HC Deb 04 March 1976 vol 906 cc1527-30
17. Mr. Nigel Lawson

asked the Chancellor of the Exchequer if he has any intention of making any further cuts in public expenditure for any of the years covered by the Public Expenditure White Paper published on 19th February.

Mr. Healey

No, Sir.

Mr. Lawson

I deeply regret that answer. Why have the Government planned for a substantial increase in public expenditure next year when the Chief Secretary said yesterday that fears about unemployment could be met by tax cuts? Does not this cast doubt on the White Paper and demonstrate that the Chancellor is nothing but a paper tiger, if I may use that tiny Chinese expression?

Mr. Healey

I am afraid that the hon. Gentleman's "paper" smells a little of oil, but I take his point. I can only refer him to the views of the Shadow Chancellor of the Exchequer who, in a recent speech at Surbiton, finally confessed that the cuts in public expenditure for which he is asking in the coming year will be bound to lead to increases in unemployment—a fact confirmed yesterday at Question Time by the right hon. Lady the Leader of the Opposition.

Of course it would be possible to offset cuts in public expenditure by reductions in taxation, but not if we took the hon. Member's advice or the advice of the Opposition Front Bench Members who argue that I should also bring down the public sector borrowing requirement. Moreover, if I were to meet the objectives put to me by the Opposition Front Bench earlier this afternoon, we should need massive cuts in public expenditure next year and massive increases in taxation.

Mr. Pavitt

In making these very difficult judgments between the totality of private expenditure and public expenditure, will my right hon. Friend bear in mind that in 1973 we spent £1,945 million on tobacco and £3,536 million on alcohol, which is half as much again of the total we spent on health? In view of the hazard to health of the first, and the advantages of the second, will my right hon. Friend bear both in mind when preparing his Budget?

Mr. Healey

I may have misheard what my hon. Friend said, but I thought that he said that I spent all this money on tobacco and alcohol. The fact is that the public spent the money, but I derived substantial tax revenue from the expenditure.

Mr. Ridley

Does not the Chancellor think it was rather defeatist of him to make all of his cuts for the years when a Conservative Government will be administering public expenditure?

Mr. Healey

The hon. Gentleman always preserves a sort of excessive realism when discussing economic matters. However, the fantasies of optimism that he permits himself when discussing political matters are the marvel of the world.

Mr. James Lamond

Are there not many parts of the White Paper which should be welcomed by hon. Members from all parts of the House, including the clear indication of the Government's policy to maintain and improve old-age pensions and other benefits for the year to come, in strict accordance with the Labour Party manifesto.

Mr. Healey

Yes, I believe that the whole of the Labour movement will welcome the fact that in taking measures intended to enable our manufacturing industry to take full advantage of the upturn in world trade, and therefore in levelling off public expenditure programmes after April next year, we have tried in every respect to maintain the priorities to which we committed ourselves in the manifesto on which we fought and won the last General Election.

Sir G. Howe

Does the Chancellor of the Exchequer still not recognise that as a result of his failure to control the growth of public spending in the past two years, each and every household in the country is now saddled with an extra burden of debt interest, on behalf of the Government, of £100 per year? Does he not recognise that if he continues on the path of public spending outlined in his White Paper, that burden will rise to more than £200 per year extra as a result of his failure to control public spending? Will he not acknowledge that that burden means higher taxation and the destruction of jobs instead of their creation?

Mr. Healey

I should be more impressed by the crocodile tears shed by the right hon. and learned gentleman on behalf of householders and anyone else if I were not aware, as he must be, that the Government of which he was a member increased public expenditure in their last three years more than the present Government are increasing public expenditure in these next three years.

19. Mr. Hoyle

asked the Chancellor of the Exchequer what effect the cuts envisaged in the White Paper on public expenditure will have on the economy.

Mr. Healey

They will ensure that sufficient resources are available for increased exports and investment and allow priority to be given to expenditure for improving industrial productivity and efficiency. They will also reduce any possible increase in taxation by the equivalent of 8p in the pound on income tax.

Mr. Hoyle

Does not my right hon. Friend agree that they will also create unemployment in the public sector without creating employment in the manufacturing sector? This is evidenced by the fact that the National Enterprise Board, which was to be the instrument for revitalising the economy, is being given only £1,000 million to the end of 1980.

Mr. Healey

No, I cannot agree, because employment in the public services will be maintained constant once the cut in programmes begins to take effect next year, as I have made clear on many occasions in the past week or so. My hon. Friend must accept that, in the words of Mr. Jack Jones in the Coventry by-election campaign yesterday—I look forward with the same excitement and interest to the result of that by-election as Opposition Members, but with a good deal more confidence—it is not really a battle about public expenditure: it is a battle for the very industrial heart and life of Britain.