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That a sum, not exceeding £3,244,048,000, be granted to Her Majesty out of the Consolidated Fund. on account, for or towards defraying the charges for the Civil Departments and for Defence (Central) as set out in House of Commons Pa per 125 for the year ending on the 31st day of March, 1969.
Debating the Vote on Account on the eve of the Budget is rather like appearing as the prologue in "Pagliacci". We are just waiting for the Chancellor of the Exchequer to ring up the curtain. It is singularly appropriate that we should be doing so.
I want to say a few words about the closing remarks of the Joint Under-Secretary to the Department of Economic Affairs in the last debate. The position of the Opposition is absolutely clear. We believe that it is our duty to attack the Government when they are doing things which we consider to be wrong. The Government can expect to receive our support only when they are doing things which we consider to be right. It is surely the Opposition's duty to attack the Government if the Opposition believe that the Government are not acting in the interests of the country as a whole. It is in that spirit that I intend to pursue this debate.
I said that this is rather like waiting for the Chancellor to ring up the curtain. It might be more accurate to say that in this debate we are rather in the position of someone describing a thrilling melodrama between one instalment and the next. Tomorrow we shall be in the position of saying, "Now read on". What I want to do tonight is to bring up to date the story as it is. I think that probably we shall be very glad if tomorrow we could find the Chancellor of the Exchequer in much the same position as a journalist once produced on finding that his hero was tied to the rails with the express train due shortly. The journalist wrote, "With one tremendous leap, our hero extricated himself from his predicament".
It is right that we should debate the very large sum covered by the Motion. The purpose of the debate, as we conceive it, is to examine some of the reasons why the Government are in the present economic situation and why they have brought the country to the present economic situation, so that we can, we hope, avoid a repeat performance next year.
However, it is to be noted that it is very unusual for the Vote on Account to be debated as such. The researches which I have conducted with the assistance of various bodies in the building tell me that there is no precedent for debating it as such—that is, the sum total of the Vote on Account—at any rate since 1945 and probably since a great deal further back than that. The whole tradition of the House is that money shall not be granted to the Government unless redress has been given to grievances. Perhaps there can be no greater or relevant redress than saying that we think that the total sum involved needs to be reconsidered and discussed.
This came out very clearly in two interventions made on 13th March, when my hon. Friends the Members for Louth (Sir C. Osborne) and Twickenham (Mr. Gresham Cooke)—I am glad to see that they are both in their places—endeavoured at the beginning of the day's business to raise this very question of the sum which is to be given to the Government to run the country's business in the forthcoming weeks until such time as the individual amounts can be debated and authorised by Parliament.
The crucial point which needs to be made at the outset is the enormous aggregate amount covered by this year's Vote on Account. I put it into perspective by pointing out the extraordinary variation which occurred between the Estimates of expenditure which were made last year and the extent to which it has been necessary to augment these by Supplementary Estimates during the past year. It is in this context that we should consider the position of the Vote on Account.
As well as granting the Government the money which they need to run the country, the Vote on Account provides us with a first glimpse of the Government's expenditure plans for the forthcoming year. It therefore clearly falls into place alongside the speech which we shall hear tomorrow from the Chancellor and the following debates this week and next concerned with how that money is to be raised.
The figures in the Vote on Account are open to a number of detailed objections as to consistency between one year and another. It may be, for example, that foreign aid is to be financed out of one Vote rather than the Vote by which it was previously covered. It may be that some of the measures which are undertaken by the Government will in turn bring in tax revenue and, therefore, that an adjustment needs to be made for that. None the less, it cannot be seriously dis puted that the Vote on Account is a very important document and one which should be suitably scrutinised by Parliament.
At this point, it is right to remind the House that the Government's own attitude towards the Vote on Account has been singularly inconsistent. Last year, the Department of Economic Affairs in its Progress Report for 1967, in effect, extolled the virtues of the Vote on Account and rightly, in our view, emphasised the importance which the Government attached to it:
The Vote on Account is presented to Parliament in mid-February each year and published as a House of Commons Paper. It provides the first official indication of the shape of Central Government spending in the coming financial year, and is the most important single statement of expenditure proposals which the Government makes to Parliament each year.
One could not be more forthright than that in saying that the Vote on Account which we are now debating is a most important document. It includes a summary statement of all Supply expenditure in the coming year, including defence expenditure.
It was rather curious, therefore, that the Government's approach to the matter this year strongly suggested that, by one means or another, they had suggested to the Press that, perhaps, the Vote on Account was not as important as was usually thought. Certainly, the implication was that it was not as important as the D.E.A. Paper last year suggested. The whole tenor of reports in the Daily Telegraph, the Guardian, The Times and the Financial Times was that the Vote on Account should, perhaps, be regarded with some suspicion. We fully accept that one needs to make adjustments of the kind I have described, but it is extraordinary that there should be a clear statement from the Government one year about its importance and that the whole implication of Press reports next year should be that the Vote on Account is not as important as one had thought.
Strangely enough, in spite of going into the matter as thoroughly as I could in the Library and elsewhere, I have not been able to find any clear statement from the Government this year of their view on the subject. It all seems to have been reports in the Press, though the unanimity of those reports suggests that, perhaps, some guidance was given to the newspapers. If so, I hope that the Chief Secretary will tell us precisely what the guidance was. It is undesirable that the Press should have it and that we should hear about it only at second hand. Perhaps we may in the future have a clear statement of the Government's view on questions of this kind.
