Government Expenditure (Hansard, 17 December 1981)

§ 9. Mr. Marlow
asked the Chancellor of the Exchequer whether he expects, in any future year, to reduce Government spending in real terms against the previous year's spending.

§ Mr. Brittan
Our plans for public expenditure in 1982–83 are at approximately the same level in real terms as the 1981–82 plans. I must ask my hon. Friend to await the White Paper, which will show our plans for the whole of the survey period up to 1984–85.

§ Mr. Marlow
Will my right hon. and learned Friend tell the House that, whatever the outcome of the pay negotiations in the coal industry, the real level of Government expenditure in the industry this year will not be increased? Will he confirm that that which is down for revenue expenditure will be for revenue expenditure, and that for capital for capital expenditure, and that there will be no mish-mash between the two? Will he assure the House that if wages are so increased the Government will not bring forward any more money, and if the price of coal increases they will facilitate the import of cheap coal?

§ Mr. Brittan
The external financing limits for the NCB have been set, published and announced in every possible way to all concerned. If the developments that my hon. Friend fears occur the consequences will be serious, but I hope that moderation and good sense will prevail, as they so often do.

§ Dr. Bray
How can the Chief Secretary do anything about public expenditure in real terms when his officials and the Chancellor have just been telling the Treasury Select Committee that public expenditure planning is now in cash terms? What are the implications of the unpredictability of prices for real spending for the employment of teachers and public sector workers generally?

§ Mr. Brittan
I hear from behind me an hon. Friend saying that the hon. Gentleman is getting into a muddle. 441 I am inclined to agree. It is perfectly possible to plan in cash, as, indeed, we have done, which is an extremely salutory and important reform, but at the same time, if the hon. Gentlemen are concerned to know the level in real terms, it is a simple calculation to answer the question.

§ Mr. Adley
Do my right hon. and learned Friend and the Treasury differentiate between public expenditure on the nation's infrastructure and public expenditure on, for instance, manufacturing industry, where on the one hand there is nobody else to pick up the money or the market, and on the other there would be people who could do so?

§ Mr. Brittan
Clearly, there is a distinction. This shows that merely making the distinction between capital and current expenditure does not necessarily provide a uniquely useful tool for determining priorities.

§ Mr. Shore
If the Chief Secretary cannot give the assurance sought by his hon. Friend that in any future year he expects to reduce public expenditure, does riot that mean that the whole medium-term financial strategy and the policy of cutting and reducing public spending and the public sector has been abandoned? If that is so, have not the Government been attacking main public expenditure programmes but constantly finding, as the recession increases, that any gains on that front are lost through the payment of unemployment and other slump benefits?

§ Mr. Brittan
As the right hon. Gentleman's premise is false, it is not surprising that his conclusion is also false. With the renewal of growth in the economy, there is a real prospect that public expenditure will begin to fall again as a percentage of gross domestic product, and that may well happen next year.