HC Deb 25 July 1985 vol 83 cc1291-2
3. Mr. Portillo

asked the Chancellor of the Exchequer whether he is planning any changes in the level of public expenditure.

The Chief Secretary to the Treasury (Mr. Peter Rees)

No, Sir. The Government have agreed to stick to the public expenditure totals of £139 billion for 1986–87 and £144 billion for 1987–88 published with the Budget.

Mr. Portillo

When the Government next publish new figures on public spending in the Autumn Statement, does my right hon. and learned Friend think that they will publish a fiscal adjustment? Does he agree that fiscal adjustment is given importance way above its merits, that it sometimes sets hares running round in all directions and that it can be damaging to confidence in the economy?

Mr. Rees

I agree with my hon. Friend's analysis. If he and the House look at the Government's response to the eighth report of the Treasury and Civil Service Select Committee, they will see that we state that the published figure for fiscal adjustment is assigned a significance out of all proportion to its very limited value.

Mr. Bell

Does the Chancellor of the Exchequer recall that in his first speech from the Dispatch Box as Chancellor of the Exchequer on that bright confident morning he said: an essential ingredient in providing the right balance between fiscal and monetary policies"— [HON. MEMBERS: "Reading."] Of course I am reading, I am quoting.

Mr. Speaker

Order. Not quoting, paraphrasing, please.

Mr. Bell

On that bright confident morning the right hon. Gentleman said that an essential ingredient of the economy was to keep the public sector borrowing requirement under control. Is that the reason why, year in and year out, since he became Chancellor, £3,000 million to £4,000 million worth of national assets have had to be sold? Is that why he is selling them?

Mr. Rees

The hon. Gentleman directed his question at my right hon. Friend, but I hope that he will allow me to answer it, because it arises from a question that I answered earlier. If the hon. Gentleman studies the public sector borrowing requirement, he will see that, apart from the impact of the miners' strike, it has fallen consistently since 1981. That is a very creditable record.

Mr. Marlow

When will the Government cut public expenditure in real terms?

Mr. Rees

Although some individual items have been cut, that is not our declared policy. Our declared policy is to maintain public expenditure broadly stable in real terms.

Mr. Hattersley

To revert to the Chief Secretary's original answer, does that not confirm—indeed, it does — that the only way in which the Government can finance future tax cuts is by selling more national assets?

Mr. Rees

It seems that the right hon. Gentleman underestimates the merits of privatisation for its own sake. Certainly it is true that the sale of public sector assets has been clearly reflected as an item in the accounts, but as I said, we have achieved significant cuts in direct taxation by other means as well.