I turn now to the Estimates themselves and the Vote on Account. One set of figures in the Vote on Account shows a remarkable trend. The first page shows that the Estimates—the "General Position" as it is described—as between 1967–68 and 1968–69, that is, the Estimates in the Vote on Account which will be covered by the Chancellor's Budget statement tomorrow, present an increase of £1,014 million. It overlooks that Supplementary Estimates have been produced during the year, and I shall return to that in a moment. None the less, it is a very large increase. No doubt, adjustments of the kind I have mentioned can be made. Perhaps the right hon. Gentleman will tell us of the various adjustment; which he himself would regard as relevant in this context. At all events, the sums involved are very large, as is the sum covered by the present Motion.
The D.E.A. in its Report last year gave a table expressing the increase in constant prices. I realise that the right hon. Gentleman is usually inclined to think in money terms rather than in real terms, but I hope that he will tell us what these figures represent in real terms. Last year, the D.E.A. said:
In comparing one year's estimates with another, a more informative picture emerges if one adjusts the figures so as to eliminate the effect of changes in costs between the different years.
A table was published at that time, but, so far as I know, we have had no corresponding figures showing what is represented in real terms this year.
I turn now to the relationship of the Vote on Account to the more economically orientated statements about public expenditure in 1968–69 and 1969–70 which we had in the White Paper, Cmnd. 3515. The crucial point here was brought out clearly in an article by Mr. David Wood in The Times on 26th February, in which he said that the Government's inconsistency in their attitude to the Vote on Account ought to be empha
sised. He made the point that the Government's figures in the Vote on Account now before us were firm, real figures whereas the statements which the Government themselves had made, in particular the statements of the Chancellor of the Exchequer, were merely a declaration of intention in broader economic terms. Mr. Wood suggested that Ministers wanted to
bury the message of the Vote and erect as the significant economic indicator the Chancellor's ipse dixit that the rate of increase in public expenditure…will fall from 7½ per cent. in the current financial year to 3¾ per cent. in 1968–69 and 1 per cent. in 1969–70"—
and he went on to suggest that, perhaps, we ought to take more notice of the Vote on Account rather than the broad generalisations in which the Chancellor had been talking.
I shall examine the relationship between these two figures. One curious feature which emerged from the discussion of the cuts in Government expenditure before Christmas and after was that the arithmetic did not seem to add up. One point has been worrying me, and I hope that the right hon. Gentleman will clear it up. We were told before Christmas that there would be cuts in Government expenditure, following devaluation, of £400 million. There would be cuts of £100 million on defence expenditure, £100 million on the S.E.T. premium, £100 million on the export rebate and £70 million in delayed Government expenditure on the nationalised industries. That makes a total of £370 million, and I have not been able to discover what happened to the other £30 million. Presumably, if I understand the matter aright, it would be reflected in the figures in the Vote on Account. I am a little worried about losing £30 million in this way, and I should like the right hon. Gentleman to tell us what the other £30 million cut announced before Christmas represented and what the impact has been in the present Vote on Account.
Be that as it may—I hope that we shall have an answer—the crucial point which emerges from a comparison of the White Paper on Public Expenditure and the Vote on Account is that, even making adjustments for the figures to reduce them to real terms and for the cuts, too, public expenditure in 1969 will still be higher than that foreseen in the National Plan two and a half years ago. This is true even though the National Plan target in terms of actual growth in G.N.P. has completely failed to be realised. This is a matter which should worry us all very much. It implies that the share of Government expenditure in the national economy is growing very fast. We cannot view that with equanimity.
I hope that the Chief Secretary will be able to tell us what the relationship is between the figures in this Vote on Account and certain other items which have increased the amount of Government expenditure expected in the forthcoming year. There is, for example, the Concorde. There is also expenditure under the Industrial Expansion Bill, not the main part of the Bill which gives a global figure but certain separate small amounts. Will they be added eventually to the Vote on Account?
Finally, I relate the Vote Account to the overall question of last year's expenditure and the expenditure which we foresee in the year ahead. At this stage it is not inappropriate to look at what the Chancellor said in his Budget statement last year. It seems a dreadfully long time ago. He said:
First, public expenditure, notably public investment, will still rise rapidly this year. In our present circumstances I do not regard that as a cause for alarm. It is quite justifiable that during a period when private investment is declining public investment should be allowed allowed to advance quite rapidly,…
This means that public expenditure, which cannot be quickly changed, must be reined back in good time."—[OFFICIAL REPORT, 11th April, 1967; Vol. 744, c. 990.]
That is, if the economy was to be kept under control. Yet we find ourselves at the end of a year which was opened by that Budget statement in the extraordinary position where the extent of overspending in the economy has amounted to about £440 million more than the original Estimates. In homely terms, that is something like the equivalent of a shilling on the standard rate of Income Tax. That is extraordinary after the Chancellor was saying so gaily last year that the message was "steady as she goes." In fact, the ship was not on a steady course at all but was swerving very fast on a course where the Government's expenditure was completely out of control to the extent of £440 million.
It is not irrelevant to look at the Third Report from the Estimates Committee on the Spring Supplementary Estimates. The first thing that catches the eye is the following statement in page vi:
As Your Committee stressed last year, the objective should be to ensure that the out-turn should be as near as possible to the original Budget Estimates. This year the Treasury estimate provisionally that there will be an increase of about £440 million.
