Public Expenditure (Hansard, 27 April 1978)

§ 1. Mr. Flannery
asked the Chancellor of the Exchequer if he has any further plans, consequent upon his recent Budget, to increase public expenditure in order to bring down still further the number of unemployed.

§ The Chief Secretary to the Treasury (Mr. Joel Barnett)
My right hon. Friend described his plans in this respect in his Budget Statement.

§ Mr. Flannery
While welcoming the details of the tax cuts for the lower-paid and the free school milk, and so on, and while knowing that there would be twice the level of unemployment if the Tories were in power—[Interruption.] That always provokes Opposition Members, because it is true. While I welcome the measures that have been taken, may I ask my right hon. Friend whether he agrees with me that the impact on unemployment can be of only the slenderest kind and that it is therefore necessary for a major amount of cash to be pumped into the economy in order to ensure that unemployment is brought down even more than it has been so far?

§ Mr. Barnett
I certainly agree with the first part of my hon. Friend's supplementary question, but I am afraid that I do not agree with him on the second part. As I pointed out in my speech in the Budget debate, I think that to pump more into the economy might in the short term add a little to output, but I do not think that in the longer term it would be at all helpful to the objective that we both have in mind.

§ Mr. Marten
It is true that if one adds all the unemployment benefit that is paid out to the cost of the various job creation and allied schemes, the total amounts to about £1,822 million a year?

§ Mr. Barnett
I should like the hon. Gentleman to put down a Question about the precise figure, but it is certainly a lot of money.

§ Mr. Gould
Will my right hon. Friend confirm that if the inflow of foreign capital in October last year caused an increase in the money supply, the outflow of foreign capital which presumably accompanies the current selling of sterling will reduce the money supply? Should this not give him greater freedom on the public expenditure front?

§ Mr. Barnett
As my hon. Friend knows, there are many factors to be taken into account in considering this matter, and we shall take them all into account in due course.

§ Mr. Peter Walker
Has the right hon. Gentleman any estimate of the figure of the increase in public expenditure resulting the increase of unemployment during the period of office of the present Government?

§ Mr. Barnett
As the right hon. Gentleman knows, he would need to table a Question about that. It is very difficult to be precise about that relationship, as he very well knows. However, if he cares to table a Question, I shall do my very best to answer it.

§ Mr. Parry
Does my right hon. Friend agree that more public expenditure would make a significant contribution to the whole question of unemployment, particularly in the construction industry, which on Merseyside is in a critical condition?

§ Mr. Barnett
As my hon. Friend will know, we have increased public expenditure on the construction industry, over two years, by about £800 million. I am bound to tell him, however, that the simple fact of putting more money into the economy while disregarding the rest of the factors affecting it would not necessarily be helpful. I think that it is much better to do as we are doing, as my right hon. Friend the Chancellor laid down in his Budget Statement—namely, to go for a sustained growth of output over a long period.

§ Mr. Tapsell
Is the Chief Secretary aware that it is precisely because the Chancellor has allowed public expenditure to rise this year, as compared with last—by 6 per cent., or £4,000 million—that the Budget has so damaged confidence at home and abroad, and that this will have a very serious and bad effect on future employment prospects?

§ Mr. Barnett
What would have an appalling effect on both the internal and external confidence would be the thought that the hon. Gentleman and his hon. Friends had the slightest chance of ever forming the Government of this country. He knows very well that the fact is that everything that Opposition Members have specifically suggested would increase public expenditure rather than cut it.