HC Deb 29 January 1987 vol 109 cc473-5
4. Mr. Lawler

asked the Chancellor of the Exchequer what representations he has received from political parties for increases in public expenditure.

Mr. MacGregor

No representations as such, but I have had correspondence with the Labour party about its proposals for increases in public expenditure.

Mr. Lawler

Is it not highly dishonest for any political party to make a large number of expensive promises without stating precisely how they will be paid for? Given that the Labour party has made pledges amounting to £28 billion, would my right hon. Friend speculate which would be most damaging to the economy—an income tax rate of 53 per cent., a VAT rate of over 40 per cent. or a PSBR of £28 billion, with a consequent rise in interest rates?

Mr. MacGregor

I am sure that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) has a good excuse for being away this afternoon. He clearly did not want to be here to he probed on the Labour party's £28 billion spending programme. My hon. Friend is quite right. Making pledges on that scale is misleading to the electorate. Those pledges have still not been denied or withdrawn, and they would undoubtedly have savage consequences if they were ever implemented.

In answer to my hon. Friend's second question, he is right to say that the equivalent is 53p on income tax, which the right hon. Member for Sparkbrook has said he will not do. Therefore, it will mean a massive increase in VAT or in the PSBR. Opposition Members have already promised a big increase in the PSBR. Either would greatly fuel inflation and savagely increase interest rates.

Mr. Madden

Is the Chief Secretary aware of the all-party representations that have been made by hon. Members representing Brad.7ord, including Conservative Members, about the Government's refusal to allow the city of Bradford to borrow more to deal with the housing and education crisis that is gripping it?

Is he also aware of the protests made by hon. Members of all parties who represent Bradford, including Conservative Members, about the Government's refusal to allow the city to use more of the money from the sale of council houses to improve the city's housing?

Finally, will he urge the Prime Minister to accede to my request this week to meet representatives of the city, including Conservative Members, so that we can urge her to change her policies and allow the city to overcome the social and economic problems which the Government have brought upon that city?

Mr. MacGregor

Those representations have, quite rightly, not been made to me. I would advise the hon. Gentleman that in the public expenditure White Paper this year we have considerably increased the rate support grant for local authorities and the provision for housing maintenance. However, to engage in overall public expenditure planning on the scale that some Labour-controlled local authorities would wish, or are doing through deferred purchase and other creative accounting measures, would be very damaging for the economy and, in the long run, extremely disadvantageous to the ratepayers and the electorate in the local authorities.

Mr. Gow

In view of the Labour party's recent further commitments to public expenditure, will my right hon. Friend revise his figure of £28 billion as being the total cost of the extra spending by the Labour party and make sure that his revised and higher figure is well know to all the people of this country?

Mr. MacGregor

I am certainly willing to revise the figure each time it becomes clear to me that the spending pledged by some of the spending shadow spokesmen is withdrawn. However, I shall equally add to it any additional spending pledges that they make.

My hon. Friend is entirely right in saying that it is important that, when the election comes, the electorate are aware of the tax, interest rate and borrowing implications of the Labour party's proposals.

Mr. Gould

In order to bri:ng an end to this increasingly ridiculous exercise and fanciful invention, will the right hon. Gentleman take one or two of his hon. Friends aside, in a gentle manner, and invite them to read any one of the independent surveys of Labour party's economic programme—for example, that produced by the Institute for Fiscal Studies or Philips and Drew, the stockbrokers—which all show the fanciful nature of those inventions? While he is about it, will the Chief Secretary read those surveys himself so that we hear no more of that nonsense from the Dispatch Box?

Mr. MacGregor

I do read them and they do not bear that out. I advise the Labour party that it could put the matter right by making clear which of the pledges that I have put forward—and they have all been put forward in the pages of Hansard—it would withdraw. My right hon. Friend the Chancellor of the Exchequer asked the right hon. Member for Sparkbrook the other day which pledges he would withdraw on health, education and aid. It was significant that the right hon. Gentleman simply did not answer. It is up to the Labour party to make that matter clear.