In a number of places the Committee examines the specific increases in expenditure. Paragraph 5 is startling. It says:
A Treasury witness was unable to give any specific explanation for the large total of Supplementary Estimates this year. Apart from two main items, the foot-and-mouth epidemic, which Your Committee examined in their First Report, and investment grants, which they examine later in this Report, ' there were a variety of causes which, of course, are very difficult to identify and certainly not possible to quantify'…The two other factors mentioned by the Treasury were' the sagging in the economy' which had led to bills being submitted faster than normal, and the fact that the original Estimates' were drawn very tightly'.
One would hope that the original Estimates were very tightly drawn, but it is extraordinary that after the expenditure has exceeded the Estimates by that amount, and when we are asked to approve a similar Vote on Account this year, the Treasury witnesses were unable to produce any explanation. I hope that the Chief Secretary will be able to do rather better than that this evening and at least give us some explanation.
I was quoting from a statement in the Third Report from the Estimates Committee as to what answer it received from a Treasury witness. The Treasury witnesses could not give any specific explanation when questioned, and I thought that it was not unreasonable to suggest that the Chief Secretary might give some explanation this evening, because the point we are making is that Government expenditure is out of control. The basis on which this Vote on Account has been established is considerably suspect. That, too, is a point which the Estimates Committee brings out.
To quote again:
that is, the £440 million to which I referred—
reveal such a marked contrast between the present year and previous years that Your Committee think it right to highlight certain aspects of them. In a year when cuts in public expenditure amounting to some £300 million have been announced by the Government, the total of Supplementary Estimates amounts to £562 million, or more than double the comparable figure in any of the last ten years. The average difference in the audited outturn of expenditure compared to the original Estimates over the previous five years is £-4 million. In the present year the audited outturn is expected to be £440 million greater than the original Estimates.
I do not want to weary the House with quotations from the Report, but the occasions when we have an opportunity of bringing out this kind of point are far too few.
There is one particular point directly related to the Vote on Account we are now considering which we should make allowance for. In discussing the increase of investment grants to 39·4 per cent., the Estimates Committee says that the reason for this discrepancy is twofold:
one a change of policy by the Government, the other a miscalculation by the Board of Trade.
It says later:
With regard to the miscalculation one of the purposes of the investment grant scheme is to encourage investment in development areas.
The Committee analyses this in some detail, and says:
In forming their Estimates, therefore, the Board of Trade had to calculate not only the total amount of claims which were likely to be made but also the proportion of these claims likely to come from development areas.
The system of Board of Trade calculation is quite extraordinary. It seems to imply that it anticipates that the policy will actually fail. Unless I am mistaken, that seems to be its assumption when making its estimate of what the policy will cost, because it makes no allowance for the policy's having any effect.
The Report continues:
A Board of Trade witness admitted that estimating these two factors was 'pure guess work'. The only basis used by the Board of Trade for calculating the proportion of claims likely to come from development areas was the amount of employment in these areas;
since this amounted to 20 per cent., they assumed that 20 per cent. of eligible investment would be in development areas. As their, witness put it, 'We had no other basis on which to rely' He was unable to hold out any hope that future initial Estimates for the year would be much more accurate, and it would not be until the following January that the total for the year could be calculated with any precision.
That kind of statement is relevant now, because it suggests that a large number of figures in the Vote on Account are extremely suspect and that we should therefore view the whole question in great detail.
Similarly, for the Industrial Reorganisation Corporation there is an increase of 33⅓ per cent. over the amount originally estimated in last year's Vote on Account. The Committee comments:
A Treasury witness was unable to give any account of the reason for the Supplementary Estimate except to say that it was a drawing from the Exchequer which the Corporation was empowered to make from time to time, and that 'This is not money that they are drawing at the moment for any specific purpose that is known to us'.
We should know whether any similar nebulous sums in this Vote on Account are being sought for similarly nebulous purposes.
Finally, I stress as strongly as I can that the Vote on Account must call into question the whole extent of the Government's proposed expenditure cuts. In a great many cases they would seem to be phoney cuts. Saying that is not to undermine the basis of the Government, or to shake sterling, but to fulfil our duties as Members of Parliament to ensure that the Government spend the money in a right and proper way, and that the interests of the taxpayers and the rest of the people of this country are protected.
Tomorrow we shall no doubt hear a great deal about making devaluation stick. It may be that it would be less of a problem if the Government had taken action of the kind I and my right hon. and hon. Friends suggested some months ago. Be that as it may, to say that tomorrow's Budget, if it is tough, is something to make devaluation stick is only a small part of the truth. No one doubt's that it will be tough, but in large part that is because the growth in public expenditure has been far in excess of what we on this side of the House think that it should be, and far in excess of what the Government said it would be last year.
Therefore, we look with suspicion at the figures with which we are presented in this Vote on Account. I hope that we shall in future take very much greater care in estimating them and achieve the Select Committee's objective, which is to make the Vote on Account as closely as possible resemble the actual course of expenditure in the following year.
Although it is personally agreeable that the Chief Secretary should be winding up this debate, I am sure that hon. Members will feel that it is very unfair to him that he should have this penitential experience, because the figures in this Vote on Account represent his failures. It should be the victors in the conflicts inside the Government, the great spenders—the Minister of Health, the Secretary of State for Education and the Minister of Housing—who should be here to answer the debate, and not the Chief Secretary, who, I am sure the House knows, did his level best to prevent all this happening.
