HC Deb 18 December 1975 vol 902 cc1629-32
7. Mr. Gow

asked the Chancellor of the Exchequer what steps he is proposing to take in order to improve the monitoring of the public sector borrowing requirement.

Mr. Healey

I am happy to be able to reassure the hon. Member. As my right hon. Friend the Chief Secretary to the Treasury told him on 30th October, my officials are working continually on the improvement of information about developments in the public sector financial position.

Mr. Gow

Does the Chancellor remember that on 15th April, from that Dispatch Box, he told the House that a borrowing requirement in excess of £10,000 million would involve unacceptable risks? Does he also remember that on the same occasion he told the House that it was his intention to reduce the public sector borrowing requirement below that figure of £10,000 million by well over £1,000 million? Does he not now agree that to accept a PSBR for this year in excess of £12,000 million is to gamble recklessly with the finances of the country?

Mr. Healey

I certainly agree that in April I made the statement and the prediction to which the hon. Gentleman has referred. However like all my fellow Finance Ministers in every country which I have been able to check, I was mistaken about the depth of the recession this year. This has increased the PSBR beyond what I then expected, though it is too soon to say by precisely how much. However, I am happy to confirm what I told the House in the last debate—that, comparing like with like, our general Government deficit is substantially lower than that of West Germany at present and in the same range as that of most other Western countries.

Mrs. Bain

How much of Scottish oil has been staked as collateral against the PSBR?

Mr. Healey

None, Sir.

Mr. Watkinson

Will my right hon. Friend note that the Opposition particularly in defence debates, are always calling for increased expenditure, which would mean an increased PSBR? Will he further state that at the present level of unemployment it is necessary to maintain the PSBR at its present level, but that in the long term if we are to get the investment which my right hon. Friend requires and which we all need, it is necessary to reduce the PSBR?

Mr. Healey

Yes, Sir, I agree with every word my hon Friend has said. My views on this matter are in line with those of all my colleagues in the Western World.

Sir G. Howe

Will not the Chancellor recognise that there is an important difference between the position in Germany, on which he continues to rely, and his own position? Whereas he has overshot his forecast for the PSBR by £3,000 million, the Germans appear to have managed to get their borowing requirement under expectation by £1,000 million.

Will not the right hon. Gentleman also recognise what will inescapably prove to be true—that the longer he goes on carrying a high and rising PSBR, the longer he will be putting off and retarding the prospect of an upturn in the private sector? He must begin to reduce the expectations of public sector borrowing if he is to see any chance of the revival in activity to which he is looking forward.

Mr. Healey

The right hon. and learned Gentleman is totally mistaken about Germany. The German public sector deficit is now estimated at almost twice the percentage of GDP at which it was estimated six months ago. It is true that a statistical mistake was made in Germany, according to German authorities, which has led to a recalculation of the deficit, as 7½ per cent. of GDP rather than 8 per cent. However, as I told the right hon. and learned Gentleman the other day, calculated by the same formula, even if the PSBR were as high as £12,000 million this year—which I do not believe it will be—our deficit will still be only 6½ per cent. of GDP.

Mr. Cyril Smith

Does the Chancellor agree that if he is to get long-term investment in industry and by industry, in adidtion to short-term he ought to be talking about long-term package deals? Is he aware that both employers and trade unions in the textile industry have this morning totally condemned as unrealistic and unhelpful the proposals that he made for the textile industry yesterday? I stress that it is trade unions as well as employers. What long-term plans does he have for this industry?

Is he aware that yesterday evening in replying to the debate the Secretary of State for Employment totally ignored every observation about textiles and honest questions seeking clarification about the Chancellor's statement of yesterday? In the light of that, will the Chancellor undertake to look at yesterday's Official Report with a view to answering those questions in writing?

Mr. Healey

I am always ready to read debates and I always read with admiration the speeches of my right hon. Friend the Secretary of State for Employment. Last night I was also able to listen to that speech with admiration. However, textual criticism of speeches by my colleagues does not arise on the Question of the hon. Member for Eastbourne (Mr. Gow).