Public Spending (Hansard, 19 October 1989)

§ 1. Mr. Geoffrey Robinson
To ask the Chancellor of the Exchequer what is the public spending planning total for 1989–90.

§ 16. Mr. Andrew Smith
To ask the Chancellor of the Exchequer if he will make a statement on the public spending planning total.

§ The Chief Secretary to the Treasury (Mr. Norman Lamont)
The public expenditure planning total for 1989–90 published in Command Paper 621 is £167.1 billion.

§ Mr. Robinson
While thanking the Minister for that informative answer, may I put it to him that he should not seek this year or in any other year to effect a cut in the activities of the Export Credits Guarantee Department? He should take it from me that, given the staggering, disastrous balance of payments deficit run up because of the Chancellor's mismanagement of the economy, the last thing that we want is a cut in the activities of the ECGD. I make special reference to the London Project Group, which finances major capital projects in the Third world. Does the Minister agree that it would be not only absurd but perverse for the Secretary of State to curtail the activities of the ECGD at this time?

§ Mr. Norman Lamont
In the midst of the public expenditure round, I note the representations made by the hon. Gentleman. I am sure that they will also be noted by the Secretary of State for Trade and Industry. Subsidies for capital exports have been maintained in recent years. Nonetheless, it is extremely important that British exports are obtained on competitive grounds and not by subsidy from the taxpayer.

§ Mr. Smith
Given that the actual rate of inflation has so far so consistently exceeded the Chancellor's original estimate, will the Minister revise upwards the public expenditure planning total to compensate for that, or will he tell the House how extensive the cuts will otherwise be in essential public services?

§ Mr. Lamont
The policy of the Government is the same policy as that subscribed to by the Labour party—we should plan in cash terms. A cash planning system does not mean that we accommodate inflation. That is the essence of the system.

§ Mr. Tim Smith
Does my right hon. Friend agree that if inflation is to be brought down, firm control must be 249 maintained on public spending? Will he compare his prudent fiscal policy with that of the Labour party and say what effect its spending plans might have on inflation?

§ Mr. Lamont
My hon. Friend is absolutely right; the control of public spending lies at the heart of economic management. Furthermore, as my hon. Friend suggests, just to go in for huge surges in public spending, as the Labour party did when it was in power, does not serve the public services well. As we all know, what happened was that the Labour Government started off in years one and two trying to expand public spending regardless of the circumstances and, in the end, they had to cut it. They also had to cut capital programmes. Our record compares well with theirs. We believe that it is necessary to control public spending to get inflation down and that it is essential to do so for a sound economy.

§ Mr. Butterfill
Will my right hon. Friend confirm that the result of his prudent policies gives us, for the second year running, a budget surplus and the ability to repay debt? Will he compare that with the enormous increase in public sector debt which was incurred when the Labour party was in power?

§ Mr. Lamont
Our policy of having a budget surplus and repaying debt meant that last year we were able to find more room for priority programmes. If we had maintained the public sector borrowing requirement at the level with which the Labour party left us when we came to office in 1979 we should have a crippling burden of debt interest to pay.