It is noticeable, too, that the Chief Secretary is having no oratorical support from the benches behind him. This is worth noting. I hope it will be noted outside the House that on a Motion which involves the spending of over £3,000 million not a single Labour Member rose to speak when my hon. Friend the Member for Worthing (Mr. Higgins) sat down. Tomorrow, when all our constituents will have to suffer under the blows of swingeing increases in taxation, I think the constituents of hon. Members on the Labour benches will want to know why when the spending which will play so large a part in these increases in taxation was under discussion the Labour Party did not think it a matter worth discussing, not worth a single speech.
This is the spending for which the Chancellor of the Exchequer will present the bill tomorrow. The Vote on Account contains the goodies. The bill will be presented by the head waiter tomorrow. Therefore, it is, as my hon. Friend the Member for Worthing rightly said, extremely fortunate that it has been arranged that we have this discussion, far too brief though it will be, on the spending of this money on the very eve of the day when the Chancellor of the Exchequer takes action to pay for it.
It has always seemed to me that one of the great defects of our Parliamentary procedure is that we fail to relate the attractive, agreeable and popular proposals for spending money with the grimmer and less attractive methods of raising the wherewithal to pay for them. I think the House owes something to the Opposition in that we have, from the point of view of time, produced as close a juxtaposition as we could between the spending of the money and the action which will be taken to pay for it.
What the Chancellor does tomorrow will undoubtedly be in very large measure affected by what we are called upon to vote for tonight. The Prime Minister said last week that "the task of the Budget would be to release resources for the unfulfilled requirements of overseas trade". There is no doubt that the Chancellor will treat us, in his agreeable manner, to a disquisition on the necessity to divert resources from personal consumption into either investment or exports. In parenthesis, I do not think that anything that the Chancellor will do will do anything other than discourage investment if he follows the line he has followed recently.
The line that I hope the House will follow is that there would have been much less need to put on the individual taxpayer a large additional imposition to free resources for export if the Government had not themselves pre-empted so large a part of our additional production. It appears that for every £ of additional production last year some 15s. are being hypothecated by the Government into public spending. It was well put the other day in The Times, in Mr. Ian Trethowan's column, that the Budget would not have needed to be anything like so tough on the taxpayer if the Government had been a little tougher with themselves. It is the spending contained in this document which will be a major factor in the incentive-paralysing, miserable and oppressive additional taxation which there is no doubt the Chancellor will be imposing on us before tomorrow is out.
It is no good the Government pretending that the need for these measures, the need for this pre-emption by the Government of so large a part of the additional national product, results from devaluation. The claims of the individual taxpayer as against Government spending are in that context even stronger. The taxpayers on whom this additional burden will be imposed tomorrow have already had—I quote the Prime Minister—their savings and their wage packets reduced in real value by devaluation. It is upon people already so penalised by the Government's action a few months ago that the Chancellor will be imposing this further burden rather than exercising proper and effective control over spending by the Government themselves.
So the Vote on Account, as my hon. Friend indicated, reveals unprecedented public spending in peacetime. It reveals an increase of £1,014 million from £9,503 million to £10,517 million in expenditure borne on the Estimates. If one makes the comparison—which I think is the wrong one—not from estimate to estimate but between this coming year's estimates and last year's estimates plus the lush supplementaries to which my hon. Friend referred, there is even then an increase of £452 million.
The sort of figures that we are talking about are of the order which outside commentators suggest the Chancellor of the Exchequer is contemplating it may be necessary to abstract from consumption by taxation measures tomorrow, and if that is so, it vividly underlines the point that it will not be the wicked speculators, it will not be those mysterious people who operate in the gold market, it will not be forces over which the Government have no responsibility, but in large measure the Government's own failure to control this expenditure which will be the main reason why the Chancellor of the Exchequer will, rightly or wrongly, feel it his duty to impose this additional taxation tomorrow. And it reveals what a pathetic sham the so-called economies in Government expenditure have been.
We remember the agonising Cabinets, the threats of resignation, the right hon. Lady the Minister of State for Science and Education indicating the principles on which she would go or remain, and Ministers emerging from No. 10 grim-faced after wrestling for their Depart ments—the whole build-up of drastic economies of £300 million. The end of it is that for the coming year, so far from saving £300 million, when all allowance is made for whatever savings there will be in that largely inflated figure, the actual increase, estimate to estimate, is over £1,000 million. This shows that the Government, if they attempted to economise, have failed.
I know it is unfair on an issue of this kind—I know that this is a point which the Chief Secretary will take if I do not anticipate it—to criticise expenditure in general without being prepared to criticise it in particular. I want to put what are only a handful of examples—we could extract many more but time is short—of why the figure is so high. I do not suggest that a great deal of this expenditure may not be wholly admirable, that there may not be a strong case for it, taken in isolation. No one knows better than the right hon. Gentleman that one of the great problems of controlling Government expenditure is that the claims are so persuasive. If they were not, they would not be put forward. But when the total becomes too high, as in this case, it is the Government's plain duty to decide on priorities and to cut back some in order to enable others to go forward.
Today, for example, it was elicited by my hon. Friend the Member for Oswestry (Mr. Biffen) that Class IV, Vote 19—Ministry of Technology (Industrial Services)—was rising this year compared with last by 22 per cent., or £5½ million. Of course, the Minister of Technology says that this is to help industry. But what the Government, in this respect as always, do not seem prepared to face is the question of whether it would not be better to help industry by allowing it to keep more of its own money to spend as it thinks fit, rather than to take it away by taxation in order to allot it as the Government think fit. The right hon. Member for Battersea, North (Mr. Jay) held the opinion that the gentleman in Whitehall knows best, but in truth and in fact most industrialists know better how to invest their money than either he or the Minister of Technology does.
