§ 2. Sir David Priceasked the Chancellor of the Exchequer if he will distinguish in his treatment of the public sector borrowing requirement between borrowing for current expenditure and borrowing for capital investment.
§ The Chief Secretary to the Treasury (Mr. Leon Brittan)Borrowing is not undertaken to finance specific services or projects, but details of current and capita) transactions are set out in the published public sector accounts, most recently in the Financial Statement and Budget Report.
§ Sir David PriceWould it not assist my right hon. and learned Friend the Chancellor, in his very commendable efforts to bring down the cost of borrowed money, if he adopted a more selective approach to funding, according to the end use of the borrowing, as he has indeed done in the private sector?
§ Mr. BrittanI do not feel that that would assist my right hon. and learned Friend in achieving his objectives, because, at the end of the day, whatever the purpose of the borrowing, its short-term effect is the same.
§ Mr. HoramIs it not obvious that over the years, under all Governments, the level of capital spending has been ruinously affected by the desire to control total spending and the difficulty within that of controlling current. spending? Therefore, if one took out capital spending, and funded and showed it differently, one would have a PSBR in more understandable and business-like terms.
§ Mr. BrittanAnything that assisted one in reducing. current spending and retaining capital spending would) certainly be very beneficial. However, I disagree with the: constructive thought behind the hon. Gentleman's remarks, because I do not believe that merely by switching the accounting one would be changing anything in reality. The sort of obstacles that one faces are the real pressures in favour of current expenditure on items such as social security and defence, which are important, but all of which point in the opposite direction.
§ Mr. ShoreDoes the Chief Secretary agree that it makes sense to draw a distinction—as the CBI might put it—between the quality of the PSBR as it reflects capital expenditure and current expenditure? Pressing the Chief Secretary a little further, one of the things that has surely struck him and his colleagues—
§ Mr. SpeakerOrder. Even right hon. Members on the Opposition Front Bench must ask questions rather than engage in argument.
§ Mr. ShoreI shall ask a precise question. Having considered our experience in this matter and our definition of what comprises the PSBR, would we not be more sensible—as have so many other countries, including our European competitors—to use the classification of central Government borrowing requirement and thus exclude from the borrowing requirement our enormous public sector of industry?
§ Mr. BrittanThe right hon. Gentleman is making a great mistake if he believes that by excluding the borrowing of the nationalised industries from the public sector borrowing requirement the impact of that borrowing on national resources will be affected. It is ridiculous to expect that to happen. The right hon. Gentleman should be slightly reticent about capital expenditure, having been a member of a Government who, in a couple of years, reduced the proportion of capital expenditure to total expenditure from 19 to 14 per cent.
§ Mr. Charles MorrisonIs my right hon. and learned Friend aware that in spite of his helpful replies many of us still remain puzzled as to why it is not possible to draw a distinction between capital and current expenditure when in every other walk of life, private, commercial or industrial, those concerned have to do so?
§ Mr. BrittanThe distinction is drawn. I am happy to draw my hon. Friend's attention to the relevant tables in the FSBR and the public expenditure White Paper.
§ Mr. JayAs I know that the Chief Secretary studies his official figures carefully, is he aware that according to his figures total capital expenditure in the public sector greatly exceeds the PSBR?
§ Mr. BrittanYes.