HC Deb 24 February 1977 vol 926 cc1622-4
11. Mr. Clemitson

asked the Chancellor of the Exchequer by how much public expenditure has increased, excluding personal transfer payments, in constant price terms since 1970.

Mr. Joel Barnett

Assuming that the term "personal transfer payments" means expenditure classified in public expenditure White Papers as "current grants to persons", the increase in public expenditure, excluding such payments, between 1970–71 and 1976–77 is estimated to be about 19 per cent.

Mr. Clemitson

Is it true that if personal transfer payments, so defined, are deducted from public expenditure the increase in public expenditure over recent years has been considerably less than is normally claimed? Is it not also true that even with the increase in such payments, particularly over the past three years, we are still lagging behind most of the other member countries of the EEC in pension payments and other social benefits?

Mr. Barnett

My hon. Friend is right in the latter part of his question, namely, that as a proportion of GNP our public expenditure, however defined, is not the highest in Europe. He is absolutely right in that respect. However, it is equally true to say that one of our problems is that our total GNP is lower than that of many countries in Europe. It would be foolish to pretend that because public expenditure other than transfer payments has not grown as fast as capital and current expenditure generally we can therefore somehow have a substantial increase as from now. I do not believe that we can. It is important to look at the whole of the expenditure and incomes side in balance. When we do that we see that it is essential to try to help, particularly at the lowest end of the incomes scale, in terms of direct taxation. That does not leave room for increasing public expenditure, whichever definition one uses, in the immediate future.

Mr. Ridley

Is the right hon. Gentleman aware that between 1975 and 1976 the earnings of the employees of central Government increased by 29 per cent., as well as did their numbers? Surely what has happened is that the vast increase in public expenditure has been taken up by greatly increased earnings for those who have security and who are not really operating efficiently in the public sector. What has happened has been a loss of control of public sector costs.

Mr. Barnett

I know the hon. Gentleman's views on incomes policy but I do not know what the effect of what he advocates would have on public sector pay. I hope that he will support us in trying to obtain a sensible incomes policy. I do not accept his across-the-board criticism of the whole of public sector employees as being inefficient. The hon. Gentleman cannot prove that to be a fact. In many cases public sector staff are doing an excellent job.

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