HC Deb 15 July 1976 vol 915 cc877-80
1. Mr. Moate

asked the Chancellor of the Exchequer if he expects to make an early statement on cuts in public expenditure.

2. Mr. Gwilym Roberts

asked the Chancellor of the Exchequer if he is now in a position to make a statement on future levels of public expenditure.

15. Mr. Michael Marshall

asked the Chancellor of the Exchequer if he will make a statement on future levels of public expenditure.

The Chancellor of the Exchequer (Mr. Denis Healey)

I refer the hon. Gentleman and my hon. Friend to the answer my right hon. Friend the Prime Minister gave to the Rt. Hon. Member for Finchley (Mrs. Thatcher) on 29th June, following his statement about the Puerto Rico summit meeting.

Mr. Moate

While the right hon. Gentleman's conversion to the need for public expenditure cuts will be welcomed by all sections of the House, is it not clear that his own record of massively increasing public spending in his first years as Chancellor of the Exchequer has been a major cause of our economic troubles? When he makes such a massive admission of error, how can he expect to instil confidence at home and abroad?

Mr. Healey

I dare say that I made the mistake of following my predecessor, Lord Barber, who increased public expenditure by over 8 per cent. in 1973. We are getting the economy into better balance and I am sure the hon. Member will agree with the Banker, which in an article today says that, although it is not wholly satisfied with Government policy, at least it is better than having no policy at all, like the Opposition.

Mr. Roberts

Does not my right hon. Friend realise that further public expenditure cuts at this stage are likely to antagonise the activist sections of the trade union and Labour movements by feeding the appetites of the Tories and international blackmailers? Does he not agree that he is likely to increase that appetite by making further cuts?

Mr. Healey

I realise that no Labour Government welcome cuts in public expenditure, and neither does the Labour Party or anyone else who supports it. There are, however, times when a Government must accept their responsibility for keeping the economy in balance, and that will be done. As to feeding the appetite of the Opposition, my hon. Friend will agree that the sort of food that I give them is not always to their taste.

Mr. Marshall

Is the Chancellor of the Exchequer aware that his answer is totally unsatisfactory and that it smacks of the kind of political compromise which is becoming intolerable? Does he not agree that he is more concerned about consultations with his hon. Friends than with the needs of the country at large? What has he to say to that?

Mr. Healey

I have been asked what I have to say to that. I shall control myself, Mr. Speaker, because I know that you have a deep regard for the proper proprieties of our institutions. The Government face—[AN HON. MEMBER: "Defeat."] Not defeat. We have to maintain a relationship with the trade union movement—and that has won international praise, not least from the International Monetary Fund—while at the same time making adjustments in the economy which are required to make the rest of our policies successful. No doubt I shall succeed on this occasion, as I have done in the past.

Mr. Cyril Smith

Can the Chancellor of the Exchequer say anything about cuts in expenditure that he has imposed upon the Home Office and which have resulted in a situation in which prison officers can no longer take prisoners half-way through murder trials to continue those trials in the Crown courts? Is he aware of the situation that judges are sitting but cannot hear a trial because there is no prisoner? We have been told in the local Press that that is a consequence of cuts in public expenditure.

Mr. Healey

I welcome the fact that the hon. Gentleman has decided to add his weight to the Liberal Front Bench—after some misgivings, which all of us on this side of the House well understand. The question he has just asked me would be better put to my right hon. Friend the Home Secretary, as no doubt the hon. Gentleman recognises.

Mr. Watkinson

Does my right hon. Friend accept that, now that the economy is expanding, the growth should produce a fall in the public sector borrowing requirement next year? Is he in a position to tell the House what sort of fall he envisages as a result of the growth that is now taking place?

Mr. Healey

I am not in a position to make an estimate of that but, as I have often said, between one-third and one-quarter of the present sector public borrowing requirement results from unemployment. As unemployment comes down, the public sector borrowing requirement will come down with it, but nothing like enough to make room for the expansion of exports and investment which is our objective.

Sir G. Howe

Does the Chancellor of the Exchequer accept that the time has ended when he can simply go on chuckling through with backward looks at the past? Is it not time for reductions in public expenditure to be genuine and to come soon? Does he agree that they will have to exceed the figure of £1 billion which has been widely bruited around for so long that it is already discounted? Is he not making the task harder for himself by prolonging the process of re-educating his party?

Mr. Healey

Those words were sombre, even to the point of pomposity. I am not prepared to be lectured by the right hon. and learned Gentleman, with his record and the record of his Government, about the need to control the public sector borrowing requirement and the money supply.