Public Expenditure Control (Hansard, 10 July 1975)

§ 2. Mr. MacGregor
asked the Chancellor of the Exchequer if he will make a statement on the progress of his investigation into the possibility of setting cash limits for public expenditure.

§ 5. Mr. Hurd
asked the Chancellor of the Exchequer whether he will make a statement on the progress made towards achieving a more effective control of public expenditure, for example by imposing cash limits on each sector.

§ Mr. Joel Barnett
My right hon. Friend said in his statement on 1st July that cash limits would be fixed for wage bills in the public sector. The Government will employ the system of cash limits more generally as a means of controlling public expenditure in the short term. The intention is that in appropriate cases the existing system of control in real terms should be reinforced by cash ceilings on expenditure in the year ahead.

§ Mr. MacGregor
Does the Chief Secretary agree that it is essential to include strict cash limits on local authority expenditure, over and above the rate support grant, if we are to ensure that this control is adhered to? Will he guarantee that this will be included in the system to be announced?
Secondly, to avoid the danger of public bodies saying to his right hon. Friend the Chancellor at the end of a 10-month period "We have run up against our ceiling on cash limits. You must accept that either there will need to be further subsidies or there will be no services" will he ensure that there is a proper monitoring system throughout the year of the expenditure and of the cash limits, accountable to Parliament as well as to Ministers, so that this danger can be overcome and warning signals can be given?

§ Mr. Barnett
On local authority expenditure, I am sure the hon. Member appreciates that it would be as well to 715 wait for the White Paper tomorrow. On the monitoring system, we are constantly looking at the best way to improve this system. I shall certainly take note of what the hon. Gentleman has said.

§ Mr. Heffer
Do not cash limits mean that there will be cuts in public expenditure? These are taking place now. Is my right hon. Friend aware that this is not acceptable to many Labour Members?

§ Mr. Barnett
I do not think my hon. Friend appreciates that cash limits are another means of controlling public expenditure. Excessive public sector wages, of course, must inevitably have an effect on public expenditure.

§ Mr. Hurd
Does the Chief Secretary accept that the Consolidated Fund figures published yesterday have strengthened the fear of people who believe that public expenditure is still out of control? Does he propose to publish, for each part of the public sector, the cash limits which are now to be imposed? Is not that the only way of reassuring people on this vital point, which is far more important than what the right hon. Gentleman proposes to do in the private sector?

§ Mr. Barnett
The figures published yesterday can be very misleading. It would be quite wrong to draw conclusions from figures for so short a period. I am sure the hon. Member will recognise that it is not helpful to draw such conclusions.

§ Sir G. Howe
Will the Chief Secretary accept that Conservative Members welcome the Government's recognition of the need to impose cash limits as a means of controlling public expenditure? Will he assure the House that the proposal to fix limits for wage bills in the public sector will not only fulfil the Chancellor's pledge to prevent the growth of subsidies or borrowing but will prevent the excess costs of wage settlements being loaded on to the public through increases in prices and charges? In other words, will he so apply the sysem as to prevent a recurrence of what appears to be happening in the Post Office?

§ Mr. Barnett
The right hon. and learned Gentleman has made precisely the same point as my hon. Friend made the other week. I am sure that the right hon. and learned Gentleman will be able to wait patiently for the White Paper tomorrow.

§ 32. Mr. Michael Latham
asked the Chancellor of the Exchequer whether he will now announce further proposals for the control of public expenditure.

§ 34. Mr. Lawson
asked the Chancellor of the Exchequer what progress he has made towards a more effective method of controlling public expenditure, in particular by the imposition of cash limits; and whether he will make a statement.

§ Mr. Joel Barnett
I would refer the hon. Members to the answer that would have been given earlier today to similar Questions by the hon. Members for Norfolk, South (Mr. MacGregor) and Mid-Oxon (Mr. Hurd).

§ Sir G. Howe
On a point of order. Mr. Speaker—

§ Mr. Speaker
Order. I did not hear what the right hon. Gentleman said.

