "We shall give you lower taxes", it will provide the sort of society for which some of us do not care very much.
I give an example from Scotland. For 50 years one party has had power in Edinburgh. It has said, "Your rates will be lower than they would be under the Labour opposition." This has happened for 50 years. Let us look at this city now. It is one of the very few authorities that have been pouring out untreated sewage into the Forth, whereby we become almost a national and an international disgrace.
One comes back to the old question of values. There is a difference between the North and the South. When the hon. Member for Horsham was speaking, I could not help wondering what was going on in the mind of the Chief Secretary to the Treasury. In his capacity as the hon. Member for Farnham, he may have agreed with much of it, but I wonder what he thought in his capacity as a former Member for Halifax, where there is serious unemployment and under-used capacity at present. We have been treated to tremendous differences between those representing metropolitan London and the South-East and those representing other parts of the country.
During the speech of the right hon. Member for Taunton (Mr. du Cann) I was also reflecting upon the reason why the debate was so ill attended. It is partly a matter of titles. Had this document not had the rather long title that it has, and had it been called "The Second British National Plan", hon. Members would have been tumbling over themselves to catch the eye of Mr. Deputy Speaker.
§ Mr. Dalyell
It was so in George Brown's day, and it is very sad that because of a number of difficulties that that plan got into the whole concept of discussing seriously a national plan should have been brought into disrepute. Like the right hon. Gentleman, I should like to know the whereabouts of the chorus of 1374 hon. Members who say they want to influence the Executive to a greater extent.
In the last five years we have heard of a desire to influence the Executive. If Parliament is to mean anything, I should have thought that this was the time to do that. I am not in a mood to be chided in the Press about this. If one reflects that the House of Commons has been fairly empty, the Press Gallery, even during the opening speeches, was even emptier. It does not lie in the mouths of certain pundits to censure us.
I take seriously the right hon. Gentleman's remarks about what, in a sense, he called the most important State document of the year. This is a rolling, five-year plan. I should have thought that Ministers and potential Ministers might have been a little more interested. We all know that their reputation is often made on decisions taken not by their predecessor but by their predecessor but two. For example, my right hon. Friend the Member for Blackburn (Mrs. Castle) may agree that many of the things for which she got the credit were done not by the former Member for Hamilton, Mr. Tom Fraser, but by the right hon. Member for Wallasey (Mr. Marples). This is the nature of what happens in technological Ministries. Inevitably, what we decide now will set the pattern in the mid and late 1970s.
I have here a constructive suggestion. In terms of debate, perhaps it would be better if within 48 hours of publication of the White Paper there was a debate not on the minutiae but on the general terms, with a party division after, probably a three-line Whip, so that we could stake out the general differences of opinion between the major parties while the whole document was still hot, and not after some weeks when inevitably, through no fault of the authors, it has become rather stale.
What we are debating is the whole balance between private and public expenditure. I agree with the right hon. Member for Taunton that it should be presented not even by the Chancellor of the Exchequer but by the Prime Minister. I thought that it was strange that it was presented to Parliament by a Minister, however important, who is not in the Cabinet. It should certainly be the job of a Cabinet Minister to present it, and 1375 there should be the presentation of realistic alternatives.
Before getting down to particulars, I want to mention the serious political, philosophical problem. If we are to say simply that all that we have to do is to discuss the needs of health, the needs of housing, the needs of education, we shall get into absurd extrapolations. I do not forget that the Principal of the National College of Science and Technology said that had we taken action on the basis of need as outlined in 1965 we should all have been research scientists by the year 2000. There has to be a cut-off somewhere—a cut-off in housing, a cut-off in education, and—as my right hon. Friend the Member for West Ham, North will recognise—a cut-off in overseas aid. We all accept that this is a matter of priorities. It is, perhaps, an intellectual contradiction which must be resolved in practice.
In this context I make another constructive suggestion. We as a House of Commons have greatly under-rated the amount that can be done by mobilizing voluntary initiative. Specifically, I am very sad that the Government have seen fit to cut down on the voluntary task force scheme, which had the patronage of Mr. Speaker and of my right hon. Friend the Member for Sowerby (Mr. Houghton), just at a time when it seemed to be becoming very useful and growing. This is the sort of candle ends decision, the sort of hurried decision, the sort of ill-thought-out decision, that I object to and that should be considered by Parliament.
I am glad that the Chief Secretary is here, because I come on to what I thought was a rather strange remark of his. He came gallantly and gratuitously to the defence of the Secretary of State for Education and Science and compared her favourably with the Secretary of State for Social Services. I do not know whether he made this gallant defence in the light of a recent article in The Guardian on the Secretary of State for the Social Services; the article said how humane that Secretary of State was, with the implication that the Secretary of State for Education and Science was not quite so humane.
There is a very real problem. This is not the time for me to make a pejorative or long-winded attack on the school milk decision. However, if anything ever 1376 was a candle-end decision this must have been it, because I cannot believe that any Government sitting down in rational thought would have made that kind of saving.
As my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) well put it, the present Government are not the only ones who have found themselves in such a situation, and we should candidly admit this. One of the questions we must ask ourselves is: how is it that British Governments get into this position, and what happens to British Cabinets when they make this kind of decision?
Perhaps it is in the very nature of our Cabinet system, which seems to be a wrestling match where the prestige of the individual Cabinet Minister is, at any rate to his civil servants, partly bound up with the amount of lolly that he brings back to his Department from those Tuesday and Thursday morning meetings. Until that problem is fairly honestly looked at, I begin to wonder whether we as a nation can avoid this kind of mistake.
Coming to details, I take first the subject of health. It will be known to the Chief Secretary and to the Treasury that before he left office my right hon. Friend the Member for Coventry, East (Mr. Crossman) prepared a paper for the Labour Cabinet on future costs of the National Health Service. I am at liberty to say that my right hon. Friend asked specifically that his successor should have a sight of exactly the same document on taking office.
What that document said in effect was that to maintain the Health Service at the standards of the present day, plus certain specific help for mental hospitals and a very little money for family planning, the increase required was £300 million each year for five years. Page 51 of the White Paper makes it clear that the cost rises from £2,345 million to £2,834 million. That is entirely out of keeping with the figures that my right hon. Friend thought were necessary to maintain the Health Service at the standard that all of us in the House would wish.
Paragraph 4 on page 52 of the White Paper says rather lamely:Over the next five years, the capital allocations will make it possible to replace or bring 1377 up to modern standards the equivalent of about one-tenth of all the current hospital facilities".Is it at this level that we are to set our sights? Everyone in the Chamber knows that we have in our constituencies hospitals that desperately need either to be replaced or to be modernised.
However, let us give credit where it is due. The Secretary of State for Social Services has made many speeches and got some funds for mental health, but on visiting some of our mental hospitals one finds that they do not belong to a nation that calls itself civilised.
§ Mr. James Hamilton (Bothwell)
I am obliged to my hon. Friend for giving way to me, because I am very conversant with this aspect as I have a mental hospital in my constituency. We cannot afford to be political on this question. The hospital in my constituency is over 100 years old. I visit the hospital regularly. There is not even one foot of space between the beds. We must ask why the Government of the day are not spending more money in this direction.
§ Mr. Dalyell
I know exactly which hospital my hon. Friend is talking about, but this is not the time to get down to constituency details. Once again, I give some credit to the Secretary of State for Social Services, but the central issue is: is this where we are setting our sights for the next five years? If so, it is not the kind of society that I and many of my hon. Friends want Britain to be.
Next, page 25 talks about aircraft projects and assistance and gives the following figures for 1975–76: Concorde £4 million; RB211, in the black £10 million; other, blank. This is a very strange kind of forecast. Time and again hon. Members opposite have said—quite rightly—that they want Britain to go ahead with vertical take-off and landing aircraft. Does anyone suggest that these can be financed by Hawker Siddeley or by merchant banks? Does anybody suggest that if we are to have a vertical take-off and landing aircraft substantial Government help will not be needed? This, if it is true, is a very unrealistic and sombre forward look at British technology. If I were a director of Hawker Siddeley I should be dismayed on looking at this table, because I should hope that considerable funds had been set aside for this kind of project.
1378 Here again we come to what was raised in the Chief Secretary's speech—the short-term intermediate needs. He claimed that he was going to use public expenditure as an instrument to create employment. I can understand that changes in the Government programme may further be made if, as he said, the Government desire them, but the fact is that my hon. Friends the Members for Gorbals and for Bothwell (Mr. James Hamilton) and I represent Scotland, which has 141,000 unemployed and the forecasts are not good. Therefore, it is with nothing less than dismay that I look at the Scottish education building figures and I see that in the early 1970s there is at one point a fall rather than a rise. I refer to page 62 of the White Paper, and I find there is a fall from £3241 million in 1972–73 to £3158 million in 1973–74. This represents in human terms, I would have thought, a backsliding. I know that there are bulges in school population, but actually to spend less and to forecast that less will be spent on education two, three or four years hence seems to me to be a very dismal view of the world.
Therefore, I would like the Treasury to ask the Scottish Office to give some detailed explanation of these figures. I do not expect the Financial Secretary or the Chief Secretary to be able to do it off the cuff, but this represents the dashing of the hopes of many of the young people whom we represent. If it is said "We have completed many of the capital projects that need to be completed", I say that one has only to look around Glasgow and Dundee and even many of the rural areas, some of which are represented by hon. Members opposite, and it would be thought grotesque that there was not still a major capital programme.
§ Mr. Patrick Jenkin
The hon. Gentleman is being a little unfair to my right hon. Friend the Secretary of State for Scotland. If he examines the run of figures, which are all in constant prices, he will see that what has happened is not a reduction in 1973–74 but a quite unprecedented increase in 1972–73. That is the peak. In fact, the flow of expenditure is fairly steady, subject to the one peak in the year which is obviously going to require a great deal more spending. Perhaps the hon. Gentleman would like to reconsider what he said.
§ Mr. Dalyell
I have the table in front of me. It is on page 62. The fact is that in 1972–73 the figure is £324.1 million. Then it goes down. That is a fact. Our view is that there should be an increase in the quality of education that is given. But if there is a short-fall of £8 million, even though there are slightly fewer pupils, I regard this as a very sad state of affairs.
In a sense, much worse on page 62 are the figures for nationalised industry. The Financial Secretary must face up to this fact. Here are the figures for investment for nationalised industries: 1972–73 £109.1 million 1973–74 £92.4 million; 1974–75 £84 million. I will listen to any explanation that is given.
§ Mr. Dalyell
In 1975–76, £105 million. The right hon. Gentleman is quite right. Fair enough. I am absolutely candid and open about figures. But this represents a slowing down, over a period of two and a half or three years, of investment in nationalised industry. In a situation where we have 141,000 unemployed, not believing in miracles I would have thought, especially when factors such as the electricity power load requirement for industry is taken into account, that this represents a very pessimistic view.
§ Mr. Maurice Macmillan
I want to make this clear. What the hon. Gentleman is saying would have greater force if the figures represented a forecast of industry. They do not. What they represent is the projection of existing policies in 1970–71 if no changes are made and no further decisions are taken. It is simply an estimate of what the present decisions will result in. It is in no sense a forecast of what decisions will be taken.
§ Mr. Dalyell
If that is so, I am not sure that we are spending our time usefully discussing this document. If the Chief Secretary is right when he says "Of course, there will be additions", then I am discussing a lot of unrealistic figures. This seems to me to be a matter of considerable substance. What the Chief Secretary has said in the last minute or two is "These tables are totally misleading and you, stupid fellow, are believing the misleading tables that we have presented." 1380 What other explanation is there? Will the hon. Gentleman say whether I am wrong? What is the point of the tables?
§ Mr. Macmillan
The Public Expenditure White Papers have been produced for three years. They started off with relatively firm figures for two years and a general indication of what the existing programmes would result in in the last three years of the quinquennium but not specified year by year. The next addition to the Expenditure White Paper took the process a stage further and gave the breakdown of figures in the last three years of the quinquennium with a stern warning that these were very problematical figures and were subject to wide variations as policy changes were made. Nobody in his senses would expect any Government to make now policy decisions about investment in nationalised industry, Scottish school building or anything else which were binding and firm for the next five years without the possibility of alteration or change. This would not be a realistic way of running a business, let alone a country.
