HC Deb 26 February 1981 vol 999 cc962-3
9. Mr. Chris Patten

asked the Chancellor of the Exchequer what is his latest estimate of the public sector borrowing requirement in the current financial year.

Mr. Brittan

I ask my hon. Friend to await the Budget Statement of my right hon. and learned Friend the Chancellor.

Mr. Patten

After the Government's experience of wrestling with the PSBR over the last couple of years, is my right hon. and learned Friend now rather more sympathetic to the argument, first, that we should remove the capital investment programme of the nationalised industries from the PSBR calculation, and, secondly, that we should follow the Americans' example and take some account of the level of economic activity in determining the level of the Government's borrowing requirements?

Mr. Brittan

On the second point, my right hon. and learned Friend has indicated that that is a relevant consideration. On the first point, I would not agree that it is realistic to remove nationalised industry investment from the public sector borrowing requirement, because the cost of the nationalised industries' investment is something that is borne by the public sector. If money has to be borrowed in order to do that, it is realistically reflected in the PSBR.

Mr. Dubs

Should not the effect of nationalised industry borrowing have a different impact from that of private industry borrowing? Surely the total effect on the PSBR must be different in the two cases.

Mr. Brittan

If the private sector borrows money, it has to finance it. If a nationalised industry has to borrow money, as it is within the public sector it is not in the least surprising that the borrowing should come from the public sector borrowing requirement.

Mr. Budgen

Would my right hon. and learned Friend agree that the public sector borrowing requirement is intimately related to the rate of increase of monetary growth? In that connection, does he agree with the Financial Secretary, who said at page 11 of the report of his speech in Zurich that sterling M3 was and remains "the most useful guide" to the rate of monetary growth?

Mr. Brittan

When the statement made by my right hon. Friend the Financial Secretary is read in the context of his speech as a whole it will stand up to any scrutiny.

Mr. Robert Sheldon

Does the right hon. Gentleman realise that in the last public expenditure White Paper the amount of lending to nationalised industries was expected to reduce by £1,200 million in the present financial year, when we all know that it will increase, rather than reduce, by £1,200 million. Will he be more realistic in the next public expenditure White Paper, and understand that at a time of severe economic depression it makes good sense to lend more money to nationalised industries for investment purposes, because by so doing one can be a little more relaxed about the public expenditure limits?

Mr. Brittan

I am sure that the right hon. Gentleman will find that the next public expenditure White Paper will be entirely realistic.