HC Deb 08 December 1977 vol 940 cc1637-9
20. Mr. Litterick

asked the Chancellor of the Exchequer what is his Department's current estimate of the public sector borrowing requirement for the current year; and how this compares with the estimate made when the White Paper public expenditure proposals for the current year were first published.

Mr. Joel Barnett

I would refer my hon. Friend to the Industry Act forecast, published on 26th October, of a PSBR in 1977–78 of £7½ billion, £1 billion less than the Budget estimate.

Mr. Litterick

I am grateful for that answer, but, in view of the massive undershooting or undercutting of the spending estimates for last year by £2¼ billion, can my right hon. Friend assure me that the Government have the spending levels under control to the extent that they can tell the House what the spending levels, and, therefore, the borrowing requirement, are likely to be?

Mr. Barnett

My hon. Friend will recognise that there is a serious problem. Total public expenditure is in the region of £60,000 million, so that to be able to be precise within a very small amount of money is very difficult. We have public expenditure under better control now than it has ever been, certainly since the war. I have no wish, and neither have my colleagues in the Government, to see excessive underspending of public expenditure. We hope that this year we shall get very much nearer to the target than we did last year. I do not want to see underspending of the kind my hon. Friend talks about.

Mr. Powell

Does the estimate of the borrowing requirement which the Chief Secretary just gave include the cost of increasing our reserves?

Mr. Barnett

I am not quite sure what the right hon. Gentleman means by "the cost". Does he mean the interest rates? Perhaps he will explain a little further.

Mr. Powell

I mean the sterling that we have to pay in order to be balanced by the increase in our reserves.

Mr. Barnett

To be honest, I do not normally find the right hon. Gentleman as confused as that, but I am not at all clear what that has to do with the PSBR. The PSBR includes all the figures that impact on the PSBR itself.

Mr. Noble

Does not my right hon. Friend agree that one of the reasons why we have underspent in this way has been the refusal by Tory-controlled local authorities, particularly in Lancashire, to use to the full the rate support grant? Will he consider putting pressure on local authorities to make sure that facilities for people in these areas are not damaged further by determination to hold down the rates at the expense of services?

Mr. Barnett

I am aware that some local authorities are carrying out policies which my hon. Friend and I would not particularly like, but, overall, local authority current expenditure outturn is broadly in line with the estimate. The actual underspend in public expenditure, as was seen in 1976–77 and from the figures that we published for the first half of this year, was in some ways in areas that we should be pleased about—for example, the substantial improvement in many of the nationalised industries, whose financial requirements are now very much lower.

Mr. Lawson

Can the Chief Secretary be a little clearer about this underspending? Is he aware that Treasury officials gave evidence to the Expenditure Committee that underspending this year was running at around 4 per cent. of cash limits, yet they gave evidence also that of the £2 billion undershooting of the public sector borrowing requirement £1¾ billion was due to higher taxation and only £250 million—very much less—was through underspending. How does he reconcile these two statements?

Mr. Barnett

In fact, they were reconciled by my officials who gave evidence.

Mr. Lawson

No.

Mr. Barnett

With respect, they have been reconciled. My officials gave the facts very clearly to the Committee.