The basis of these figures has always been that they are not a forecast of policy. They are an estimate of what would be the cost of existing policies, of decisions already taken up to now, projected at constant prices for the next five years on the basis of there being no change in policy from this date.
§ Mr. Dalyell
If the hon. Gentleman is right, I am wasting the time of the House of Commons talking about bogus or meaningless or phoney figures. They may not be phoney, but if what the hon. Gentleman says is true, they seem to me to be irrelevant. All right, the charge is not that they are bogus or phoney or produced with ill will but that they are irrelevant. I am concerned about the actual projected meaningful likely realistic level of public investment on those whom we represent in the next three or four years. I shall read in HANSARD tomorrow with great interest the explanation of the Chief Secretary, because I now begin to doubt the virtue of the whole exercise. Are not these figures aligned with existing policy?
May I ask the Chief Secretary one more direct question? Are we to believe that the 1973–74 estimate of £92.4 million for nationalised industry in Scotland, 1381 the 1974–75 estimate of £84 million and—for the benefit of the right hon. Member for Wolverhampton, South-West (Mr. Powell)—the £105 million for 1975–76 bears no relation to actuality?
§ Mr. Macmillan
What they represent is simple and clear. They represent the best estimate that we can make of what policies which have already been decided would cost in that year—nothing more and nothing less. This has been exactly the basis on which every White Paper since the series started has been put forward.
§ Mr. Dalyell
I think that what it really means is that the policies have to be changed and will be changed. Perhaps one can take heart and not regard these things too seriously.
§ Mr. Powell
It seems to me that what the hon. Gentleman has revealed is that there is a difference in the meaning of present policies and policy decisions when applied, on the one hand, to subjects such as education, health and so on and when applied, on the other, to investment by the nationalised industries. That is the difficulty, I think, no doubt common to all White Papers, which he has exposed.
§ Mr. Dalyell
That is a shrewd observation. Would the Chief Secretary care to comment on what his right hon. Friend says? [Laughter.] We are beginning to talk about quite separate sets of figures which seem to have no business in the same table. [Interruption.] It may be claimed that this is open government, but it seems also to be misleading the House of Commons, though without malintent.
§ Mr. Patrick McNair-Wilson (New Forest)
In paragraph 12, page 33, we read these words about the steel industry:The figures in Table 2.8 for the years after 1971–72 are the Corporation's estimates of the investment required. They are necessarily no more than provisional pending the results of the long-term review"—which review we all know is coming. So the figures are as at the moment, but when that review comes and it is decided, say, that very large plants costing a great deal more money than has been estimated for will be built, the figures will be changed. I think that that 1382 is the point which my hon. Friend the Chief Secretary was making, and I think that it lies at the basis of the hon. Gentleman's problem.
§ Mr. Dalyell
So then it will all be cleared up! The provisional figures may become more apparent and more firm? I suspect that were we to clarify the matter, we would be taking up the time of the House, so I shall scrap most of what I still have to say.
§ Mr. Dalyell
All right. As I have been invited by one of the Whips to carry on, I shall say a bit more.
I come now to my worries on the overseas aspect of the matter. My plea is that commercial representatives in our legations and embassies abroad should be given the same power as the Japanese have; that is, power to issue air tickets to likely customers. I had intended to say a good deal about exports, but I say no more than this. The Treasury really must consider such an arrangement. The Japanese commercial attaches at every Japanese embassy have power to issue a first-class return ticket from the country of origin to Tokyo and back to anyone who is thought likely to be a good customer. The British ought to be thinking about that sort of thing now.
In conclusion, I return to the point made by my right hon. Friend the Member for East Ham, North. What it comes down to is that we should not be ashamed of advocating public expenditure. I hope that candidates at election time will not resort to what I must say is, in my view, the often cheap and vulgar device of saying to the electorate, "Under us you will be taxed less".
That is a dangerous approach in the modern world. In the modern world, if one does that, one will not have a satisfactory industrial employment situation in areas such as the North, and the Secretary of State for the Environment, for example, will never be able to keep half his promises on pollution, for any meaningful anti-pollution measures cost a great deal of money, not tens of millions but hundreds of millions.
My hon. Friend the Member for Pontefract (Mr. Harper) will know what I mean. I do not know the details of the 1383 problem which he raised at Question Time today, but I know that there are projects here involving £5 million or £10 million for one constituency. If one believes in fighting pollution, one must fight for something else, too, and that is higher public expenditure. This means that we must be truthful with the electorate. I hope that all of us, whatever our political views, will on this subject be a little more truthful with the electorate than many—not all—Conservative candidates seeking election in the past have been.
§ 7.35 p.m.
§ Mr. Patrick McNair-Wilson (New Forest)
My right hon. Friend the Member for Taunton (Mr. du Cann) spoke of the problem of presenting the facts before us today in a form which would stimulate rather more interest than has, perhaps, been shown in the debate. One of our problems in considering this document is that we have to try to digest far too much in one small pamphlet. In a two-day debate, based on what is necessarily fairly slight information, it will never be possible, I believe, to conduct a discussion which means very much.
In the speeches from both sides today, we have had a mixture of constituency points and argument directed at broad strategy. My suggestion is that, in future, the document should be rather more compartmentalised than is the present White Paper. To draw a rather tiresome analogy, what we are doing now is rather like having a meal made up of nothing but suet dumplings—no doubt very filling, but not highly nutritious. I should like to see a number of documents in which the subjects could be compartmentalised, with a debate spread, perhaps, over a somewhat longer time. It is impossible to discuss the future of the nationalised industries, or of any one nationalised industry, in this kind of amalgam of subjects.
I am not sure that I quite adopt what the hon. Member for West Lothian (Mr. Dalyell) meant if I use the words "A Second National Plan", but I feel that, if we could somehow present the whole document as being rather more exciting, we could bring rather more hon. Members here and take part. In fact, the White Paper is a vital document, and we, as 1384 Members of Parliament, are the guardians of the taxpayer's money. We are the only check to ensure that the taxpayer has good value for his money. I often feel that we discuss large global figures in the House without ever going into sufficient detail to ask whether the taxpayer is getting true value, and I do not believe that in today's debate we have been able to examine the subject in sufficient detail.
White Papers of this kind enable us all to make suggestions, however, and I shall take up just two subjects, one related to the fuel industries, the other to steel.
On page 33 of the White Paper we find the suggested estimates for expenditure on the Gas Council and the gas boards, and there is this sentence:The investment of the industry is dominated by the programme of conversion to natural gas".That may well be true, but the programme has had a difficult time. A number of consumers have felt far from satisfied with the service which they have received when the conversion has been made in their homes. I am sorry to see that nowhere in this paragraph dealing with the gas industry is anything said about service and maintenance to gas consumers. It will be no secret to anyone that serious criticism has been expressed in the newspapers of the service being provided to consumers.
I have recently had experience of that bad service, and I shall give this example to illustrate what I am saying. One appliance in my own home has failed over a period of eight weeks, and I have for 14 days been without any hot water in my home save what could be heated in a kettle or saucepan. There have been seven return calls by fitters. The waste of both their time and mine, of the board's money and, ultimately, my money, as a consumer, has been considerable. I purposely never mentioned during this problem that I was a Member of Parliament until, out of complete frustration, on the tenth day I did so, and I have to admit that the service changed dramatically.
I make this point because I have checked with other people and they are also getting extremely bad service. There was a short letter in the Daily Express yesterday which is worth reading to the 1385 House. It is signed by J. Glasgow, of Ealing. It says:If any of your readers have been waiting for service from their Gas Board, this snippet which I overheard on the telephone while waiting my turn to be put through to the service manager's office may further depress them.Clerk No. 1: 'Look, this one is November 2.'Clerk No. 2: 'Oh, that's much too soon now. If it was three months I'd say get it moving.'We are not customers, we are victims!I believe that, in this area of service, it is essential that the gas boards be given sufficient money to carry these things out and I believe that the matter is urgent.
The other matter I want to look at is the steel industry. We were told yesterday that a new piece of legislation on the industry is shortly to be introduced. The industry is at present displaying all the traditional symptoms of an ailing nationalised industry, and it is very worrying. There are falling receipts and rising losses. A leader in The Times Business News today said:But the sad thing is that everyone was assured that the state steel industry would quickly pay its way. So confident were the planners and managers that public dividend capital was created so taxpayers would reap a slice of the profitable action.The leader concluded:Meanwhile, the taxpayer must quietly keep footing the bills in the hope of better times and the hope of nailing Government and management to that still elusive financial objective, which steel has never been given.The steel industry is a most unhappy industry, quite apart from being a serious loss-making industry. The losses are running at approximately £2 million a week and the estimated accumulated deficit by 1973 will be about £240 million. It is true that on page 33 of the White Paper are the words which I repeated to the hon. Member for West Lothian, when he was having his difficulty about the expenditure estimates. They obviously relate to the statement which will be made by my right hon. Friend the Secretary of State for Trade and Industry on new plans for the industry.
§ Mr. Dalyell
Surely these figures are aligned with present policy, whatever else is said. It is not a question of my difficulty. They are aligned with present policy.
§ Mr. McNair-Wilson
The figures in the document relate to announcements which 1386 have already been made by my right hon. Friend and which were made earlier this year, regarding certain investment plans which have been agreed. I will refresh the hon. Gentleman's memory. We are to have three statements in all. The first statement was about bulk steel making and the fact that it was to remain in the public sector; the second was related to certain new objectives—billet making, certain refurbishings of plant, certain hiving-off suggestions; and the third we are still awaiting. It will tell us of the big new capital programme which will, hopefully, bring the industry into a much happier situation. But I agree that the figures we have before us are those only relating to the first two statements we have had.
It is hoped that when we get the third statement we shall be told the major development plans in the industry in relation to major plant. We are told, and many of us know, that our competitor nations such as the Japanese, the Russians and the Americans are already operating scales of plant unlike anything we have. Twenty million tons-a-year plants are to be perhaps the basic minima for steel making. We have nothing comparable to that. The largest plant we have is one of three million tons. The caveat I put to the Government on this question is that merely going for size will not of itself provide the cure-all we are asking for, because I believe that what is wrong with the British Steel Corporation is not necessarily that the plant is inefficient or, indeed, that if it had bigger plants it would be more efficient. It is that we have a dangerous management position which has, ever since nationalisation, failed to make the Corporation commercially viable.
A number of attempts have been made to change this. Everyone will remember that earlier it was decided to operate the Corporation on the basis of geographical groupings. These were then changed to the product groupings which we have now. But the fact is that management in the Corporation is still unable to sell the products effectively. One of the reasons for this is the over-centralised control which exists in London. It has always surprised me that we have a steel industry run from London and not from a centre of steel making in the North, or 1387 from Sheffield or elsewhere. Centralised control has destroyed morale in many of the plants throughout the country.
I have always believed that the Corporation, since it came in for political reasons and not for commercial reasons, was likely to be doomed to disaster from the beginning, but I am very concerned now that we find after so many years of nationalisation that we see no end to this loss-making situation. The Government are introducing a Bill to write-off a certain amount of capital, but I hope that no one will run away with the idea that, having done that, the problem will remove itself. It will merely pass the burden on to the taxpayers once again.
In both the instances I have given—first of bad service by a particular industry and the second of lack of profit by another—my feeling is that, as Members of Parliament, we must have more facts against which we can check the purpose of those industries. I do not believe that the White Paper enables us to do so. I believe that the taxpayers are perfectly prepared to pay for excellence, and, indeed, will pay for it. But they do not like being treated like a flock of mindless sheep, and this document which, we all agree, is of desperate importance does not give us the essential facts upon which either we or those members of the public who have to foot the bill can make a judgment.
§ 7.48 p.m.
§ Mr. Edmund Dell (Birkenhead)
I entirely agree with the final remark of the hon. Member for New Forest (Mr. Patrick McNair-Wilson) on the need for improving this document. The Chief Secretary to the Treasury pointed out that the figures for later years were problematical, and of course they must necessarily be so. Equally problematical is the reduction in the rate of increase of public expenditure several years hence, to which he referred again and again. Also equally problematical for the moment, although I hope it occurs, is the looked-for increase in the rate of growth in the economy which has to absorb this rate of increase in public expenditure. The only thing we have at the moment—and I welcome it but I would have thought that hon. Members opposite would have been greatly worried about it—is the fact that public expenditure has been increased 1388 above the level which was propounded in the previous White Paper.
