HL Deb 14 November 1972 vol 336 cc594-5

2.46 p.m.

LORD BALOGH

My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what is the expected deficit in:—

  1. (a) the conventional Budget 1972–73;
  2. (b) the new form economic overall Budget including the requirements of the public sector corporations.

THE LORD PRIVY SEAL (EARL JELLICOE)

My Lords, the latest published figures can be found in a convenient form in Tables 5 and 11 of this year's Financial Statement and Budget Report. It was expected that, after the changes announced in the Budget, the total public sector borrowing requirement will be £3,358 million, and that the total borrowing by the National Loans Fund will amount to £2,667 million.

LORD BALOGH

My Lords, does the noble Earl realise that this means a turn round of almost £4,000 million in the public finances and that even if one does not accept the monetarist interpretation of economics, as Mr. Powell does, this is a very serious matter indeed?

EARL JELLICOE

My Lords, I think my right honourable friend the Chancellor of the Exchequer has made clear by his recent actions the importance which he attaches to ensuring that the borrowing requirement which emerges in the second half of the financial year does not lead to undue expansion in the reserve base of the banks, and that is why he judged it appropriate to call for special deposits last week.

LORD SHINWELL

My Lords, may I ask a question which seems to have a bearing on the conventional Budget for next year? Has he seen the report in the Press this morning that the expected deficit on the balance of payments by the end of next year will be over £400 million?

EARL JELLICOE

My Lords, I agree that what the noble Lord has said would have a bearing on next year's Budget, but I think it is going rather wide of the Question asked by the noble Lord, Lord Balogh. I must confess that I have not seen that particular report.

LORD BALOGH

My Lords, does not the noble Earl realise that his right honourable friend's efforts have resulted in a 20 per cent. increase in the monetary circulation as measured by M3—and the noble Lord, Lord Robbins, will probably be the only noble Lord who will understand that—and that an increase of 20 per cent. in M3 is not what the noble Earl could possibly describe as a satisfactory rate of increase.

EARL JELLICOE

My Lords, I am going rather cautiously where M3 is concerned, but it is my understanding, which I know the noble Lord, Lord Balogh, will bear out, that the rate of increase in M3 is now quite sharply de-accelerating.

LORD ROBBINS

My Lords, is it possible for the noble Earl to make some attempt slightly to quantify his use of the term "undue expansion"?

EARL JELLICOE

My Lords, I would, of course, wish to respond as always to any question put to me by the noble Lord, Lord Robbins, but I think that on this occasion I will do my best to resist the temptation.