I note from the Vote on Account that the total expenditure on the Department of Economic Affairs is to rise from £2,467,000 by nearly one-sixth to just under £3 million. At least that is not a system of payment by results. Indeed, since there has been a Department of Economic Affairs the economy has never been out of trouble. Surely this increase or, indeed, the provision for the Department at all, could be removed without causing the slightest public disadvantage. I am willing to bet that if the Chief Secretary were prepared to indulge in the same frankness as the right hon. Member for Belper (Mr. George Brown), he would say that he wholly agreed on that point.
According to this document, the provision for the Legal Aid Fund rises from £6,757,000 to £8,821,000, an increase of over £2 million or over 30 per cent. Why? Is it because those who administer legal aid are going on the same principle as those who decided to allow Dr. Savundra legal aid on the fullest scale, although he was travelling to court in a Rolls-Royce from a luxurious mansion? This is a substantial increase.
As I am no longer a practising member of the Bar, that is not a particularly wounding retort. I must ask whether the right hon. Gentleman thinks it right, at a time when the Chancellor is urging that there is no room for increasing the individual standard of life, that increases of this sort should be made. I must also ask whether he is satisfied that, as in the case I quoted, legal aid is not being given to people who, if left to themselves, could perfectly well in one way or another pay for it themselves. If he told me he was satisfied about that, I should be surprised.
Then there is the case of overseas aid. I believe that, properly administered, this work is magnificent, particularly in the smaller underdeveloped countries of the Commonwealth. But it is up by £9,263,000. Is some of it necessary in present circumstances? I do not know whether this figure includes it, but what about the proposed £20 million loan to Egypt. Is it really necessary in the present situation if that is so?
Since Egypt is spending so much money on re-arming for the renewal of her war against Israel, and since she is keeping the Suez Canal closed, thereby penalising herself and us, I wonder whether the British taxpayer should have to find such large provision for Egypt. I wonder whether it is really right that, as the Minister of Overseas Development has told me, we should be providing aid to 10 countries who have either broken off diplomatic relations with us or have expropriated British property without compensation.
A little more discrimination in the administration of overseas aid, a little more appreciation of the desirability of helping our friends rather than countries like Egypt or, for that matter, Indonesia, which have done us so much harm and whose own mismanagement accounts for their troubles, would help a great deal in the present situation.
We can multiply these cases. We must be selective because of the shortness of time, but I am indebted to my hon. Friend for giving another example of money which, in the present situation of the country, one is entitled to ask is it necessary to provide.
Coming closer home to the Chief Secretary, there is the growth of 50,000 in the number of non-industrial civil servants since the Government came to office. On a normal basis of calculation, that means about £62½ million additional expenditure annually. I quote these figures in no attack on civil servants, for whom I have the highest regard and with whom I worked for 13 years. They are among the hardest working people in the community. But this increase in numbers means that the Government are expecting the Government machine to do too much by taking on marginal functions which might be desirable in ordinary times but which the right hon. Gentleman should look at with severity at this time when we are told that standards of consumption must be cut in order to make resources available for export.
There is an even greater increase in the staff of local government. A small example is the squads of uniformed Amazons who prowl the streets of Chelsea to see if a desperate character has tried to park his car outside his own front door.
Then we come to major items of expenditure. Vote 2 of Class IV deals with Transport Boards, which I take to mean substantially the subsidy to British Railways. This shows an increase of about £11 million to just under £150 million a year. The rising cost of this subsidy is the price we are paying for the abandonment of the Beeching Plan, which sought to make the railways economically viable, and the weak-kneed surrender to those who clamoured that railway lines should be kept open at the expense of the taxpayer. What limit is the right hon. Gentleman proposing on the increase in subsidy to the railways?
It is still not clear how much expenditure is being found for keeping open uneconomic pits. What is the direct subsidy to the National Coal Board for the losses involved and what is the indirect cost resulting from, for example, compelling the C.E.G.B. to use the most expensive form of generation in order to maintain employment in the pits?
For light relief, we may turn to the activities of the Land Commission. Does the right hon. Gentleman really say that anyone in this country, except the 1,900 employees, would be the slightest bit worse off if he wound the Land Commission up tomorrow? Is it not irrelevant to the needs of the country, whose expenditure on vital matters such as defence is being pared and whose citizens are to be subjected to the highest taxation they have ever known in time of peace?
Class IX Vote 2 involves certain mysteries and perhaps the Chief Secretary can explain them. The cost of accommodation services in the United Kingdom goes up by the sizeable figure of £12 million, from £74 million to £86 million. I assumed for a moment that that was because of the Government's proposal, ill advised though it is, to bring home the Armed Forces from overseas. But then I looked at Vote 3 and saw that the cost of accommodation services overseas was up by more than £1 million, from £8 million to £9·4 million. Perhaps the Chief Secretary can enlighten us about why this happens. Is it because expenditure is still being continued on military accommodation in the Persian Gulf, as the Minister of Public Buildings and Works admitted to me, on top of the £14½ million which the Government have spent there since they came to office, and have continued since the Government's announcement of their decision to scuttle out of that area?
Then there is the curious paradox of Votes 4, 5 and 6 in Class IX. As the effective strength of our Armed Forces is ruthlessly cut away and as they are deprived of aircraft, aircraft carriers and effective arms, the cost of building for the Armed Forces goes steadily up. The building which the Ministry of Public Building and Works is undertaking for the Services is up by £4 million for the Navy, £13 million for the Army and £4 million for the Royal Air Force, coming to the sizeable total of £166 million.