I agree with those who have said that we are discussing the White Paper too soon, before we have had an opportunity to absorb it. That may be because the Public Expenditure Committee has not yet achieved adequate status. There are certain matters which cannot come before the House until they have been before the Public Accounts Committee—excess Votes, for example. I suggest that the Expenditure Committee should rapidly put itself in a similar position to ensure that these documents do not come before the House before they have come before the Committee.
No doubt the debate has been brought forward because the Government were afraid that the White Paper, already somewhat out of date because of the changes recently announced by the Chancellor of the Exchequer, would be made even more out of date by the further announcements which the right hon. Gentleman may be making after Christmas. In those terms, one understands the rapidity with which the Government have found it necessary to present the document for debate.
The document undoubtedly gives us a great deal of additional information. I find it useful in relation to a Bill in the Committee on which I am now serving, the Criminal Justice Bill. For example, I find the figures for the estimated increase in the prison population over the next five years, and, so far as I know, they have not appeared in any other Government publication. There are also the figures for the capacity of probation hostels, which again is relevant to that Bill. It is extraordinary that we have to have a public expenditure paper to discover such details of what Departments are doing. Nevertheless, we must welcome what we get and how we get it, and here we have additional information. However, although we are now getting much more information, it is still woefully inadequate.
Again referring to the Criminal Justice Bill, the White Paper gives figures for the growth of legal aid over the next five years. Legal aid divides itself into criminal legal aid and civil legal aid, and now there is the new legal advice scheme. I am sure that the Home Office knows how the total is broken down and 1389 has an estimate of the effect on the defence of those charged with indictable offences. Why it cannot say so I do not know. It ought to give us that information.
My hon. and learned Friend the Member for Lincoln (Mr. Taverne) referred to the inadequacies of the information provided by the Department of Trade and Industry, mentioned in The Times today. We know that the Department has considerable difficulty defining the objective of some of its programmes, for some have no measurable output. The Bolton Committee on Small Firms suggested that a certain type of aid should not be given to small firms unless it was absolutely clear that benefit from that aid would exceed the cost. Unfortunately, the Bolton Committee has left to the Department of Trade and Industry the job of working out exactly how that calculation is made. I wish the Department luck! It is sometimes difficult accurately to define the output of one's programmes.
Nevertheless, with all the excuses of the D.T.I. and accepting its reference to emergencies which occur in industry and to which it has to attend—and we have seen some of those emergencies over the last few months and the way in which the Department has attended to them—it could have done a great deal better in what it has presented to the House, and I hope that the Financial Secretary will be able to answer my hon. and learned Friend's comments on that subject.
I should like to make a few general remarks about the system of control of public expenditure which the creation of the Select Committee and the publication of the White Paper has established. We have not only a public expenditure White Paper, but a departmental policy White Paper, and as such it is grossly inadequate.
The Financial Secretary should not be answering the debate at all, simply because he has not the material with which to answer it. I remember that in the comparable debate last year I put certain questions to him which, as he properly pointed out, did not fall within his remit, but that of one of the Departments whose expenditure was covered in the White Paper. However, he was answering a debate on public expenditure and my speech was entirely relevant.
1390 It was not a Treasury matter, but the Treasury is apparently providing the Ministers to answer these debates when many questions which are properly being asked are matters for individual Ministers, even though they may fall within some form of Treasury supervision. The right hon. Member for Taunton (Mr. du Cann) was right to say that the Prime Minister should speak in the debate, because he might be the only member of the Government with a sufficiently overall view of Government activity to deal with these questions. Treasury Ministers are are not only unable to deal with the matters raised, but are particularly inappropriate to do so.
The Treasury, not just under this, but under the previous Government—and no doubt under past Governments—has become thoroughly dissatisfied with its ability to control the public expenditure of Departments. It is not so much a matter of how much Departments spend. One may take different views about that and I happen to agree with those of my hon. Friends who say that we want public expenditure to represent a higher proportion of the gross national product. It is more a matter of ensuring that the Departments are conducting their affairs and controlling their expenditure properly, have defined the criteria of need so far as possible, that they have objectives and try to see what the output of their policies is.
The Treasury is now saying that that is a job which it cannot do. I have been impressed by the part played in the creation of the Select Committee on Public Expenditure by my right hon. and now noble Friend Lord Diamond. He was Chief Secretary to the Treasury for six years and, if I may say so on his behalf, sometimes how he suffered! A man of deep humanity, he wanted to see the social services at an adequate level. I suspect—he never said this to me—that over the years he had increasing doubt about the efficacy of Treasury control over public expenditure in the sense of ensuring not that the right amount was spent but that what was spent was rightly spent with the greatest efficiency.
He came to the conclusion that inadequate resources were devoted to this problem within the Government. He may also have felt, as one of the two Treasury 1391 Ministers in the Cabinet, that he was in a minority position which prevented adequate force from being given to the position that he adopted. What is significant is the great part which he with his experience played in creating the Select Committee on Public Expenditure. I suspect, as did the hon. Member who quoted the evidence of Lord Diamond to the General Sub-Committee, that it was very much in his mind that if only there were a Select Committee on Public Expenditure, the problem of seeing what the Departments were really about would be more efficiently attended to.
The Report of the General Sub-Committee brings out how co-operative the Treasury has been. Canning called a new world into existence to redress the balance of the old. The Treasury having evidently considered that it has failed, has called the Select Committee on Public Expenditure into existence to redress the balance within the executive. One might compare this with the invention 100 years ago of the Public Accounts Committee which, I suppose was called into existence by the Treasury to eliminate nonsense on expenditure within the Government. It is a good joke that Parliament, in its effort to control the Executive, has become the instrument of the Treasury against the rest of the executive. No doubt the Treasury thinks that with our recent rise in pay we have to earn our money.
We can all consider that this is a great compliment that the Treasury is paying Parliament, and particularly the Select Committee on Public Expenditure, but it is a compliment that is undeserved, for Parliament cannot do the job. Hon. Members do not have the time. We do not have the right number of Members prepared to serve on these Committees.
Just look at the number of reports that have been published in the lifetime so far of the Select Committee and all its Sub-Committees. We have the difficulty of the Parliamentary system which tends to tie hon. Members to the Government or to the Opposition on issues on which greater independence might be desirable. I am sure that the Treasury must do the job, because the Treasury alone is capable of doing it. The Treasury must remember that it is not 1392 just an economic Department. It is the Department for the control of public expenditure.
There are things which Parliament can do. Parliament can give a Government a feel with regard to the acceptable level of taxation. Parliament can press for particular programmes which it thinks should have greater priority. No doubt the information in this White Paper might assist us in doing that. What Select Committees can do is to probe the reasoning behind particular limited policy decisions. The fact that the Select Committee on Public Expenditure has, understandably, been able to publish so little as a result of the reviews which have been carried out over the last year or so shows how inadequately the job will be done if the Treasury thinks it can leave it to Parliament.
Here I refer to a point made by my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon). He was repeating the contents of paragraph 15 on page 6 of the Report of the General Sub-Committee, which reads:The basic issue before Parliament is the examination of the Government's whole choice of priorities.I agree that that is the basic issue.We hope that both Members themselves and those outside the House who are interested in the size of particular programmes will do more than simply argue that more money or more resources should be devoted to their favourite proposals. They should also see the issue in terms of other benefits forgone (whether in the public or private sector).I am not sure I understand what that is intended to mean. If it means that we cannot spend the same resources twice, I agree. If it means that Members of Parliament should be honest with their constituents and tell them that if public expenditure is to be higher, taxation may also be higher, again I agree. So far, it is obvious. But if it means that each time an hon. Member has a plus he should also get a minus, I do not agree. I do not know, and no hon. Member can know—after all, the receipts side is not given and one cannot know the rate of economic growth—that a cut anywhere will be necessary. Perhaps the hon. Member for Horsham (Mr. Hordern) is right, and it will all be taken care of by additional economic growth.
1393 I do not think we should make a change in the balance of public expenditure, which is already difficult enough because of the inertia behind public expenditure, more difficult by having to obey the exhortation contained in paragraph 15 of the Report. In addition, I do not want to have to seek allies to support me in what I want to do and then to have to seek a different set of allies for the things I want to cut down. If Members of Parliament think that something should be done, they should say that it should be done. If the Select Committee, or my hon. Friend the Member for Ashford-under-Lyne, insists on my finding something to cut every time I propose additional public expenditure, I shall take the easy course and say "Cut defence". Defence will do every time. I believe that defence should be cut. But I think the intention behind that paragraph may have been a little more subtle.
I want to say a moderate word of caution to the General Sub-Committee. I understand the drive which some members of the Sub-Committee may feel towards the Sub-Committee becoming a parliamentary D.E.A. That they are interested in medium-term assessments and forecasts of receipts years ahead, and the economic management implications of the White Paper is understandable. The idea of a Select Committee for Economic Affairs is attractive. But we are here dealing with public expenditure matters and that fact should be kept well in the forefront of their minds. They should be thinking how to get more information about public expenditure and, perhaps, giving guidance to other Sub-Committees of the Public Expenditure Committee on how that additional information might be used. At the moment we are in danger of making it virtually impossible to gather within the four corners of this Chamber all the hon. Members who should be here during this debate.
I notice in the Minutes of Evidence before the General Sub-Committee that Peter Jay, on page 92, quoted what the hon. Member for Guildford (Mr. David Howell) said in the House:The Select Committee on Expenditure, far from having the effect of further weakening the Chamber of the House of Commons, 1394 would vastly strengthen and enliven debate in the Chamber.…I do not think we have seen that happen today. He went on:My contention is that so far nothing has been done adequately to support these hopes. This is not meant to be churlish or partisan, except that it is partisan in the sense that I am on the side of the Parliament party rather than the Executive party."—[OFFICIAL REPORT, 21st January, 1970; Vol. 794, c. 585.]There have not been many members of the Parliament party here today, and part of the reason may be the somewhat technical approach to matters of public expenditure of the Report and of the first part of the White Paper.
What does the activity of the Select Committee show so far about the future of Select Committees? Obviously, they are better for getting information than Question Time is, but that is not saying very much. We have to face their small resources, their weekly meetings—naturally, the most they can do being composed of busy people—the danger that without guidance they might sometimes be led into channels not all of us would regard as of absolute priority. If they are to make an impact, and if they are to make the most of their potentiality within the system of government, they will have to work a great deal faster even if less thoroughly than they have done to date, and they will have to cover a wider area of policy even if they have to do it less thoroughly. I also suggest—and in this sense I welcome the Motion which is down for tomorrow—that they will have to look at things a little more politically.
I am glad the hon. and gallant Member for Eye (Sir H. Harrison) who spoke earlier is here. His interesting speech worried me in one respect. He explained to the House the reasoning behind various Ministry of Defence policies. I have never doubted the ability of the Ministry of Defence to defend its policies in this House. What I have sometimes doubted is the ability of this House to control the Ministry of Defence, and the ability of Sub-Committees and Select Committees on Public Expenditure to control the Ministry of Defence. I hope he will understand that in my view it is more important that his Sub-Committee should do the latter rather than the former service.
§ Sir H. Harrison
I did not go into too much detail on this. The hon. Gentleman referred to "a year or so", but we have hardly had a year on this yet. He is perhaps a little impatient, as it is a big subject. I hope that he will find from our report that we are trying our utmost to control the Ministry of Defence and compare one cost with another.
§ Mr. Laurie Pavitt (Willesden, West)
Before my right hon. Friend leaves that point, is he aware that the Select Committee on Science and Technology decided that the £270 million spent on defence research was grossly out of proportion to the £21 million spent on medical research? The Select Committee advised a large number of cuts, but nothing has happened.
§ Mr. Dell
I think that the conclusion of that Select Committee was very wise, but that is perhaps an unfortunate illustration of the limited influence of Select Committees on the Government within our parliamentary system. This is a situation which we must strive, with the means we have, to improve.
My last point is that when the Public Expenditure Committee and the Treasury together have got Departments to provide adequate information as a matter of routine rather than having to strive to get their public expenditure programmes in proper form, as they are doing at the moment, perhaps we should abandon the public expenditure approach and, instead, have Select Committees on all the major Departments or groups of Departments which can discuss the policy of those Departments in the light of expenditure rather than discussing public expenditure in the light of policy. Perhaps then we could debate the reports which those Select Committees produced, when perhaps we could have the right Ministers at the Dispatch Box to answer the debate.
