Ministry Spending Plans: Procedure (Hansard, 25 June 1992)

The Minister of State, Department of Transport (The Earl of Caithness)
My Lords, each Autumn Cabinet agrees new spending plans for departments in the light of discussions which take place between the Chief Secretary to the Treasury and spending Ministers in the annual public expenditure survey. There is no presumption that any reductions which might be made in one programme will be used to finance higher spending elsewhere.

§ Earl Russell
My Lords, I thank the noble Earl for that reply. I appreciate his point. However, will he take into account the fact that the Question seeks to ask about a situation where a reduction in the budget of one Ministry may have the no doubt inadvertent effect of increasing that of another? Is any machinery available for considering whether such a situation may arise? Further, is the present bilateral system of the public spending round best designed to get at that question in advance?

The Earl of Caithness
My Lords, in the negotiations within the discussions which the Chief Secretary to the Treasury has with individual departments, all the ramifications of bids or reductions in bids are taken into account.

§ Lord Boyd-Carpenter
My Lords, is my noble friend aware that the highly sophisticated machinery of government, and especially that of the Treasury, will very easily handle the problem to which the noble Earl referred?

The Earl of Caithness
Yes, my Lords; my noble friend puts it well.

§ Baroness Faithfull
My Lords, I have with me a hook from the Library entitled The Course of the Exchequer. Does my noble friend the Minister realise that in 1247 the barons complained to the King about the Treasury on this very subject? Despite the very welcome intervention of my noble friend Lord Boyd-Carpenter, does my noble friend agree that there has been over-spending in social affairs because there has not been a co-ordinated policy between different departments?

The Earl of Caithness
My Lords, I am glad that there is some continuity in this world in that past noble Barons have been joined by others in often complaining about the Treasury. However, those of us who have been lucky enough to work in the Treasury know that it is an excellent department. My noble friend is absolutely right—there has been a substantial increase in a number of departments' spending.

The Earl of Halsbury
My Lords, does not the ultimate responsibility rest in another place? Surely it is not our concern.

The Earl of Caithness
My Lords, it might well be our concern. However, my noble friend is right to say that the responsibility is with another place.

§ Lord Peston
My Lords, the responsibility may rest with another place, but it seems to me that correct procedure in government is not exactly a subject which is closed to us. I was interested to hear the noble Lord, Lord Boyd-Carpenter, say that the Treasury dealt with such matters easily. Having been a junior economist, I seem to remember that it was very hard. I think that the noble Lord, as Chief Secretary, may also remember that too. However, in his Answer the noble Earl said that there was no presumption that a reduction in one Ministry would lead to an increase in another. Perhaps more for the sake of his own noble friends than mine, can he say what would happen if the situation was the other way around? For example, is there any presumption that if one Ministry starts to spend more, there will be a need for other Ministries to spend less?

The Earl of Caithness
My Lords, I do not see how that question has any particular relevance to my noble friends on this side of the House. I should have thought that it was much more relevant to the noble Lord's noble friends on his side and to his honourable and right honourable friends, who seem to want to increase public expenditure right across the board.

§ Lord Peston
My Lords, I think that the Minister has missed the point. We on this side of the House actually believe in an increase in public expenditure. I thought that noble Lords on the other side of the House believed in a decrease. Therefore, if they 548 discover that there have been increases, surely they will be campaigning very strongly for countervailing decreases. That is the question I asked. Will the noble Earl give me an answer?

The Earl of Caithness
My Lords, I believe that the difference may be that we exercise very tight control over public expenditure.

§ Lord Renton
My Lords, although these and some other matters are the responsibility of Members of another place, would they not exercise that responsibility much more efficiently if they paid careful attention to what is said in your Lordships' House?

The Earl of Caithness
My Lords, I can assure my noble friend—and I know that from his own experience that he will know this too—that right honourable friends in another place do take very seriously what your Lordships say.

§ The Countess of Mar
My Lords, is the noble Lord aware that I have been asking this question on and off in different forms for the past five years? After the exchanges this afternoon I am still none the wiser. Is it possible to have some kind of clear committee which talks about what will happen if people become unemployed? They lose their houses, they become ill, the Inland Revenue loses money and considerable expenditure is then incurred. Would it not be possible to do that?

The Earl of Caithness
My Lords, we have another example of continuity from the question put by the noble Countess. However, it is wide of the Question on the Order Paper.

§ Earl Russell
My Lords, without wishing to challenge what the noble Lord, Lord Boyd-Carpenter, said about the wisdom of the Treasury, will the noble Earl confirm that it is not likely to be at the front of the Treasury's mind whether it may be accidentally creating spending in another Ministry, especially a Ministry such as Social Security where spending is often demand led? Does a Minister not deserve notice if one of his colleagues is attempting to dump spending in his department? Does that not again illustrate the "unwisdom" of the purely bilateral system of negotiation?

The Earl of Caithness
My Lords, I think the noble Earl, with respect, missed the first part of my Answer, which is that each autumn it is the Cabinet that agrees spending.

§ Lord Elton
My Lords, is not the real area of concern that which happens when the expenditure on a policy by one department can reduce the need for demand-led expenditure in another and when decisions are taken not during the PES rounds with the Treasury? Is there machinery for negotiating virement between departmental Votes for this purpose? If not, should that not be considered?

The Earl of Caithness
My Lords, I am sure that my noble friend will recall that where money is involved the Treasury is always there too.