In Class X Vote 10 expenditure on the Ordnance Survey is up from less than £4 million to £5·2 million, nearly a 30 per cent. increase. How has this come about? The country is not any larger so as to require a 30 per cent. increase in the cost of surveying it. Is it, again, simply a failure by the Government to take a firm grip on spending?
In Class X there is one bitter exception. It is a small reduction, only £6,000, but it is a reduction in the provision for the National Savings committees. This, presumably, is a sorry indication that in the economic climate which the Government have produced the task of these committees has been made very nearly impossible.
So large an item as present Government expenditure is a major factor in the operation of the economy, Our present troubles have been substantially contributed to, to put it no higher, by the fact that public expenditure has risen so much faster than the gross national product. That generates inflationary pressure and creates an overstrong home market, and the consequent increases in taxation have a demoralising effect, stimulate the brain drain and diminish incentive. Since the Government came to office, they have already increased taxation by £1,300 million a year, and that before whatever the Chancellor of the Exchequer does tomorrow.
The lack of confidence at home and abroad in our economy and its operation which has bedevilled the Government's efforts for the last year or two will not be resolved until the Government take a firm grip on public spending. Until they do so, lines of credit, loans, I.M.F. standbys and all the complicated expedients available to a modern Government will only temporarily prop up the structure, because there will not be confidence in the economy of a country whose Government are persistently over-spending and whose Government have shown, as this Vote on Account shows, an inability to control that spending. The Vote on Account is an indication that in this task of controlling spending the Government have failed and, whatever the Budget contains tomorrow, it will do no more than minimise the serious damage which that failure has caused.
I had no intention of intervening in the debate, but the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) did himself less than justice. I shall deal with only four of the matters which he raised. Because of his experience as a Minister, he should have a great deal of knowledge about two of them, and if he had used that knowledge, he would not have made the kind of speech to which we have just listened.
The right hon. Gentleman spoke of the increase in the Civil Service. Like the right hon. Gentleman I pay the greatest tribute to the Civil Service and the hard and devoted work it does not only for the Government but for the whole nation. I want to discuss one considerable increase in the Civil Service over the last three years. It has occurred in the Ministry for which I was responsible, the Ministry of Pensions and National Insurance, for which the right hon. Gentleman was responsible for many years, which became the Ministry of Social Security.
It has far more civil servants than when we became the Government in October, 1964, but, as the former Minister, I make no apology for that increase. It occurred because we introduced great improvements in social security over those three years. The right hon. Gentleman knows better than anyone in the House, and almost better than anyone in the country, that with a great change like that from flat-rate unemployment and sickness benefits to earnings-related sickness and unemployment benefits and earnings-related widows' benefits, there must be a greater number of civil servants, particularly in local offices, to ensure that the new scheme works smoothly and also to ensure that benefit is paid on the day expected—the right hon. Gentleman knows how important that is.
There is another reason for the increase of which I am proud and for which I make no apology. The right hon. Gentleman will remember how often when he was the Minister we discussed the plight of old people who would not apply for National Assistance. I thought that they were wrong not to do so, as the right hon. Gentleman did, but, I am happy to say that with the introduction of our new scheme more than 500,000 more old people are in receipt of supplementary pension. Civil servants are needed to administer that. The right hon. Gentleman knows better than anyone else in the House that the former National Assistance Board, now the Supplementary Benefits Commission, not only ensures that old people get the financial assistance they need but also that their welfare needs are taken care of. Many of these officers are the best welfare officers in the country. Therefore, if we are to do that kind of welfare work, without which many old people would be neglected, more civil servants are needed. I have spoken only about the Department of which I have great knowledge. I do not know whether any other Departments, except the new ones, have had as large an increase in civil servants.
The right hon. Gentleman made great play about legal aid and about Savundra getting legal aid. I do not know the details about Savundra, but the right hon. Gentleman knows the body which decides whether a person gets legal aid. He knows that when he was in the Government and in the job which I had, it was the National Assistance Board which investigated an applicant's resources. Only when that board, now the Supplementary Benefits Commission, decides that a case should have legal aid, is it granted—
I do not think that the right hon. Lady has it right. The old National Assistance Board, now the Supplementary Benefits Commission does extremely well, I agree, with the investigations into means. The decision as to whether legal aid should be granted, however, is taken by the legal aid committees. It was their administration which I wanted to criticise and did criticise.
The right hon. Gentleman quoted the amount which was spent. One cannot isolate one part and say that that is being criticised, because often the committees decide on the information which they get from the Commission. Therefore, he was no doubt playing politics on both those subjects.
Another matter which he criticised—
The right hon. Gentleman is the expert in these matters, but I thought that the Savundra case was a criminal and not a civil case. He is therefore saying that, despite an appropriate Government authority being satisfied that there was no income available to the defence, a person charged with a criminal offence who had no money to defend himself should not have the opportunity to do so.
But what my right hon. Friend has said is true, which is why I come back to the point that the legal aid committees decide on the information which they get from the Commission.
I want to turn now to the criticism of subsidies to the National Coal Board and British Railways. When the right hon. Gentleman was saying how strongly he felt about the subsidies to keep open uneconomic pits and railway lines, I wondered whether he would pass on to the next natural case of subsidies, which are almost the biggest provided by this Government, the subsidies to farmers. I do not criticise these subsidies, because, if we want to get our balance of payments right, we must produce as much food as possible. There are many people who would like us on this side to argue that farmers are getting too much, but, unlike the right hon. Gentleman, I am not playing politics.