§ 8.10 p.m.
§ Mr. J. Bruce-Gardyne (South Angus)
I am sure that the right hon. Member for Birkenhead (Mr. Dell) will realise at once that I intend no discourtesy to him in saying that there were moments in his speech, as there were in earlier speeches, when I wondered whether those who 1396 were absent were not right. I began to wonder whether we had not been in danger of demanding for the future too much extra information and too many details in this White Paper, together with a complete squad of Government Ministers on the Front Bench to cover the waterfront. I believe that one of the main reasons why this debate, like previous debates on the subject, has not been attended in the way that my hon. Friend the Parliamentary Secretary to the Civil Service Department hoped is precisely that we have in this White Paper and in the Report of the Select Committee a burden of information which is already somewhat unwieldy for the majority of hon. Members. I think that we should beware of trying to overload the content of these debates or of the demands that we make upon the Government for the expansion of the information provided in the White Paper.
I know that some of my hon. Friends have gone further. In his very interesting speech, my hon. Friend the Member for Horsham (Mr. Hordern) seemed to be going in the direction of saying that, on balance, the publication of these forecasts could be positively undesirable. My hon. Friend referred to the evidence of Lord Diamond. However, he did not refer to one passage where the noble Lord seemed to be going a long way in this direction. In reply to a question from the hon. Member for Fife, West (Mr. William Hamilton) the noble Lord said:My view is that Parliament would be making its task much more difficult if every Minister of every Department were put in the position that he had to justify every single step because then he would insist, as far as it was open to him, on every single item of departmental expenditure being included. If anything was of public political controversy he would insist to the point of resigning and you would have an enormous turnover of Ministers, a much increased public expenditure and the result would be pretty chaotic.If I thought that that was the direction in which we were moving, I should be the first to call a halt.
I do not think that we need draw such dramatic conclusions from this exercise, provided that we keep it in proportion. The question that hon. Members on this side of the House, at any rate, have to ask is whether the propensity of spending Departments to overspend would be more likely to be restrained by the 1397 knowledge of medium-term expenditure targets being available to the House, or whether the propensity on the part of the House to encourage overspending would be inhibited by a lack of knowledge of those targets. I confess that, having listened to myself saying that, I am not sure that it adds up. It seemed to before I said it.
I wish to raise one or two points of detail about the White Paper. I think that the addition of Table 3.9, with the comparative data for future years that it includes, is an admirable innovation, as is the introduction of Table 3.1. Only one question arises from the latter table, and it may be that one of my hon. Friends will be able to deal with it. I think that it would have been more useful, if it were possible, if even this year the table had been "jobbed" backwards. I feel that we ought to have been given the correlation of those figures to the figures in last year's White Paper as if that table had appeared in last year's White Paper. That would have made the table even more useful than it is in isolation.
We seem to have heard rather less this year about the exclusion of the revenue tables. Last year, I was among those who were inclined to criticise my right hon. and hon. Friends for excluding them. I am not so sure now. It seems clear from its Report that the Select Committee realised that there was a close correlation between the publication of the revenue tables and the publication of the medium-term economic forecast, and some doubt about whether there was value in publishing the revenue tables unless the medium-term economic forecast was published as well. To date, no Government have published the medium-term economic forecast. I wonder whether we shall see it published, or, indeed, whether it is practical to ask for it, or whether we should necessarily advance our interests very much by securing its publication.
I suppose that the underlying argument must be that, if the medium-term economic forecast were seen to be going awry in the light of subsequent events, the fact that it was available to the House would encourage additional and more urgent pressures on the Government to revise it. However, in all these matters we tend to have a rather foreshortened 1398 impression of the time between the implementation of policy changes and their impact on the economy. I shall return to that point in a moment.
I cannot refrain from commenting on the phrase in the Select Committee's Report to which the hon. and learned Member for Lincoln (Mr. Taverne) referred. On page xiv of its Report the Select Committee says:But in the meantime the House should recognise that it has little material on which to debate the merits or otherwise of the total amount of public expenditure published in the Command Paper series.I think that that comment goes a great deal too far, and that our discussion today shows that it goes too far.
§ Mr. Taverne
Will the hon. Gentleman expand on that a little further? I may have missed something while I have been away. It seems to me that one can have a meaningful discussion about specific parts, but not about the total, in the absence of knowing the resources to which it relates.
§ Mr. Bruce-Gardyne
This is what the whole argument has been about. The hon. and learned Gentleman will recall that we discussed this matter at considerable length last year. There may be an element of argument about the worthwhileness of discussing the one without the other. The bald statement which appears in the report, I think, quite definitely over-stated the case on one side.
I turn now to some of the issues of strategy behind the White Paper. We frequently hear the charge—we heard it to some extent in a moderately muted form from the right hon. Member for East Ham, North (Mr. Prentice)—that my right hon. and hon. Friends, on taking office, started by cutting Government expenditure, that they were then driven to have second thoughts by force of circumstances, but that the second thoughts did not go so far as to use public expenditure in any sense as a Keynesian weapon in management of the economy. These charges are totally unfounded. The whole burden of the assault by the hon. and learned Member for Lincoln upon the Government in last year's debate was, in effect, that my right hon. and hon. Friends were only pretending to cut the rate of growth of public expenditure. They were not.
1399 As for the second part of the charge, that my right hon. and hon. Friends have been a little tentative or squeamish about using public expenditure as a Keynesian weapon in the management of the economy, nothing could be further from the truth. Right hon. and hon. Members on both sides of the House may have noted a leading article on the White Paper in the Financial Times of 26th November, which said:Keynes should be living at this hour. For years and years during the inter-war depression he urged on a hostile Treasury public works programme to be financed by loans. Now 40 years later his doctrines have been accepted hook-line-and-sinker. The Treasury, reversing its normal role, has gone round to Departments and nationalised industries begging them to bring forward spending programmes on which an early start can be made.I think that this is true. It is an almost unique example of the Keynesian manipulation of the economy through the use of the public sector.
I sometimes feel that economic theories are subject to what I may call the Burke syndrome. By that I mean that they are in a sense brought up again long after they have been improperly ingested in the first place in circumstances which are vastly different from those which prevailed when they were first propounded. The whole background today is totally different from that against which Keynes's theories were originally propounded. We have a background still of very high inflation opposed to a background of chronic deflation. Even more important in this context, the Keynesian remedies were designed to be immediate or long-term remedies to a chronic situation, whereas what we are trying to do, so it seems to me, is to diminish unemployment levels almost on a month-by-month basis looking forward. I have considerable reservations about the usefulness of Keynesian techniques in the public sector in this context.
My hon. Friend the Chief Secretary made it clear that the Government's philosophy was what the Financial Times, in the leading article to which I referred, described as the theory of having a bump up of public expenditure in the next year or two years to arrive at the same summit levels at the end of the period.
1400 This is spelt out again in paragraphs 5 and 8 of the White Paper. Paragraph 8 states:The Government, however, whilst allowing the absolute level of the public expenditure programmes to increase throughout the period, have held the rate of growth of their real cost to the economy in that period close to 3 per cent. so as not to produce excessive pressure of demand when resources are fully employed again.The Financial Times commented on this exercise that it wished the Government well, but it expressed some scepticism. I share that scepticism. I doubt whether it is given to any man to act with such wonderful precision in this broad sector of public expenditure as seems to be suggested. My scepticism is deepened when I refer to some of the details of, for instance, Table 2.7. The hon. Member for West Lothian (Mr. Dalyell) ran into difficulties when he tried to lay too much weight on the broken down figures for the later years of the series, and quite rightly so. However, the figures given in Table 2.7 for expenditure in the later years of the series on such items as Concorde and the RB211 seem to be almost unbelievably optimistic on the basis of present forecasts. The suggestion that by 1975–76 we should be seeing a profit of £10 million a year on the RB211 sounds like Dr. Johnson's definition of a second marriage,the triumph of hope over experience".Furthermore, there is the whole issue of capital expenditure by nationalised industries, to which my hon. and learned Friend the Member for Dover (Mr. Peter Rees) referred. Table 1.2, compared with the corresponding table in last year's White Paper, suggests almost a stagnation in capital expenditure by the nationailsed industries in the later years of the series and, indeed, a slower rate overall than in Command 4578. I should have thought that this was surely wildly out of date in the light of reports of the direction in which Treasury encouragement to the nationalised industries is currently being given, as we have heard in the last few weeks.
I find it absolutely amazing that there is no reference in the White Paper to the effect of the limitation of price increases in the nationalised industries, except in paragraph 22, referring to Table 1.2, which states:The table does not, however, include figures for the gross trading surpluses of the 1401 nationalised industries, because of the great uncertainty of any forecast of them.If I were to bet my hon. Friends that each of the nationalised industries would have no gross trading surplus over the latter part of the period, I should win the bet a good deal more often than I should lose it. I find it very difficult to understand how it comes about that no apparent account has been taken in the White Paper of the effect of this limitation on price increases by the nationalised industries.
Last year's White Paper reminded us thatWhen the Government took office … they carried out an immediate review of public expenditure up to 1974–75 in order to concentrate the activities of public bodies on the tasks which they alone can perform … and to permit taxation, including personal taxation, to be reduced… This is the way to faster growth of the nation's resources".I agreed then, and I still do. The philosophy of this year's White Paper seems to be that current circumstances permit both a substantial acceleration in the rate of growth of public expenditure and a continuing programme of tax reductions.
I hope that by the time the current programme of public sector expenditure boosts has made its real impact on the economy, in, say, 15 months' time we shall not then find that the need to reduce the net borrowing requirement and to take the money supply in hand once more turns out to be incompatible with the fundamental objective of reducing the burden of taxation. If we do, we shall find that our whole strategy is under considerable pressure.
§ Mr. John Mendelson (Penistone)
On a point of order, Mr. Deputy Speaker. A little while ago the hon. Member for the New Forest (Mr. Patrick McNair-Wilson) made a highly biased and one-sided attack on the publicly-owned steel industry and the people who manage it. The hon. Gentleman is not now in the Chamber, having left as soon as he made his speech.
The hon. Gentleman referred to a Bill which has only just been given its First Reading and will not be given a Second Reading until, perhaps, next week. I submit that it would be in accordance with the normal order and fairness of 1402 the House if an hon. Member representing a steel constituency—and I do not mean myself—were given an early opportunity to reply to the one-sided and wholly unjustified attack made by the hon. Gentleman on one of our major publicly-owned industries.
§ Mr. Deputy Speaker (Mr. E. L. Mallalieu)
I am grateful to the hon. Member for his suggestion, but the calling of hon. Members to speak in the debate is entirely for the Chair. Broadly speaking, I agree with what the hon. Gentleman said, that at an early stage it would be desirable if the hon. Member for the New Forest (Mr. Patrick McNair-Wilson) were given a reply to the remarks that he made, but I think not at this moment.
§ 8.32 p.m.
§ Mr. Laurie Pavitt (Willesden, West)
I agree with one comment made by the hon. Member for South Angus (Mr. Bruce-Gardyne), namely, that no Government like to make forecasts, economic or otherwise, or put forward targets, because today's forecast is tomorrow's albatross.
The hon. Gentleman hoped that hon. Members had been reading the Financial Times. One theme that has run through the debate has been the disappointment expressed by both sides of the House at the lack of interest in the important matters that we are discussing today. I assure the hon. Gentleman that more people read the News of the World than the Financial Times. There is talk about out-turn and estimated out-turn, and about gross national expenditure, and the White Paper contains various figures and statistics. The average person is far more interested in the female figure than in the kind of figures presented to the House in the White Paper.
The right hon. Member for Taunton (Mr. du Cann) referred to the complexity of the subject, and he is right in so describing it. He referred to the problems of the Sub-Committees of the Expenditure Committee. He spoke of the problem which arises when a Sub-Committee discusses highly controversial political matters—for example, private 1403 practice in hospitals—and has difficulty in reaching a unanimous decision on the subject. I hope that those concerned will consider the possibility of Sub-Committees being able to present both a majority report and a minority one.
