HC Deb 27 January 1977 vol 924 cc1691-2
17. Mr. Tim Renton

asked the Chancellor of the Exchequer whether he is satisfied with Treasury forecasting.

Mr. Joel Barnett

I am always looking for improvements in forecasts, both inside and outside the Treasury.

Mr. Renton

I must thank the right hon. Gentleman for his honesty. But are Treasury economists now definitely converted to control of the economy through domestic credit expansion control rather than through demand management, or will they revert to their old ways once the restraints of the IMF are lifted?

Mr. Barnett

I think that the hon. Gentleman is mixing up his first question. The fact is that we are talking about forecasts and forecasters. All forecasters have made errors, both inside and outside the Treasury. If we look over the years of forecasts, we find that in the early 1970s the errors were very large. I am glad that the hon. Gentleman restrained himself from criticising his own Government in that respect, because he would have been quite wrong to do so. I can assure him that economists and Ministers within the Treasury take due consideration of all forecasts that are made, as well as many other judgments, in coming to conclusions about DCE and many other matters affecting the economy.

Mr. Gwilym Roberts

Does my right hon. Friend agree that economic forecasting is an uncertain business? Does he accept that all the recent statistical tests carried out show that as a whole the Treasury forecasts in many leading areas are far better than most of the other forecasts?

Mr. Barnett

My hon. Friend is right. Forecasting is an uncertain business. One has to take account of great magnitudes of figures affecting countries around the world as well as this country. I do not wish to be complacent about anybody's forecasts, but I am surprised that some seem to believe that it is only Treasury forecasters who from time to time do not get it absolutely right.

Mr. David Howell

The Chief Secretary is right to be shy of forecasts, although he should not be surprised by people's reactions. Will he at least reassure us that in the forthcoming public expenditure White Paper, which I believe is to be published very shortly, full account will be taken of the relative price effect and the impact of inflation on projections of public expenditure for the coming year and the year after that? It would be misleading if such matters were left out of a public expenditure White Paper.

Mr. Barnett

I have no wish to make any comments about the White Paper, the first volume of which was published today. We take account of all these matters in deciding on the White Paper and, indeed, on our public expenditure plans and control of public expenditure, which I am sure the hon. Gentleman will agree is now under much greater control than it has been for many years.