Privatisation Proceeds and Oil Revenues (Hansard, 23 October 1990)

§ Lord Hesketh
My Lords, net privatisation proceeds in the years 1979–80 to 1989–90 amounted to £28 billion. North Sea oil revenues over the same period totalled £67 billion.

§ Lord Dean of Beswick
My Lords, I am grateful to the Minister for that reply. Is he aware that no Chancellor in our history before 1979 received the benefits of huge sums of money from completely new sources? Bearing in mind that those have been received by successive Chancellors, can the Minister tell us why we are in such a serious financial and economic situation? Where have those huge new financial resources been deployed?

§ Lord Hesketh
My Lords, I have to disagree with the noble Lord, Lord Dean. The opportunity to achieve those finances was available if a previous government had decided to engage in a policy of privatisation. Perhaps I may take two figures. It is worth remembering that expenditure both on the health service and on social security has increased by one-third in real terms during that time.

§ Lord Boyd-Carpenter
My Lords, can my noble friend say what was the reduction in the national debt over the same period?

§ Lord Hesketh
My Lords, I do not have a figure for the reduction in the national debt. However, I can tell my noble friend that the public sector borrowing requirement in 1979–80 was some £9.9 billion, which is the equivalent of £19.9 billion today. The current figure for public sector debt reduction is some £7.9 billion for 1989–90.

§ Lord Mackie of Benshie
My Lords, is the Minister aware that it is easy to reduce an overdraft if one disposes of the collateral?

§ Lord Hesketh
My Lords, there appears to be a view that North Sea oil is different to any other form of revenue. However, in my dealings with the Treasury, I have found that revenue is revenue.

Lord Bruce of Donington
My Lords, is the noble Lord aware that one of the principal purposes of the Government's privatisation receipts has been classified as negative expenditure, whatever that may mean? They have been used for political purposes purely to pretend that Government expenditure as such has kept within its defined limits. As regards the oil tax, is the noble Lord further aware—this is an extension to the Question of my noble friend—that the extra revenue derived this year from the increases that have taken place in the price of oil will net the 1244 Treasury some £2 billion? Will the Government therefore at last honour their manifesto obligation and restore child allowance to its proper level?

§ Lord Hesketh
My Lords, the noble Lord, Lord Bruce, goes rather wider than my brief. I fear that the noble Lord also assumes the best figure on the best day. It is worth remembering that the oil price in mid-July was 18 dollars and 45 cents a barrel. It rose to 40 dollars and 33 cents a barrel on 11th October and is trailing today at 26 dollars and 65 cents a barrel. I do not believe that that will equate to an extra £2 billion.

§ Lord Cledwyn of Penrhos
My Lords, is it not the case, nevertheless, that the Government will benefit substantially from the increase in petrol prices? Is the Minister aware that I received a helpful letter from the noble Viscount, Lord Ullswater, in which he stated that, so far as the Treasury can calculate, the Government will benefit to the sum of well over £100 million this year and to well over £200 million next year? How will that money be spent? Is it to be spent in the current spending round?

§ Lord Hesketh
My Lords, I am grateful to the noble Lord the Leader of the Opposition for drawing that fact to my attention. I should point out that we have a commitment in the Gulf. That commitment will cost a great deal of money, but at this moment it is hard to put a price on it.

Lord Bruce of Donington
My Lords, as the Minister queried the figures that I produced, will be bear in mind that the increase in the price of petrol from £1.50 per gallon to £2.40 per gallon—that is not unreasonable—will yield an extra £1.35 billion, and that £245 million will be contributed by increases in VAT? If the noble Lord cares to add that figure to the increases in corporation tax that have been levied, he will find that the figure of £2 billion that I mentioned is not all that unreasonable.

§ Lord Hesketh
My Lords, I believe that the noble Lord is suggesting that those prices will hold for 12 months. I believe that there is no evidence to suggest that that is the case.