I should like to deal briefly with a rather specialised aspect of the report. The debate has ranged widely, but I want to concentrate on pages 51–53 of the report and direct my attention to the points made about the health and personal social services. Like Oliver Twist, I am grateful for small mercies but I am asking for more. The fact that an additional £118 million is being spent on these services is something for which we are grateful. Frankly it is not enough, not good enough.
I know that in this House it is an argument more sterile than a hospital syringe to discuss on the lines of "what we did, what you did, what they did and what happened in other years." Nevertheless it is worth putting on record that there was a rise in National Health Service current expenditure in the six years of the previous Government from £1,026 million to £1,754 million—that is an average of £121 million a year. This White Paper shows that as we get towards the end of the period the sum will decline to less than £100 million—to £91 million on current expenditure. There is to be a decline in public expenditure in what I consider to be the most important service for the health of the nation.
The White Paper fails miserably to tackle the basic urgent and vital problem of the N.H.S., and that is why I support the Amendment. What is needed in public expenditure is a massive increase in Health Service resources. What is happening is that the Government are fiddling about with odds and ends, such as charges, private patients and insurance schemes, but all of these are peripheral They are not only irrelevant but they help to defer the real decision of getting to grips with reality.
I would like to see the Secretary of State for Social Services fighting under the slogan "6 per cent. for the sick." I refer to 6 per cent. of the gross national product. I would like to see Dr. Stevenson of the B.M.A., together with 1404 the nurses, the psychiatrists and Health Service workers of all grades, leading deputations to the Elephant and Castle, pressing not merely their own pay claims but demanding 6 per cent. of the gross national product for the sick. I want to see the Secretary of State fighting for that inside the Cabinet because on 1970 figures it would have meant that he would have got £2,560 million instead of £2,038 million, an increase of £500 million. It is an increase of that order which is needed in the Health Service if we are to get anywhere.
The figure of 6 per cent. of G.N.P. represents only 11 per cent. of all public expenditure. Is not our personal and our family health our highest priority? Is it not our greatest national asset? I am aware that when we look at public expenditure we must not only look at the gross figure but must examine how it is spent. One of the fallacies we have to be aware of is that if we think in terms of the total amount and know how it is spent we can get to the situation reached in the United States where they always spend far more of their G.N.P. on health than we do, yet in the world health league table they are fourteenth for infantile mortality, eighteenth for life expectancy of males, eleventh for life expectancy of females, twelfth in the percentage of mothers dying in childbirth, and the American male aged 40 to 45 has less chance of living to be 50 than his counterpart in Europe, Canada, Australia and Japan. I am aware that, whilst I am asking for massive resources, there must be a determination to spend in the right direction.
I welcome the decision announced on page 52 of the White Paper that the cost-related prescription charges which the Government put about are now to be dropped. I would like to see all prescription charges abandoned. With the kind of figures that are being bandied about in this debate, the meanest cut of all was the raising of £50,000—do not forget we are talking about a total public expenditure of £20,000 million—by putting a tax of 15s. a year on mental patients and people who have had coronary thrombosis and chronic bronchitis. Do the Government really want 15s. from a sick man to give the £10,000-a-year man an extra £185 a year?
1405 I welcome the decision in the White Paper to spend more on the old and mentally ill. A total of 45 per cent. of National Health Service beds are for mentally disordered patients but only 11 per cent. of consultants are psychiatrists and only 21 per cent. of the nurses are in psychiatric wards. I very much object to the system operating in the Health Service whereby the mentally ill are being taxed to pay for the mentally sub-normal. I have a letter from a consultant psychiatrist in a London teaching hospital who says:It is our almost invariable experience that psychiatric drugs need to be prescribed for a considerable length of time, and a course of eight weeks would be unusually short. Many chronic patients need their drugs indefinitely, and as you know, chronic psychosis does not exempt one from charges. We have to give many of our patients four to six drugs at the same time. We don't like to give depressed patients quantities with which they might kill themselves and we may give prescriptions to last as little as two weeks.A patient can pay as much as £4 for a series of drugs, and weekly injections at 15s. a time are becoming far more usual with chronic schizophrenics. The letter continues:I encourage most of my patients to buy 'season tickets,' but I am afraid that an awful lot of them can never summon the initiative to get the application forms … the same people of course who won't be claiming this new means tested family benefit. It is a disgrace that our inadequate patients for whom hopes of a cure are so unlikely are penalised by these charges.This is the sort of thing that I trust the Government have in mind when they examine public expenditure. I accept that when we are talking of sums like £20,000 million these matters are small in total, but they are vital to an important sector of the community.
I welcome paragraph 7 on page 53 all the more because I know that it reflects the Secretary of State's deeply held conviction. This is an attempt to spread public expenditure more effectively from the point of view of the domiciliary and community care services, rather than to give treatment to those who need it in hospitals and institutions. This is to be welcomed as an obvious step in the right direction.
The Secretary of State is the toughest Tory of the lot on the Treasury Bench, but it also happens that he has a keen brain and never pursues an ideology when 1406 it runs counter to reality and practicality. The only way the right hon. Gentleman will realise this shift—the shift to which paragraph 7 relates—is by upgrading the general practitioner service and giving G.P.s the tools for the job.
The right hon. Gentleman should scythe into the profits of the drug industry, where he could get at least £25 million. That could do more good if it was taken from that source and put into general practice. From the figures in the White Paper, we see that the general medical services get £151 million or 7¼ per cent. of the total National Health Service budget. The drug industry, meanwhile, gets £177 million, or 9¾ per cent. of the budget.
In a recent Parliamentary Answer to a Question in which I probed how the drug industry justified its profits on the grounds of research, I was told that of the total amount of new drugs to come out in the last two years, 90.6 per cent. in 1969 and 88.4 per cent. in 1970 were all variations on an old theme. In other words, they were reformulations of mixtures discovered many years ago. The drug industry cannot, therefore, justify these sums by saying that it needs such a high percentage of profit simply for research purposes.
We must consider the priorities that we have been trying to decide in this debate and ask whether we spend enough on health care. With this in mind, I conclude with some words of Miles Hardie. Director of the King's Fund Hospital Centre:In the long run it is public opinion and the ballot box that determine the standard of health care. But how much does the public really know and care about … the priorities for expenditure on and within the health and social services?We get the Health Service we deserve. It is up to this House to see that the public deserve and get better.
§ 8.43 p.m.
§ Mr. John Tilney (Liverpool, Wavertree)
I hope that the hon. Member for Willesden, West (Mr. Pavitt) will forgive me if I do not comment on all the points he raised. Time is limited and I wish to make two other important points.
The first is the need to save money through Britain owning and not renting her diplomatic properties abroad. The Report of the Committee on Representational Services Overseas, appointed by the 1407 then Prime Minister under the chairmanship of Lord Plowden in 1962–63 said in Cmnd. 2276:The first greatest need is for Her Majesty's Government to own a far higher proportion of the accommodation it uses abroad. This applies both to official premises and to premises occupied by members of the staff … It should be the aim to own at least two-thirds of the residential accommodation.That was supported by the 14th Report from the Estimates Committee for the Session 1966–67, which is House of Commons Paper No. 666, and which said:The Government should announce that they accept the recommendation of the Plow-den Committee on Representational Services Overseas that it should be their long-term aim to own at least two-thirds of the residential accommodation required for the staff of the Diplomatic Services overseas.Yet when this summer I went to the Baltic on my holiday I found that only a tiny percentage of accommodation that we should own was actually owned by us: the rest was rented.
In Oslo for instance, we have a lovely new embassy in the grounds of the ambassador's residence which, through the vision of King Edward VII, was bought a long time ago. There, of 20 home-based diplomats, only three live in accommodation owned by this country; the other 17 use rented accommodation. The same thing applies in many of the other Scandinavian capitals, and elsewhere, too, because it has been the Treasury's policy not to be in the property market.
Few worse investment advisers to successive Governments can there have been in history than those in the Treasury who advocated that policy. To me it is comparable only to the post-war policy of the Colonial Office, when it existed, of investing the funds of our erstwhile colonies in irredeemable Government stock such as Daltons. The Treasury's policy of not owning property must have lost the country tens of millions of pounds since the war. It seems commonsense that investment advice that is sound for individuals should also be sound for countries. We, on this side at any rate, believe in a property-owning democracy, so I cannot see why the Government should not own property. With many countries after the war there was a balance of payments difficulty, but that 1408 did not apply to the sterling area or to the Commonwealth countries.
The lesson should be learned now. Only a limited amount of land is available: we may reclaim a bit from the sea, but it is negligible. It is my bet that over the next decade land values in the capital cities must go up. There may be some countries where the capital is moved—like the moving of Rio to Brasilia; and I should be interested to hear whether we have lost money by needing accommodation in both Rio and Brasilia. But even if land values do not rise, paying rents, largely to owners who live overseas, puts a tremendously heavy burden on our economy. At the end of the lease we have nothing to show for all the improvements we may have put into the accommodation, whereas if we had bought the property we should have an asset.
This circumstance applies equally to property at home. I should like to see the Government own more property in London rather than leasing it, but we are always up against this idea of the annual Budget and the annual expenditure rather than thinking of taking money out of one pocket and putting it into another form of investment, which is a perfectly sensible form of expenditure. And if the Government are thinking of buying property I hope that they will consider buying it in some of our provincial cities, where the new office accommodation is very much cheaper and where good clerical labour is available.
Expenditure is set out on page 88 of the White Paper. I want to refer particularly to the current and capital expenditure on the overseas services, and also to the defence budget. I should like to see their capital expenditure much increased. Why should our reserves not be tackled in the same way that a bank looks after its reserves? The bulk must be liquid; it must either be in gold, which bears no interest, or in a currency—perhaps dollars—which, unfortunately, usually depreciates. As in the case of the banks, there is much to be said for having a portion of our national wealth in land, buildings and even pictures. I am old enough to remember when, the U.S.S.R. had to sell a whole museum of icons in the early 1920s, because they had no proper reserves. In the event, they did better than if they had invested, before 1409 World War I, in French rentes, which would not have produced as much money as the icons did at that time. I urge the Government to go ahead with the policy laid down years ago by the Select Committee, and to buy many more properties in the world's capital cities. I believe that that would pay them handsomely.
My second point is an analogous one. A fortnight ago I had the privilege to go to Germany to look at the Army and the Royal Air Force, and S.H.A.P.E., near Mons. I was immensely impressed by the quality of our Service men and their morale, but from the driver who met me at the airport near Rheindahlen to the senior officers I heard one consistent cry, concerning the absence of married quarters and the immense length of time that soldiers had to wait to get their wives out there from this country.
We know that soldiers and Royal Air Force men marry much earlier now than was the case 20 years ago. There are three cases that I particularly remember from my visit. One man told me how lucky he was now to have his wife in a village that was only 12 miles away, where she was alone, with no other English people round her. He had previously had to commute 50 miles every day, all through the summer, until he found that accommodation only 12 miles away.
I met the wife of a cook in one of the Guards battalions who had parked herself in a village near Munster. The buses ran only four time a day and she could not speak German. He husband was paying £1 a day for just an upper room, a little alcove with a bed, and a kitchenette. Even worse was the caravan site—I regret to say that it was owned by an Englishman—near the Royal Air Force base at Bruggen, on the Dutch border. It had no decent facilities or amenities—no hard standings—and for a one-roomed caravan one Service man was delighted to pay £10 a week. I understand that these are the going rates, and that they are higher in the summer, so in this caravan site the cost is averaged out winter and summer.
Why cannot Her Majesty's Government negotiate with other Governments to buy that land and to build, preferably on the outskirts of a prosperous town, one or two tower blocks, preferably with 1410 Germans or—in Holland—Dutch people interfloored with our own people?
§ Mr. James Hamilton (Bothwell)
As one who was a serving soldier and who has also visited troops in Germany, I ask the hon. Gentleman whether he would agree that the tower blocks about which he is speaking should be the responsibility of the West German Government and that they should pay for them, and that it is not the responsibility of the British Government.
§ Mr. Tilney
I prefer to run my own show. It would be very much better even for the American forces in Britain, if they wanted married quarters, to own them rather than to rely on us.
I believe in going into Europe. Our troops will be in Europe for a long lime. It is absurd that we are wasting all this money on rent and not getting the accommodation that we want for Service married quarters and, therefore, not getting the morale in our troops that we would have if they knew that their wives were properly housed.