This weekend, I spent most of my time in discussions with a branch of the National Union of Mineworkers and officials of the National Coal Board about a pit in my constituency which is threatened with closure. About three weeks ago, they had the first of what are now called the "jeopardy meetings". That colliery employs 484 men and the Coal Board has told the union and me, as the Member representing the area, that the greatest number of men whom it will be able to redeploy to any other colliery is about ten. In the area where that pit is situated, unemployment is already running at about 7 per cent. Is the right hon. Gentleman saying that this Government should do nothing when faced with that kind of position? Does he want them to say that willy-nilly that pit will close and throw at least another 470 men on the scrapheap before alternative employment can be provided for them?
The Government have spent a great deal of money in trying to build up the infrastructure of areas such as that which I represent, but we will not see results from their efforts until there is an improvement in the economy and until industry gets on the move again. But as soon as it gets on the move, industrialists will want factories almost overnight. The Government are already providing these advance factories. I think of those 480 men and the amount which they will get from the National Insurance Fund—not only their flat unemployment benefit, which they received when the right hon. Gentleman was Minister, but, in addition, their earnings-related payment and their redundancy payment. A Government is sensible if it weighs the cost of one against the other.
I am not one who has shouted for uneconomic pits to be kept open, because I regard it as of the greatest importance that the mining industry should become viable. I told my constituents years ago that the price of coal comes into almost everything a wife buys in the shops. I have tried to be truthful and honest with my constituents. But within a year not only the pit to which I have referred but the one two miles away employing nearly 500 men may be closed. I give the greatest praise to the Government for the humanity they have shown to the people who work in the coal mining industry.
I turn to the question of British Railways. Does the right hon. Member for Kingston-upon-Thames think it totally wrong that uneconomic lines should be kept in being? Again, there has been a great deal of planning and of building the infrastructure. If we are to have industrial expansion in these areas, the railway line must be kept in being to ensure that it is successful.
It is easy glibly to twit a Government because they are spending this or that and to say how foolish they are. But, having examined the reasons why the Government are pursuing their humane policies, I say good luck to them and hope that they will continue with them.
The right hon. Lady asked me a direct question and I should answer it. Under the Conservative Government, and during Lord Beeching's term of office, the deficit, which was a very serious one, was being steadily reduced because the Government and the Railways Board were administering the railways with a view ultimately to making them viable. I criticise the Government for abandoning that and for allowing the deficit to go on rising and thereby destroying the morale of those who wanted to make the railways viable.
The Government's decision was perfectly right. I represent a Scottish constituency. For generations, a large part of Scotland has been neglected. It would be the easiest thing in the world to make the railways pay if only a few of the lines were retained. The Beeching proposals were backed up by hon. Members opposite. When it came to closures, the Scottish Tory Members who voted for the Beeching proposals made the strongest representations to the Government. The right hon. Gentleman's intervention has made me much more convinced that what the Government are doing is right.
The right hon. Lady the Member for Lanarkshire, North (Miss Herbison) has made a very human and humane plea for the spending of money for social purposes. No one in the House could make a better plea or make it with greater sincerity. However, I should counter the right hon. Lady's arguments with the one concern which I have had since I have been a Member: can we afford it? We cannot spend money which we have not earned and we cannot for ever keep on borrowing other people's money to spend.
No matter how socially desirable certain expenditure may be, ultimately we have to face the question where the money is to come from. That is why I think that my hon. Friend the Member for Worthing (Mr. Higgins), who opened the debate, was wrong in saying that it was rather strange that we should be debating these matters now before the Budget tomorrow. This is the very time when we should be debating them. We are now saying what we are to spend, and tomorrow we shall have to find the money.
I am, therefore, grateful that time has been found tonight to discuss this huge Vote on Account. I protested about it last week because I regarded it as monstrous that this vast sum should go through "on the nod". That is why I am protesting.
My constituents, for whom I am speaking, would ask three questions with which, I think, the right hon. Lady the Member for Lanarkshire, North would agree. They would ask, first, whether we can afford this vast expenditure. Secondly, they would ask whether we were getting value for money. Thirdly, they would ask whether it was necessary. It is on the first question—whether we can afford it—that I want to concentrate. Any fool can, for a short time, enjoy a champagne appetite on a ginger beer income, but sooner or later the bill must be paid. It is the bill which we have to face tomorrow.
I should like to remind the Chief Secretary of what was said on Saturday by the Economist, a newspaper which is generally favourable to his Government.
This was not in 1964 but on Saturday. The right hon. Gentleman should come up to date. The Economist said:
No set of figures could describe the hopeless outcome of the three years of Labour government rule more clearly than those showing changes in the use of resources between the second half of 1966, when the squeeze was fully on, and the second half of 1967 when defeat was admitted.
This is the key to the position.
The Economist said:
Britain's total output over this time rose by no more than 1 per cent.
Where is the money coming from, I keep asking.
But personal consumption went up 4 per cent. and so, too, did public authorities' consumption, while public expenditure went up 13 per cent.
To anyone used to looking at figures, that obviously cannot go on. If we earn 1 per cent. more and we spend 13 per cent. more, we have to go with our begging bowl borrowing money. Sooner or later, those from whom we borrow want to be repaid.
