HC Deb 24 June 1976 vol 913 cc1803-7
Q1. Mr. Lawson

asked the Prime Minister if the public speech at Eastbourne on 8th June by the Lord President of the Council on public expenditure represents Government policy.

Q7. Mr. Norman Lamont

asked the Prime Minister whether the public speech on economic policy by the Lord President of the Council to NALGO at Eastbourne on 8th June represents Government policy.

Q10. Mr. Michael Latham

asked the Prime Minister whether the public speech on public expenditure and economic policy made by the Lord President of the Council to NALGO in Eastbourne on 8th June represents Government policy.

The Prime Minister (Mr. James Callaghan)


Mr. Lawson

In that speech, the Lord President boasted that the present Government had increased public expenditure proportionately more than any previous Government in our history. Is not that precisely why the country is in such a mess today? As the Prime Minister has rightly made a point of being markedly less devious than his predecessor, why does he not come clean and brave the wrath of the wild men and still wilder women of the National Executive Committee and state here and now that substantial further public expenditure cuts in 1977–78 are absolutely essential?

The Prime Minister

I read my right hon. Friend's speech. I thought it was an extremely good one. It is true that public expenditure has increased faster. I think that the difficulty that now exists arises because there has not been a similar growth in gross national product. [Interruption.] Hon. Members are quick on the uptake today. A growth in gross national product has not taken place because of the gross expansion of monetary supply under the policies of the previous Conservative Government, so there is a chain effect here that we have to correct.

There were many other things in my right hon. Friend's speech which I thought were extremely good, too. For example—[Interruption.] The Question is related to whether I agree with the speech made by my right hon. Friend, and I am sure that the hon. Member for Blaby (Mr. Lawson) would like to hear some of these things. I hope he would agree that detailed consultation with the unions was the secret of successful government. I hope he would agree that the number of days lost through strikes has been the lowest since 1968. I hope he would agree that the services of the independent Advisory, Conciliation and Arbitration Service have helped to produce this state of affairs. I hope he would agree that the Government's approach to industrial democracy—

Mr. Lawson

On a point of order, Mr. Speaker. I have just put a supplementary question to the Prime Minister, and his answer bears no relation to that whatsoever.

Mr. Skinner

On a point of order, Mr. Speaker. Before you answer that point of order, perhaps it would help you if you understood that one of the reasons why the supplementary question put by the hon. Member for Blaby (Mr. Lawson) had to be explained at great length by my right hon. Friend was that it did not really come from the hon. Member at all but came from Conservative Central Office. [Interruption.]

Mr. Speaker

All this is only denying time for Prime Minister's Questions.

The Prime Minister

Further to the point of order raised by the hon. Member for Blaby, if I may say so, Mr. Speaker, I was answering that part of the question that the hon. Member had from the Conservative Central Office but which he did not read out.

Mr. Wrigglesworth

Unfortunately, Mr. Speaker, I have not had the benefit of any briefing from any office. Does not my right hon. Friend think that it might be better if people spent less time considering the quantity of public expenditure and more time considering its quality? In looking at their programmes for the forthcoming year, will the Government look at ways in which public expenditure can be used more efficiently? Will they also consider how much is really being used to achieve objectives which would please hon. Members on the Government side of the House?

The Prime Minister

Yes, Sir. I think that the question of priorities in public expenditure is extremely important. One of the things that the Government constantly have to do is to review the nature of their priorities. As I have pointed out to the House on innumerable occasions—Prime Minister's Question Time has a certain repetitious air—there is a dilemma regarding next year, the year in which I hope and expect that private investment will take more of our resources than it has done this year. That is the problem to which the Government are addressing themselves.

Mr. Lamont

May I ask the Prime Minister about the reply he has just given to my hon. Friend the Member for Blaby (Mr. Lawson)? If the Prime Minister is looking for my question, let me assure him that it comes from The Times and Peter Jay and not from Conservative Central Office. Can the right hon. Gentleman tell the House how he expects the economy to achieve the growth rate necessary to sustain the planned level of public expenditure at the rate specified in the Government White Paper on Public Expenditure when that has been achieved in no recent period of economic history? Is the Government's policy based on a belief in levitation?

The Prime Minister

No, Sir. The Government's policy is based on a reasonable assessment of the growth rate that can be sustained if we can successfully deal with other matters. The OECD agrees with us and is hoping for the same growth that we hope for. In the first quarter of this year our growth rate was 1 per cent. higher, and that in turn will, I trust, if we can maintain control of other factors, lead to a reasonable growth rate.

Mr. Thorpe

Are we to gather from the exchanges that there has been a serious leak? In view of the gravity of the matter, will the Prime Minister consider assigning the services of Sir Douglas Allen?

The Prime Minister

If I may quote something which I read on the tape earlier today, these documents have been deposited outside my door in basketfuls.

Mr. Heffer

Is my right hon. Friend aware that all hon. Members on this side of the House are keen to see one cut in expenditure? We would like a cut in expenditure on the unemployed by getting them back to work. What steps are being taken in a positive direction to ensure that more workers get back to work? That would cut public expenditure.

The Prime Minister

I am obliged to my hon. Friend for putting that serious point. The unemployment situation is bad and it should cause concern to hon. Members on both sides of the House. The Secretary of State for Employment has introduced a number of measures, with financial backing from the Chancellor, to help school leavers. We need to do more, but if we are to do more that will necessitate rearranging our existing priorities.

Mrs. Thatcher

Instead of constantly extolling the benefits of public expenditure, which is now at a level of 60 per cent. of the national income, will the Prime Minister agree that that has led to the highest rate of income tax on the lowest level of earnings in countries anywhere in Europe? Does he not agree that we would have their level of prosperity if the Government had a policy which gave more incentive to the people to work harder and to invest?

The Prime Minister

The figures that the right hon. Lady has quoted from columns 90 and 91 of the Official Report of 24th May are undoubtedly correct. [Interruption.] I can assure the right hon. Member for Penrith and The Border (Mr. Whitelaw) that I do not rely on the brief to which I have referred. I went back to Hansard to check, and the Leader of the Opposition is correct. But she is drawing incorrect deductions. Public expenditure, as I have said on previous occasions, helps to enlarge our freedoms, which is something for which the Labour movement stands.

Mrs. Thatcher

Does that mean that the Prime Minister is prepared to go on increasing public expenditure and saying to working people that he knows better than they how to spend their pay packets?

The Prime Minister

That is all very well for the hustings, but the right hon. Lady knows much better than that. If she ever sits on this side of the House again, she will find that she too has to arrive at a proper balance between public and private spending. That kind of interchange will get her nowhere.

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