Individuals can buy property in Germany, so why cannot the British Government also buy it? Provided it is in a sensible place, if our strategy changes we should be able to sell that block of flats probably at a great profit. There should be various car-parking facilities underneath the blocks, and we should have club rooms and a place where children can be looked after. It would make an immense difference to the overall value of our defence expenditure. We shall need such married quarters for a very long time. It would pay us to buy and to build in Germany and elsewhere in Europe, if we want to keep our troops in high morale and to keep their families happy. If such were done, it would also be a very good investment for Great Britain.
§ 8.58 p.m.
§ Mr. Frank McElhone (Glasgow, Gorbals)
Had I been more fortunate in catching your eye earlier, Mr. Deputy Speaker, I would have pursued the arguments of the hon. Member for Liverpool, Wavertree (Mr. Tilney). I have had some interest in the proper use of our embassies, especially in projecting our export drive.
The debate has been most interesting, and I have learnt a great deal. I was 1411 deeply interested when the Chairman of the Committee, the right hon. Member for Taunton (Mr. du Cann), said that hon. Members on both sides found it difficult to elicit the information they required by Questions or even in debates with prepared speeches and, therefore, that the Committee and its report should have greater importance and emphasis. I share those views.
Rather than pursue questions of strategy, I want to talk about Scotland's social services. This matter was raised by my hon. Friend the Member for Willesden, West (Mr. Pavitt). I refer the Financial Secretary to page 53 of the White Paper, in which it says that the idea is to have a growth rate at constant prices of 9.2 per cent. in 1972–73 and that the main growth points will be services for the elderly, the mentally ill and the mentally and physically handicapped. That sounds all right until one turns to page 62, on Scotland. Paragraph 2 says:In total the forecasts provide for an average annual increase of about 2½ per cent. between 1971–72 and 1975–76.How is Scotland faring in view of this small percentage as against that mentioned on the earlier page? The chronic sick and the disabled in Scotland have been getting a raw deal. I have raised this question several times and have learned to my dismay that, although Section 3 of the Chronically Sick and Disabled Persons Act imposes a responsibility on local authorities to build houses for these categories of people, only three Scottish local authorities have taken action under this Section. This is one small but very important instance where we are falling down on the Act, and not enough finance is coming to Scotland via the Secretary of State for Scotland.
Is it not possible for the Committee at some time to investigate the social services in Scotland? Such an investigation would be welcomed by many of the voluntary organisations for the disabled, by hon. Members on this side, and by myself in particular.
§ 9.0 p.m.
§ Mr. Joel Barnett (Heywood and Royton)
Several right hon. and hon. Members have said that unfortunately neither the public nor many of our colleagues seem to be very interested in the debate, though I have no doubt 1412 that all our colleagues will read the report tomorrow in HANSARD with great interest.
As we are debating total public expenditure of £25,172 million for 1972–73 it is surprising that there is this lack of interest. My hon. Friend the Member for West Lothian (Mr. Dalyell) suggested that perhaps the title of the White Paper should be changed. The right hon. Member for Taunton (Mr. du Cann) rightly suggested that it is a subject of more than sufficient importance—indeed, it is of the greatest importance—for the debate to be opened by the Prime Minister and to be wound up by the Chancellor of the Exchequer, with a major vote at the end of it.
I should never like to feel that I am all that certain about the reasons for the lack of interest in the debate. I envy those who always seem to be absolutely certain about the reasons for everything. My right hon. Friend the Member for Birkenhead (Mr. Dell) hit upon what I believe is one cause for the lack of interest—that is, that the public and our colleagues are frequently confused by the figures and the technical jargon used in the document and in our debates. When they hear us talk about survey prices, constant prices and then real prices, they wonder what the real price is and what we are talking about. My right hon. Friend the Member for Kettering (Sir G. de Freitas) said that he felt something of an intruder in the debate. That is absurd.
We should be debating the real issues in public expenditure, namely, the priorities between public expenditure and private expenditure, and how public expenditure should be divided. Instead, it is all hidden in a welter of jargon.
As I say, I do not pretend to know what the ideal solution would be. Last year I thought that the growth of the work of the expenditure committees in which the right hon. Member for Taunton has done so much, would help to improve our debates. It may have improved our debates in terms of technical knowledge and information, but it has not aroused the interest of either our colleagues or the public. It is vital that that interest be aroused if we are to have proper discussion here and in the country.
1413 We need two completely different sets of debates. We need one set of debates to discuss the reports of the committees, with all the difficult jargon that there might be. As my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) said, those debates would prepare the information. The other debate—and a most important debate—would be a wholly political one for the House—for our colleagues who do not appear to be interested in what we have discussed today. That political debate would consider the priorities, and those priorities are highly controversial, a fact that I do not think we should burke. The fact that they are highly controversial does not mean that the Expenditure Committees cannot do the sort of job that they have been doing so well in the last year. But it is important to separate the two things—one, looking at what the Treasury and different Departments are doing in the matter of public expenditure, and the other, looking at the crucial issue of priorities.
However, to get a proper debate we need clear figures and not figures which are deliberately hidden. In that sense the Expenditure Committee and the Sub-Committees will do a useful job in preparing the ground for that second type of debate to which I have referred. But at the moment, what with transfers, estimating changes and policy changes, it is impossible either for the public or for our colleagues in the House to know what we are talking about. With respect to Wynne Godley and The Times, who are doing a first-class job in trying to analyse these White Papers, the fact is that if they or anyone else imagine that these analyses will be read avidly, even by readers of The Times, let alone by the great mass of the public and our colleagues in the House, they are very much mistaken.
The fact is that the figures in this White Paper and in all the other White Papers—and I am not making a partisan point here—for a variety of reasons are unclear because of the various transfers and the estimating changes of which I have spoken. Some of this information is, I feel, deliberately confused. Take, for example, defence. I do not believe there is any doubt that the defence cuts announced in Cmnd. 4515 were not real cuts at all. They were never intended to be cuts. In my view, the 1414 Government intended to maintain the level of defence expenditure, and the words in many of their White Papers make that pretty clear.
In social security, for example, to which my hon. and learned Friend the Member for Lincoln (Mr. Taverne) referred, we have a series of changes. Because of the way in which the figures are presented, it is impossible, or certainly far from easy, to distinguish between the policy changes and the amounts which were previously in the contingency allowance, and so on. When my hon. and learned Friend the Member for Lincoln referred to what Wynne Godley had written about this in The Times, the Financial Secretary said that Wynne Godley had got it wrong. This may well be, but I must say that this sort of technical sort of argument between Wynne Godley and those who were formerly at the Treasury and are the present advisers to the Financial Secretary only serves to emphasise that this is not something in which the ordinary lay Members of this House or the public are interested. There will always be differences of opinion between experts about what is a transfer payment and what is not, and what should be in a contingency allowance. Certainly unless we get much clearer figures, we would not have the proper debate of the sort to which I referred.
On trade and industry we need a Houdini to unravel the knots between this and the last White Paper. We are told that there are net policy changes and estimating changes and transfers and so on, all adding up to a net change of about £23 million. It is almost as if the Government were deliberately trying to confuse us. On Concorde it is almost as if they were positively frightened of spelling out the true cost. We all know that in due course it will rise to a sum in the region of £1,000 million for research and development—and very likely more. Why the Government have to pretend, to hide it and confuse it in such a way that the true cost is far from clear, I do not know. But if this sort of information to which I am referring could be presented to us in a less confused way, we could have a meaningful debate, first of all on the priorities in respect of the public sector, and then the 1415 argument between the public sector and private expenditure.
True, each constituent part of public expenditure is debated frequently throughout the course of a year, but the choice as between one item and another is normally left to the Cabinet and the Treasury, so on the crucial political decisions the public and Parliament play no part whatever. One would hope that, if we had the sort of debate which I have suggested, we could for that debate have some more meaningful cost-benefit analyses of the kind to which the hon. Member for Horsham (Mr. Hordern) referred, but, certainly, until we bring the public and our colleagues to be more interested in the crucial political decisions, which are at the moment left entirely to the Cabinet and the Treasury, as I say, we shall never arouse their interest.
I come now to some of the matters which we should be examining—some hon. Members have considered them during today's debate—and which would certainly be examined if we had the sort of debate of which I have spoken. On defence, for example, we are told that in 1972–73 expenditure will be £2,506 million. We should be discussing by what rational choice it was decided that that should be the level rather than £500 million more or less. We do not have that kind of debate related to items in the White Paper.
Next, agriculture. Is it not at least possible that a transfer from another item to this, say, for the purposes of research, might show greater national benefit than the item thus reduced? That is certainly possible, but was it argued in the Cabinet? How was it argued? Did the Minister responsible present the case?
On trade and industry, under the heading "General Support Programme", we are told that the main element here is to encourage industrial efficiency, yet under the same heading we find a reduction of £9 million to £10 million on research. In terms of priorities, that may well be an appalling decision. What is the explanation? We have not had one, and it is that sort of explanation which we should have.
I take, next, the Department of Employment. What would be the effect in the youth employment sector of substantially 1416 increasing expenditure devoted to social conditions in areas such as Northern Ireland? This is not examined, and we do not have the opportunity to examine it in the welter of jargon. What, for example, would be the result of increased expenditure on training? That is another question.
As regards the nationalised industries, we should be having a discussion about priorities, whether the priorities are right within this sector, whether they are right as between themselves and the rest of the public sector, and whether they are right in relation to the private sector. Some proposals are now being brought forward, and it is being done this year for reasons which I welcome. I shall be delighted if we can reduce the appalling level of unemployment. But, to use the Government's words, are the proposals commercially viable, or are they just being brought forward because of the level of unemployment?
Are the priorities right as between roads, rail and air transport, and are they right in relation to other sectors of expenditure? Perhaps we should be spending more on roads and less on something else, even education or health services such as those to which my hon. Friend the Member for Willesden, West (Mr. Pavitt) referred. On the other hand, should we be increasing our expenditure on health and, perhaps, suffering somewhat on our roads? These are the questions of priority which we should be considering. Are the Cabinet considering them? The House of Commons is not.
Next, housing. There will be slums in this country until the 1980s, and beyond that in certain parts. What would be the effect on the environment if we increased expenditure in this direction? I do not know. It may well be that if we did some cost-benefit analysis we should find that it would be beneficial to increase such expenditure at the expense of something else. We do not know whether this has ever been discussed.
There is also the question of expenditure on law and order. I am making no partisan point, but I recall the noble Lord, Lord Hailsham saying in the last Parliament that about £100 million would be needed to be spent on our prisons. Yet on page 45, the White Paper says that the position is planned to get slightly worse. Was this a conscious decision or 1417 did it just happen? Does it just happen as though one is preparing a balance sheet and sticks in a balance figure? We do not know. A small example again is that of the fire services. How much would be saved of national assets if we increased expenditure on fire services?
My right hon. Friend the Member for East Ham, North (Mr. Prentice) pointed out that expenditure on education is increasing by only 3 per cent. I represent an area where there are many Victorian primary schools and I recognise that there is great and urgent need to do something about primary schools. Have we the total of expenditure on education right in relation to the items within it? Is it not at least possible that we should be discussing the level of increase or decrease of expendiure within the whole of education as between one sector and another? All these are the sort of issues we should be discussing, and we are not.
I was interested in the speech of my hon. Friend the Member for West Lothian (Mr. Dalyell) on health aspects. It seemed to me that perhaps we were getting a Cabinet leak by proxy. He told us that my right hon. Friend the Member for Coventry, East (Mr. Cross-man), in a Cabinet paper which he prepared, apparently advocated increasing expenditure at the rate of £300 million a year. No doubt a very strong case could be made for that—indeed, for more, as my hon. Friend the Member for Willesden, West pointed out. How absurd it is to charge someone who is sick 75p in order to cut public expenditure when the Government are reducing taxation, and boasting about it, by £1,400 million? These are the sort of priorities we should be discussing.
In the case of Northern Ireland, what would be the effect of increasing public expenditure in that tragic area by a few hundreds of millions of pounds? Maybe that money would not solve the problem—we do not know. But it is possible that a substantial increase in public expenditure there might have a profound effect. The same applies to Scotland. We have been told about the level of unemployment there, now standing at over 140,000. These are the things we should be discussing.
