Public Expenditure (Hansard, 17 April 1986)

§ 8. Mr. McCrindle
asked the Chancellor of the Exchequer when he expects to commence discussions on public expenditure programmes for 1987–88; and if he will make a statement.

§ Mr. MacGregor
Spending plans for 1987–88 will be reviewed during the summer and autumn as part of the 1986 public expenditure survey.

§ Mr. McCrindle
I recognise the continuing need to restrain Government expenditure and the important role that my right hon. Friend will play in that procedure, but will he nevertheless take note that there is a good deal of pressure for greater resources to be introduced, particularly into health and education, and will he confirm that, as the new round of expenditure control begins, he will try to keep a balanced view between desirable tax cuts, to which we all look forward, and essential Government expenditure, for which there is considerable public support?

§ Mr. MacGregor
My hon. Friend will agree that the desirable tax cuts are beneficial to economic growth Not only do we receive desirable tax cuts from a prudent control of Government spending but we get policies which can produce lower interest rates, which are equally beneficial. But of course my hon. Friend is right. We must keep a balanced approach to these matters. In particular, we must keep a clear view of priorities within the overall public expenditure programme. I have noted his priorities and he will know that we have devoted great priority to health and, after allowing for inflation, there has been real growth of over 20 per cent. in the health programme since 1979.

§ Dr. M. S. Miller
When the Chancellor is considering expenditure programmes for 1987–88, will he take into consideration the fact that today's lower oil prices—and no doubt they will continue for some time—are making it extremely difficult for the coal industry? Will he make sure that the coal industry is not totally emasculated because it is unable to compete with oil?

§ Mr. MacGregor
Obviously many of these points are matters for the coal industry, and it will have to look. I or example, at its investment programmes and everything else, both in relation to falling oil prices and the negotiation that it has with its customers.

§ Mr. Marland
When these discussions begin, will my right hon. Friend continue to explain to those representing local authorities that substantial savings can be made if they seek to privatise many of the services that they currently carry out?

§ Mr. MacGregor
Certainly I believe that the Audit Commission has shown that there are still very considerable efficiency savings to be achieved by local authorities. My hon. Friend is right in saying that contracting out and that sort of thing still have some way to go in contributing to those substantial savings.

§ Mr. Sheldon
As the final figures for the public sector borrowing requirement for last year have now turned out to be £2 billion less than anticipated, surely it will make some difference to the right hon. Gentleman's expectation of public expenditure over the forthcoming year?

§ Mr. MacGregor
I am sure that the right hon. Gentleman, who follows these matters very carefully, will know that we have an expectation of oil prices over the year. Obviously we cannot predict exactly what the future course of oil prices will be, so we must have a prudent approach in that respect. The PSBR, of course, is always within a margin of error, and it is roughly the same margin of error as in recent years, but in a beneficial direction. I think that that illustrates the buoyancy of the non-oil sector of our economy. That has contributed substantially to this favourable outcome on the PSBR, and I would have thought that the right hon. Gentleman would welcome that.

§ Sir Peter Hordern
Is it not time, before these decisions are made, for a comprehensive review to be made of one form of public expenditure as against another? Is my right hon. Friend aware of the growing concern at the consistent over-runs in defence expenditure on new, untried equipment, which nobody else appears to want to buy, and the continued underfunding of other programmes, such as the education programme?

§ Mr. MacGregor
I agree that the overall look at public expenditure is a very important aspect of each year's public expenditure round. I am making some technical changes in the sequence of putting together the material for collective ministerial discussion and decision this year and I hope that that will contribute further to that process.