§ Mr. Barnett
I would have been referring to the Question that I would have answered earlier if it had not been for your ruling, Mr. Speaker.

§ Sir G. Howe
rose—

§ Mr. Speaker
Order. I have not prevented the right hon. Gentleman from answering any Questions.

§ Mr. Barnett
The Questions that were answered were asked by the hon. Members for Norfolk, South and Mid-Oxon.

§ Sir G. Howe
On a point of order, Mr. Speaker. I am not questioning your ruling, but if Ministers at the Dispatch Box are to be protected in some way from answering certain Questions that would have been put to them when they come to Questions that are legitimately being put to them, is it not treating the House with contempt and frivolity that they should be answered in the way the Chief Secretary has answered them? Cannot he now be required to answer the Question seriously with the gravity which should attach to it?

§ Mr. Barnett
In reply to the point raised by the right hon. and learned Member for Surrey, East (Sir G. Howe), may I say that I have no wish for protection to be offered. I should have been more than delighted to answer all the previous Questions. This Question' I answered with Question No. 3.

§ Mr. Speaker
Order. The right hon. Gentleman did answer Question No. 3.

§ Mr. Latham
May I now ask my supplementary question, Mr. Speaker? Do the Government attach more importance to controlling capital expenditure on construction work or reducing unemployment in the building industry?

§ Mr. Barnett
We pay attention to all these matters. We intend to ensure that unemployment is brought down, and the way to ensure that it is brought down quickly is by bringing down the rate of inflation.

§ Mr. Lawson
Without revealing anything in the White Paper, does the right hon. Gentleman agree that public expenditure as a proportion of gross domestic product has increased, is increasing and ought to be diminished?

§ Mr. Barnett
I agree that the growth of public expenditure must be restrained if we are to find the resources for new investment and to repay the very large debt which we have at present.

§ Mr. Biffen
Does the enormous increase in the Consolidated Fund expenditure for the first quarter of the current year relative to the corresponding period a year ago fall in line with the expectations of the Chief Secretary, and is it consistent with a public sector borrowing requirement no greater than that indicated at the time of the Budget?

§ Mr. Barnett
As I said earlier, it is far too early to draw conclusions from those figures during the course of a year. I am sure that the hon. Gentleman, with his great knowledge of these matters, will understand that.

§ Mr. Cronin
Does my right hon. Friend agree that the massive and drastic cuts in public expenditure recommended by Opposition Members would not only enormously increase unemployment but, as they would not have effect for 18 months, would have no real relevance to the present economic situation?

§ Mr. Barnett
I agree with much that my hon. Friend has said.

§ Mr. Lane
To help in countering inflation, will the right hon. Gentleman clear up one area of confusion before tomorrow? Does he accept that if the Gov- 718 ernment's incomes policy is to succeed the primary responsibility must rest on the Government to persuade and compel wage and salary earners to observe the 10 per cent. limit, and that there can be no question of the Government sheltering behind employers?

§ Mr. Barnett
I am sure that the hon. Gentleman has been reading Press reports about the contents of the White Paper to be published tomorrow. Being the patient man he is, I know that he will be able to wait until then to find out what it contains.

§ Mr. David Howell
With prices likely to rise at least 20 per cent. to 25 per cent. this year, if the cash limits on public spending are to be applied at 10 per cent. will the Chief Secretary make clear to his hon. Friends—some of whom are confused, including some of his right hon. Friends—that this must necessarily mean major cuts in all public spending programmes? Will he give us an assurance that the details of those cuts will be set out in the White Paper tomorrow?

§ Mr. Barnett
The hon. Gentleman must wait until the White Paper is published.

§ Mr. Rost
How can the Government's declared intention of controlling public expenditure be taken seriously unless the Government abandon the irrelevant nationalisation programmes?

§ Mr. Barnett
I simply do not agree with the hon. Gentleman that they are irrelevant.