In the local government sector, it seems that the way in which the Government 1418 are setting about the problem is allowing all sorts of indiscriminate expenditure. It may be that some of it will reduce the level of unemployment, and if so I shall be delighted. But is this the best way to go about it? How many white elephants are going to be built? How many civic halls are we considering which will never be used? Many small local authorities, at a time when they are likely to be absorbed by much larger local authorities, will, if encouraged by the Government, spend all that they can lay their hands on. No doubt some of the expenditure at this moment will help reduce unemployment in the short tell), and if that is so we shall all be delighted. But is this the way in which we should be planning our public expenditure? It is hardly the right way to be going about it.
My view is that if the case were properly made the public would want totally different priorities. I believe that they would not want the sort of priorities being set before them. But the decisions are made by the Government after a choice by Cabinet, civil servants and the Treasury without public and Parliament having a say, or, as the right hon. Member for Taunton put it, we are the audience after the Government have made the decisions.
Certainly, decisions have been made often not on the best argued case but depending on the relative strengths and personalities of Ministers. We have all read the memoirs recently—there has been a great spate of them. It is clear that many of these vital decisions are taken, not on the best argued case, but perhaps by tears, perhaps by the loudest shouts, perhaps according to whoever is friendliest with the Prime Minister. This is a crazy way in which to plan public expenditure.
But what about the priorities between the public and the private sector? There was an interesting observation by the hon. Member for Horsham on this subject. Some of my hon. Friends had been urging the need for an increase in public expenditure, and the hon. Gentleman's reaction was that that was not very popular. It was interesting to observe that his immediate reaction was that we should decide levels of public expenditure by what was popular.
§ Mr. Patrick Jenkin
The hon. Gentleman has asked in one breath that these decisions should be made more democratically and yet, when my hon. Friend suggests that a particular line is not popular, he condemns him.
§ Mr. Barnett
The hon. Gentleman is taking the point. I have been saying that it does not necessarily follow that because something is popular or unpopular today, the decision is therefore right. It does not follow at all. As most of us would agree, the public and our colleagues in the House are very ill-informed about the whole subject of priorities, both between private and public expenditure and inside public expenditure. I happen to believe that if the public were made aware of these priorities and were able to participate, people would recognise the need for increased expenditure on health, education and so on. That is what I mean by getting greater participation by the public.
§ Mr. Hordern
What I said was that an increase in public expenditure was not popular, and that that was tested at the General Election. But it was not popular because it was wrong, in the sense that the growth in public expenditure was achieved at the expense of growth itself, which in its turn meant that a further increase in public expenditure was therefore made impossible. That was the point.
§ Mr. Barnett
I do not accept the hon. Gentleman's argument, because the reason we did not get growth was nothing to do with our level of public expenditure. In their White Paper of last year the Government were arguing:To reduce substantially previous plans for public spendingwasthe way to faster growth.We have had no arguments to prove that. But this year, in Cmnd. 4829, instead of repeating those words, they say:Activity in the economy has been lower than foreseen when Cmnd. 4578 was published … there is scope for a more rapid increase in public expenditure. …Why is there a greater need for public expenditure? Is it because they mis-forecast what was likely to happen, or because to increase public expenditure was right?
We need to kill the fallacy that a reduction in public expenditure is the way to 1420 faster growth. There is no evidence to support. The international evidence does not support it. Japan is a unique case, but the evidence of most other industrialised countries does not support it. The O.E.C.D. figures show that the increase in public expenditure in Belgium was 33 per cent. while the increase in growth of the gross national product was 4.6 per cent.; France, 33.5 per cent. and 5.8 per cent. growth; the Netherlands, 37.1 per cent. and 5.2 per cent. growth; Norway 37 per cent. and 4.4 per cent. growth; ourselves 32.8 per cent. and 2.1 per cent. growth.
I entirely accept that public expenditure figures can be meaningless. Some Governments nationalise more than others. For instance, the Conservative Government here put Rolls-Royce into public expenditure when a similar firm would not be within public expenditure in another country. I am only making this point to show that there is no evidence to prove that higher public expenditure necessarily restricts growth.
The Government's policy now is far from clear. Expenditure on resources is the same between 1970–71 and 1974–75 as it was between 1965–66 and 1970–71, with the exception of a reduction in capital expenditure and an increase in current expenditure. The Government are now desperately using public expenditure to deal with a situation for which they have no other answer because their policies have proved unsuccessful.
The Government tell us in paragraph 8 that they have held the rate of growth of their real cost to the economy in that period close to 3 per cent., despite a recognition, at least, that the productive potential, for the reasons given in the White Paper, is greater than 3 per cent. The Government have never argued a case, and certainly do not do so in the White Paper, that 3 per cent. is right for the level of public expenditure. I hope that we shall have a 5 per cent. level of growth, or even more. I have never accepted that our productive potential was only in the region of 3 per cent. This figure was based on the historic past of mismanagement by a variety of Governments. There has never been any evidence satisfactory to me that 3 per cent. was all we were capable of. If we now have, as the Government argue in the 1421 White Paper, a very much higher level of growth, why is 3 per cent. the right level of public expenditure? Where have the Government argued that this should be the level? Mentioning it is not an argument for it. Just to state that we shall stick to 3 per cent. is no argument that this is the right level.
The hon. Member for Horsham made his own pet case, a very good one I have no doubt, for increased expenditure. Hon. Members, particularly those on the Government side, are constantly asking for an increase in public expenditure, but neither in the White Paper nor in any speeches has the case ever been made that the level of public expenditure in this country is too high. This is just stated as a bald fact to support the cutting of taxation. The Government have never made an economic case for it, and they certainly cannot make a social case. It does not help when the Government simply give us these bald, very often obscure, facts without arguing the case.
It does not help the better examination of public expenditure if we pretend that this is not politically controversial. It is. It is probably the most politically controversial subject of all, and it needs to be said that the Government's policy on public expenditure is controversial. The Government's policy is not only controversial but utter confusion.
§ 9.30 p.m.
§ The Financial Secretary to the Treasury (Mr. Patrick Jenkin)
The speech of the hon. Member for Heywood and Royton (Mr. Joel Barnett) reflected the disappointment which he feels and which has been voiced in a number of the speeches today about the lack of interest which has been expressed in the debate, in the White Paper, and even in the Select Committee reports on the part of our colleagues, the Press and the public. It is right to acknowledge that the hopes of those of us who have participated in these debates since the first public expenditure White Paper appeared are being realised only very slowly.
I do not feel that the situation is quite as gloomy or depressing as the hon. Gentleman suggested. When I wound up the debate on last year's public expenditure White Paper, I quoted the phrase which kin Macleod used in the first of our debates when he said of that debate: 1422This bridge for the moment leads nowhere."—[OFFICIAL REPORT, 21st January, 1970; Vol. 794, c. 537.]The White Paper was one end of the bridge but, as yet, there was no Select Committee to constitute the other.
By last year I was able to congratulate my right hon. Friend the Member for Taunton (Mr. du Cann) on the fact that as Chairman of the new Select Committee on Expenditure he represented the foundations of the other end of the bridge. Today's debate, whatever disappointments may be felt about the lack of attendance, has shown how right the House has been to bring that bridge into existence. The traffic that it is carrying already is substantial and of real value.
I want to add my tribute to those which have been paid by hon. Members on both sides of the House not only to my right hon. Friend the Member for Taunton but also to the hon. and learned Member for Lincoln (Mr. Taverne), as Chairman of the General Sub-Committee. Their Report on Command Papers on Public Expenditure is one of the best Select Committee reports that I have seen. I was glad when the hon. and learned Gentleman said earlier today that he felt that he and his colleagues had not laboured in vain when he saw the extent to which the Government had responded to their recommendations.
If, as fain Macleod said, the first debate in 1970 was bound to be "a trifle unreal", so also was the second one earlier this year. Then, following the General Election, we had two bites at the cherry. We had two days of debate in November, 1970, on Cmnd. 4515, and a one-day debate in February on the fuller White Paper which followed it. Today we are at least having both the White Paper and the two-day debate in the order and at the time envisaged originally by the Select Committee on Procedure. But, as several hon. Members have pointed out today, even now the new arrangements are not in full working order.
Like many other hon. Members, I wonder whether we have the procedure right. I am sure that it needs thinking through more fully. It is natural that the House should want to express its views promptly on the annual White Paper soon after publication. The hon. Member for West Lothian (Mr. Dalyell) 1423 suggested two days. Other hon. Members have said that we might do better to wait until we have some reaction from the Select Committee before we debate the White Paper in the House. Others have argued that it would be better to debate the White Paper after the Expenditure Committee, through its various subcommittees, has examined and reported fully on what the White Paper has to say about the Government's programme, and that there should be other opportunities during the parliamentary year when we could consider reports of the Expenditure Committee.
I shall not attempt to answer these questions tonight. But I assure the House that my hon. Friend the Chief Secretary and I will draw the views that have been expressed on this matter to the attention of my right hon. Friend the Leader of the House. We have an open mind on the matter. We shall seek in the usual way to ensure that future arrangements, which may need to be experimental for some time yet, will be developed in whatever way best suits the wishes of the House. It is worth taking trouble to get the right answer, because, as has been said today, the decisions which this series of White Papers represent are of immense importance to the whole country.
The simple truth is that no other country in the world publishes annually its public sector programmes comprehensively and in detail for five years ahead. Moreover, I assure the House that these are not mere backroom exercises; they are used for the actual management of public sector spending as it is seen by the Government at a particular point in time.
I will take up briefly the point on which we had some argument during the speech by the hon. Member for West Lothian—the status of the figures in the White Paper. I refer the hon. Gentleman and any other hon. Member who finds this a strange concept to paragraph 17 of the Sub-Committee's report and to the paragraph references in last year's White Paper to which that paragraph refers. That paragraph makes it perfectly clear, as my hon. Friend the Chief Secretary pointed out in an intervention, that the status of the figures in the White Paper depends upon policy decisions at the date of the White Paper, the end of October, 1424 and that the figures, as it were, decline in certitude, in certainty, as the years go by. The figures for five years ahead are obviously more tentative than those for the next year.
§ Mr. Dalyell
My point was that certitude might decline to such an extent that forward figures were not terribly meaningful.
§ Mr. Jenkin
That is a matter of judgment. However, they are the best estimate we can make on the basis of policy decisions as they stand at the moment.
We know, and the right hon. Member for Sowerby (Mr. Houghton) knows, that, having published a White Paper, Cabinets do not promptly go away on holiday for five years. They are continually making policy decisions, and these have their effects as each year's White Paper is published.
I turn to the Committee's recommendations. I am glad that members of the Sub-Committee, particularly its Chairman, recognised how far we have fallen in with the Committee's wishes. The Committee recommended coverage in full detail of all the main cross-classifications, by programme, with and without the relative price effect, by economic category, and by spending authority for the full five years.
I should like to take up points made by both Opposition Front Bench speakers. We and they and the members of the Committee have to think more carefully about what we want. The hon. and learned Member for Lincoln, in an interesting technical passage in his speech, asked for further clarification, further details, further of the minutiae of the report, and the hon. Member for Heywood and Royton complained that we were getting lost in a welter of technicalities. These two views do not necessarily conflict, but they certainly need to be carefully sorted out. We may need to try to present the main bones of the White Paper more simply, while at the same time providing more background detail for those who want to probe individual cases more deeply.
§ Mr. Joel Barnett
That is precisely what I said at the beginning of my speech. It does not conflict in any way. I said that we need two different sets of debates.
§ Mr. Jenkin
Whether we need two different sets of debates is another question. The question concerns what figures 1425 should be produced. We have done a great deal.
The Committee recommended coverage in full detail of all the changes which had been made from one year to the next, distinguishing those arising from new policies from those reflecting nothing more than new estimates. This has been done. We have continued many of the old analyses as well.
It does not stop there. The Committee recommended that details should be given about public sector receipts apart from those from general revenue. They are in Tables 3.11 to 3.15. The Committee asked for figures of past expenditure on the same price bases as the forward programmes, and these, too, have been provided. It must be rare indeed for any Government to have responded so comprehensively and so promptly to recommendations of this nature, and I believe that we are entitled to credit on that account.
