HC Deb 29 January 1987 vol 109 cc477-9
8. Dr. Marek

asked the Chancellor of the Exchequer what representations he has received concerning the Government's White Paper on public expenditure.

Mr. MacGregor


Dr. Marek

Did not the Chancellor and other Ministers deliberately riddle their proposals with measures that would be generally beneficial this year, and include other measures that would have a gravely adverse effect next year? Were there not measures such as doing nothing much for the level of regional assistance this year with the intention of halving it next year, and increasing prescriptions by 2 per cent. this year, with the intention of increasing them by 8 per cent. next year, with a forecast inflation target of only 3½ per cent.? If the Chancellor did this deliberately—however much he tries to squirm and deny it—will he tell the House the truth and admit that he was trying a blatant, cynical manoeuvre to bribe the voters in a few months' time?

Mr. MacGregor

I do not follow the logic of suggesting that we have cut expenditure in areas that the hon. Gentleman thinks are attractive to the electors, and then suggesting that that is an election bribe. However, the hon. Gentleman will know that the changes in regional policy—regional development grants and regional selective assistance—followed a substantial review which was undertaken a few years ago, which is now being implemented. The effect of that is that regional development policy is now targeted more on the areas of high unemployment and on the need for investment which helps with additional labour. He will also know that we do not just measure the amount of money that is entering the regions by regional development grants. A range of other things, including, for example, the new urban development corporations, form a very cost-effective way of helping the regions, as we have demonstrated, and should be added to regional development grants.

Mrs. Virginia Bottomley

Following the White Paper. has my right hon. Friend received any representations to increase public spending by £360 million to educate within the state system those currently educated in private schools, which is a vital part of Labour's charter for pupils and parents?

Mr. MacGregor

I have not received any representations, but representations should certainly be made to the Labour party. My hon. Friend is right. That additional spending commitment by the Labour party has many other disadvantages and I am sure that it would prove to be a big electoral liability.

Mr. Campbell-Savours

Is the right hon. Gentleman aware of the anger throughout the northern region in all industry over the two-month moratorium on the payment of regional development grant, which was announced in the small print of the public expenditure White Paper? Does he realise that, in imposing those cuts on the Department of Trade and Industry his Department is literally kicking people out of work and destroying the ability of many firms to expand? Will he consider that, because industrialists throughout the north are demanding that the policy be reversed?

Mr. MacGregor

The hon. Gentleman has this wholly out of perspective. In the first place, compared with last year's public expenditure White Paper, there will be an increase of £46 million in total regional development grant and regional selective assistance expenditure in the coming year. It is important to understand what the two-month moratorium is. It will not stop the payment of regional development grants for two months. It is easing out over the year, for good public expenditure control reasons, and in accordance with our plans, the payments to get the cash flow equal. I do not believe that that will have the kind of effect that the hon. Gentleman talks about.

Mr. Yeo

Is my right hon. Friend aware that there is widespread public support for the kind of selective increases in spending which were revealed in the public expenditure White Paper, particularly as those are being achieved within the context of reducing public expenditure as a whole as a percentage of the gross domestic product at the same time as tax is being cut? Will he assure the House that that policy will be continued?

Mr. MacGregor

I am sure that my hon. Friend is right, and I can assure him that the policies will continue. As the public expenditure White Paper says, we are determined to continue to reduce public expenditure as a proportion of GDP, as we originally pledged in 1979. But my hon. Friend is also right in that, because of the success of our economic policies—we are now moving into the sixth year of steady growth—we have been able to increase in real terms many key and critical areas of public expenditure at the same time as we are achieving our overall public expenditure bill.

Dr. McDonald

With the worst-ever trade deficit in manufactured goods, at over £8 billion at the end of the last year, have the Government not got their policies wrong in their determination to cut capital spending in order to increase consumer spending during this year and the years to come, which will only continue to suck in imports and make the balance of payments deficit far worse?

Mr. MacGregor

The hon. Lady has got it wrong. In the past few years consumption has been rising by about 3 per cent. a year and investment by about 4 per cent. That is in sharp contrast to what happened under the previous Labour Government, when consumption rose twice as fast as investment.

Forward to