HC Deb 08 April 1982 vol 21 cc1072-3
2. Mr. Chapman

asked the Chancellor of the Exchequer what is his forecast of the percentage of total Government expenditure that will go in meeting general Government debt interest in 1982–83; and how this percentage compares with the previous year.

The Chief Secretary to the Treasury (Mr. Leon Brittan)

Measured on a gross basis, general Government debt interest payments are forecast to equal about 11 per cent. of general Government expenditure, including debt interest in 1982–83, compared with 11½ per cent. in 1981–82.

Mr. Chapman

I am grateful to my right hon. and learned Friend for that information. Recognising that public sector net debt interest has increased in the past 10 years from less than £450 million to more than £6,000 million and that the percentage increase in relation to public expenditure has trebled, will he assure the House that it is Government policy to decrease that percentage, as it is a very large amount and a millstone round the necks of the British people?

Mr. Brittan

I think that my hon. Friend was referring to the net figures. He is right in saying that this a burden of great severity. General Government gross debt interest is larger than any single public expenditure programme except social security and runs at £14.4 billion, which is £260 per year for every man, woman and child in the country. It is certainly right that we should seek to reduce that burden by ensuring that we do not borrow too much and to lower interest rates if possible.

Mr. Richard Wainwright

Will the chief Secretary tell the House—if he does, it will be the first time—what amount within the figure that he has just announced represents the annual instalment of the cost of repaying index-linked national savings and now index-linked gilts, and how it is arrived at for the purposes of an annual instalment of public expenditure?

Mr. Brittan

If the hon. Gentleman will put down a question to that effect——

Mr. Wainwright

I have.

Mr. Brittan

—I shall consider the answer.

Mr. Neil Thorne

In view of the statement by my right hon. Friend the Secretary of State for Defence yesterday that cost was not a factor in our response to the Falkland Islands situation, will my right hon. and learned Friend confirm that the Government's strategy on finance is not likely to be adversely affected in the foreseeable future?

Mr. Brittan

I welcome the opportunity to confirm that. As I said in the debate on the Finance Bill, and also on the radio yesterday, I see no reason for the Government's economic strategy to be affected by the operations in relation to the Falkland Islands. I also said that what is going on in that regard must be allowed to continue on an operational basis without current consideration of costs, which cannot be made in any event. Above all, however, I went on to say that the cost of what is going on will be met in a way that is consistent with the Government's economic strategy.

Mr. Shore

Inevitably, there will be costs. Will the Chief Secretary tell us a little more plainly how those costs are to be met if he intends to continue to operate a rigid policy of public expenditure control?

Mr. Brittan

Yes. As I said in the broadcast yesterday, how the cost is met will depend on its scale. If it proves not to be substantial, no problems will arise. If it proves to be substantial, it will have to be met in a non-inflationary way. [HON. MEMBERS: "How?"] That is what I said and I stand by it. It may be that revenues will be higher than anticipated, or the cost of other expenditure may be lower. Otherwise, one would have to look at other public expenditure programmes or taxation, and whatever combination is required to ensure that the consequence is not to damage our economic strategy will be taken.