In a recent article in the Financial Times Mr. David Watt described the White Paper now before the House asA far more compendious and revealing document than has ever been produced on this subject before.Only in two cases were we not able to go the whole way with the Select Committee, as my hon. Friend the Chief Secretary indicated this afternoon.
No less important are the innovations which we ourselves have made. For example, the programmes of the local authorities are now shown for England and Wales and for Scotland separately, and they distinguish current and capital expenditure. It is our hope that this will help local authorities in working out their own estimates. We want to work more closely with them in preparing their estimates, and I believe that the new tables will make that easier.
But perhaps the most significant development that we have introduced is to express the growth of public expenditure not just in terms of expenditure itself, as has been done in the past, but in demand terms; that is, the demand which is created by the expenditure upon the nation's output. It is worth spending a moment or two explaining what that means because, having listened to almost the whole debate, I have the impression that the full significance of this is not yet 1426 widely appreciated inside or outside the House.
I am referring to the figures in paragraph 7 of Part 1, and to Table 3.1 in Part 3 where we give figures for the average annual growth of public sector demand on output—2.5 per cent. expressed in volume terms, and 3.2 per cent. expressed in cost terms. Those figures represent a sophisticated and novel concept which has one great practical advantage; namely, that one can reduce the implications of the whole complex field of public expenditure over a five-year period to one or two very simple figures which represent the impact of that expenditure on the economy.
That objective has hitherto proved intractable. The previous Administration's Green Paper entitled "Public Expenditure: A New Presentation" envisaged that the annual public expenditure White Papers should contain:An assessment of the prospects for the growth of national production in the period ahead.It must be said that that did not involve presenting a full forward assessment of the economy with the White Paper. As the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) said when he introduced his own White Paper in January, 1970:The White Paper is not an economic plan.That, he saidwould take us into much wider issues of economic forecasting and management."—[OFFICIAL REPORT, 21st January 1970; Vol. 794, c. 525.]I cannot help feeling that it would not necessarily he helpful to call it a second economic plan, as I think the hon. Member for West Lothian, in a flight of fancy, suggested.
What the right hon. Gentleman's White Paper had to say about the growth of national resources was that an increase of total output was envisagedwithin a range of just under 3 per cent. to about 4 per cent. a year".That was one way of proceeding, but I am not sure that it was really very helpful. Is there really any point in putting such vague figures forward as a basis for planning public expenditure?
§ Mr. Dalyell
It was not a flight of fancy. It was simply that if it were called a second national rolling plan it might have attracted a few more people.
§ Mr. Jenkin
I doubt whether they would be fooled for more than a few minutes. We have to do better than that.
We abandoned that approach. Incidentally, there is some suggestion in The Times today that Plowden is an authority for that approach. But Plowden did not believe that these surveys would ever be published even as they stand. He said that, though they could go with the medium-term assessment, he was not envisaging publication.
The other method of relating expenditure plans to the economy was to show the corresponding revenue projections. That, too, was done in Cmnd. 4234, the famous Table 1.2 about which we argued so fiercely last year, but this, too, has its shortcomings. However long one stares at revenue projections alongside expenditure estimates, nothing is revealed about the effect of the one upon the other unless one is given variants which show how one changes with the other. If we are given no variants, as is the case in the White Paper from the Labour Party, we are given in effect no information whatever about this relationship.
The hon. Member for Ashton-under-Lyne (Mr. Sheldon) had a slightly different suggestion, that the medium-term tax revenue could be used as a basis for planning the totality of public spending. I am bound to tell him that that is really a complete caricature of what happens, whatever Mr. Brittan and Mr. Jay may have told the Select Committee. It would show a surprising failure to understand the whole approach to demand management and the extent to which resources are available at any particular time. I can assure the hon. Member that that is not the way the Treasury proceeds. On the contrary, the figures appearing in Cmnd. 4234 for revenue projections simply were not used at all in any part of the Treasury's management of our economic affairs.
Furthermore, it certainly does not help to assess a likely trend in taxation, because that depends on other factors as well as public spending. For these reasons we dropped that table last year, and I find it significant that after all the fierce protests from the heavy Press, after all the loud condemnations from the hon. and learned Member for Lincoln and 1428 other of his hon. Friends, the Select Committee, having heard the arguments fully spelt out, felt it right to suspend judgment.
It is against that background that we have put forward paragraph 7 and Table 3.1 as a much better way of relating the spending figures to the economy than anything that has gone before. We aim to show as clearly as possible what future public expenditure we intend and what its implications are in terms of demand, and we have said as plainly as we can that we judge the pattern we have there set out to be a prudent one. Over the period from 1971–72 to 1975–76 the rate of growth of the net demand on output implied by public expenditure is slightly less in this White Paper than in last year's White Paper for 1970–71 to 1974–75.
The figures on which I suggest the House should concentrate are the measurements given in paragraph 7 of the average annual rate of increase in net demand on output between 1971–72 and 1975–76, in volume terms 2.5 per cent. and in real cost to the economy 3.2 per cent. This is a good deal more informative than the average figure of 3 per cent. growth in public expenditure—not translated into demand terms at all—given in our predecessor's White Paper and related to a range of growth of national resources of just under 3 per cent. to about 4 per cent. a year.
Moreover, this new method of presentation may make it unnecessary in future to look at expenditure in separate categories with their different but unquantified effects on demand. I refer to direct purchase of resources, transfers and purchase of existing assets.
§ Mr. Powell
Would my hon. Friend be good enough to relate what he is saying to the January White Paper on Public Expenditure? Is he saying that what is said in paragraph 7 of the present White Paper is on a different basis from what was said in paragraph 10 of the January White Paper, which also related a figure, in that case of 2.6 per cent., to the increase in the productive potential? In other words, if I may restate the question, and I submit it is of some importance, are the figures given in the two 1429 paragraphs I have mentioned on the same basis?
§ Mr. Jenkin
The short answer to my right hon. Friend is "No". Table 3.1 and paragraph 7 of this White Paper present the figures in a form in which they have not been presented before. This is a novel concept. Previously we have talked in volume terms and applied the relative price effect. We have talked about them in cost terms but they are essentially measurements of expenditure. What this does is attempt to express them in terms of demand upon the economy as a whole. I recognise that this involves some sophisticated calculations, requiring both analysis and judgment. We have put a memorandum to the hon. and learned Gentleman's Sub-Committee explaining how this is being done. I hope that, having studied the paper, the Sub-Committee may feel able to recommend that we are on the right lines.
I have so far dealt entirely with presentation. In the 10 minutes remaining to me I will comment on the substance of our programmes and on some of the points that have been raised in the debate, which has thrown up a number of interesting but conflicting criticisms, the simplest being that the Government could have spared themselves all the agony of 27th October, 1970, since the aggregates are, it is said, back to where they were up to 1973–74 and even above where they were for 1972–73.
This is not just a matter of having taken money out of one programme and put it back again, as Wynne Godley's article in today's issue of The Times makes clear. Money has been taken out, but it has been put back in very different places. The purpose of the changes are twofold, one to fight unemployment in the short-term and the other to continue the process which we began last year of concentrating help where it is needed, chiefly in the education, health and social security programmes.
One has only to compare Table 1.3 of this year's Tory White Paper with Table 1.4 of Labour's first and only White Paper. Take first the areas where we are cutting out indiscriminate subsidies. Under the Labour Party, expenditure on agriculture was planned to rise by an average of 7 per cent. a year. Under us, 1430 it shrinks by 7 per cent. a year. What about subsidies to industry, and I exclude investment grants?—under hon. Gentlemen opposite, down by 2.1 per cent.; under us, down by over 15 per cent. a year. Take housing, which includes subsidies—under them, up by 3.2 per cent. a year; under us, up by only 0.2 per cent. a year.
On the other hand, consider two areas which were mentioned by the right hon. Member for East Ham, North (Mr. Prentice), areas where hon. Gentlemen opposite clamour that more needs to be spent—health and welfare. Labour's plans were for 3.8 per cent. Ours are for 3.9 per cent. The same goes for overseas aid. They planned to spend in actual cash 6.8 per cent. Our plans, even at constant prices, total 7.6 per cent.
§ Mr. Sheldon
The hon. Gentleman seems to be arguing that the cuts in public expenditure announced by the Chancellor of the Exchequer in the autumn of last year were devised so that there could be a reallocation of expenditure. He will surely recall that his right hon. Friend's reasons for announcing those cuts were to enable him to make leeway for cuts in taxation.
§ Mr. Jenkin
That was clearly one of the objectives, and the White Paper was called "New Priorities in Public Spending", a point which I have made.
Within the programmes the emphasis is changing. Instead of universal subsidies, we are planning to spend more on new schools and to give more help to families in need. Instead of a soaring bill for indiscriminate housing subsidies, we are spending more on house improvements and are lending more for house purchase. Prescription charges are higher, but so is spending on hospital improvements.
Hon. Gentlemen opposite are fond of talking glibly of our "collective standards of living" or "collective welfare", vet under the Socialists the areas of public spending that grew fastest were not spending on the community but transfer payments, subsidies for industry, for agriculture and for individuals. Under us, the fastest growing programmes are the genuine community services—roads, local environmental spending, law and order, the arts and the whole social service sphere. I therefore reject the simple gibe of no change.
1431 The second main criticism that we have heard from hon. Gentlemen opposite today of the White Paper's programmes is that they do not do enough to deal with unemployment. At the risk of boring the House. I will give the public spending figures again—£164 million for improving the environmental and social services in the development and assisted areas; £53 million for housing improvement grants in those areas; £80 million for warships from the yards in the development areas; £206 million for Rolls-Royce and the RB211. Since this White Paper was published, further measures have been announced by the Chancellor of the Exchequer, with £163 million for accelerating investment projects in the nationalised industries and the road programme. So I reject that criticism.
The third, and obviously conflicting, criticism is that we have done too much and have jeopardised control of the public sector. According to this argument, there is now a risk that the effect will still be coming through when we have moved out of this recession and will then cause damaging overheating. We have borne this point very closely in mind, and that is why this White Paper has two striking features.
First, as I have said, the special boost is concentrated on this year and next, declines in 1973–74 and is scarcely evident in 1974–75. Secondly, the rate of increase in spending over the full five years is no more than an average of 3.2 per cent. a year in terms of real demand on output in the economy. This does not mean loss of control. It means what we should all want it to mean—firm and prudent control of the programmes; flexible and humane use of their timing.
If our resources increase, as the hon. Member for Heywood and Royton suggested might be the case, we shall have a choice whether to step up the programme to higher standards or to reduce taxation, or possibly to do both.
I emphasise again that public expenditure is now more firmly under control than at any time in the past. We now know more precisely the demand effect of our plans, local authorities can see more clearly where they are going, and the nationalised industries' needs are provided for. Growth now planned is at 1432 manageable levels with emphasis on the specific measures to influence in the short term the management of demand.
The next stage is the detailed scrutiny of individual programmes, and it is here, if I may say so, that the Select Committee has a vital rôle to play. It is here that Parliament can really help by asking: "What is the point of this programme? Could it have been done another way? What has to be forgone in order to do it?" These are the sort of questions that must now be asked.
In the first of these debates, in January, 1970, I described the Executive, in a phrase which appears in the evidence before the Select Committee, as a benign but remorseless juggernaut. With the benefit of 18 months with the beast inside the cage, I can confirm that this description was not really too far out. Although the Government machine moves forward with an undeniable momentum, its speed and direction can be, and are being, controlled. But it is of necessity a huge and complex machine.
The Treasury's primary task is to exercise financial control over the entirety, and it is doing this with increasing success. But, and here I take up the point made by the right hon. Gentleman the Member for Birkenhead (Mr. Dell), with the best will in the world the Treasury cannot turn the spotlight on particular parts of the machine with the intensity that a proper scrutiny requires. P.A.R.—programme analysis and review—will certainly help, and it is a most valuable innovation. But it is essential that other checks and other scrutinies should be brought to bear, and those who undertake this must have enough information in depth and opportunity to question, to probe and to examine.
My own conclusion is that the White Paper series is now providing this information, that the Select Committee method is the right way to scrutinise that information, and that we have here as advanced and as sophisticated a system as any in the world. Whatever views may be held about the substance of the spending proposals in the White Paper, I am sure that the whole House will endorse that conclusion.
§ Debate adjourned. — [Mr. John Stradling Thomas.]
§ Debate to be resumed tomorrow.