The Economist—I put this to the Chief Secretary because I know that he regards these comments seriously—further said:
In the fourth quarter of last year, the ordinary trading accounts ran a deficit of £360 million, equivalent of £1,440 million a year…and the total deficit was running at an annual rate close to £1,600 million.
The position is getting progressively worse.
This is what I want the House to face. Much as I agree with the right hon. Lady that social expenditure is justified and desirable, where is the money to come from? How can we make the economic machine work better to produce the wealth which the right hon. Lady and I want to distribute among the poorer sections of the community? It is cruel mockery for us to tell the poorer sections of the community that they can have this and that when we are not sure that the economic machine can produce the money to provide what we promise.
The Economist further said:
Mr. Wilson still ducks the issue: there will be 'little to spare', he said on Wednesday"—
it was quoting the Prime Minister—
for increases in living standards in the near future.
That is fair enough. It said:
He should be honest and say that the living standard of the British workers has to go down.
It is against that background—
I appreciate the hon. Member's giving way, but not his scowl. Does he not recognise that what will not go down is the social wage that applies to the poorest and the lower income groups in the community because of the acts to which reference has been made? The social wage will not go down.
The social wage must go down if the cost of living goes up. Only this afternoon the Minister of Power came to that Box and said that gas prices would go up on average by 8·7 per cent. Therefore the standard of living to that extent must come down—and if hon. Members opposite think that is a laughing and a grinning matter I can assure them that poor people I represent do not think so.
I remind the House that this is the biggest Vote on Account on record—£3,244 million. Last year it amounted to £2,880 million, and two years ago to £2,127 million. This is a rake's progress, and it must be stopped or the whole economy will come to a standstill. We are promising our people to spend money that we have not got, and I call that fraudulent.
I remind hon. Members opposite that this enormous sum represents about £300 per year per family—every family in the whole country—in taxation, or £6 a week. That is the size of the burden which the Chancellor tomorrow will have to put on the shoulders of our people to pay for this Vote on Account, and it is against that that I am protesting. I am convinced that it is this huge uncontrolled expenditure by the Government which is the basic cause of all our economic ills, and until there is some control of Government expenditure we shall never get out of the jam which we are in continuously. This £3,244 million is, as my right hon. Friend said, only part of the total expenditure of the Government, which this year has increased from £9,500 million to £10,517 million. There must be some stop to this continual increase in expenditure or I do not know what will happen to our economy.
The Government from time to time have promised the House and promised their supporters that they would cut Government expenditure. We had an example of that only last week. The Prime Minister sent a letter to his unfortunate candidate in the South Kensington by-election, and in that letter the Prime Minister said:
Devaluation, therefore, must be made to work, and the cuts we have already made in Government expenditure…
My constituents want to know how expenditure is cut when more money is spent.
If the Government promise the people that they will cut Government expenditure and then spend another £1,000 million, the people say, "You are a fraud". The use of this word "cutting" Government expenditure when they go on to spend all this extra money is just nonsense.
According to The Times, last week the Prime Minister, at one of his Labour Party meetings, said—very wisely—to his supporters:
You cannot spend it before it has been earned, and you cannot spend it twice.
This Vote on Account has not been earned, and we are spending more than twice the money which we are borrowing, which we are obliged to repay one day. That is dishonest, and I protest against it.
Last week, the Bank of England produced some statistics about our position last year. They show that, as a nation, we were roughly £550 million in the red. We were spending that much more than we were earning. Hon. Gentlemen opposite often twit us, sometimes in good humour and sometimes not, that they inherited a deficit of £800 million in 1964. The figure was about £760 million, of which about £350 million had been exported in one way or another, so that the trading deficit was about £370 million. After two years of Labour freeze and squeeze, our position is a great deal worse today than it was when they took over in 1964. It is against that background that I protest about this vast amount of money being spent so recklessly.
Last week, the Business Supplement in The Times said:
Net liabilities to central monetary institutions rose from £943 million at the end of September to £1,477 million by the end of December. This debt is already a record and it more than wipes out Britain's entire gold and convertible currency reserves.
In other words, there is not a brass farthing in the kitty. But for my protest last week, this sum would have passed on the nod. We should have lightly passed a Vote on Account of £3,200 million when, as The Times says, we have nothing in the kitty. That is my answer to the right hon. Lady when she pleads for more money to be spent on desirable social matters.
This Vote represents about one-third of the Government's expected expenditure in the year. The total is £10,000 million, and this is about £3,250 million. Therefore, it must include at least one-third of the deficit which the Bank of England last week said that we had incurred. At best, it means that, in this Vote, we are spending £200 million that we have not earned, and that against the Prime Minister's very good advice to the Labour Party last week that we ought not to spend money until we have earned it.
In The Times one day last week, the hon. Member for Berwick and East Lothian (Mr. Mackintosh) protested about the saving of what he called the "trivial amount" of £25 million on prescription charges
…in comparison with the hundreds of millions handed out in subsidies to industry and loss on the Concorde.
I agree with him. A sum of £25 million saved on prescription charges is a mere nothing compared with what has been lost in other ways. I should be interested to know how many more items like the Concorde may be hidden in the £3,200 million. How many other pieces of expenditure have been smothered in this one big Vote? We ought to examine it more carefully than we do.
I will come to that in a moment. [Laughter.] This is not a giggling matter. Tomorrow, when our constituents realise that they have to find this money, it will not be much comfort to them to know that Socialist hon. Members;at giggling about it. It is all right for the hon. Member for Dunbartonshire, East (Mr. Bence), who is not standing again for Parliament. He can afford to do this. His colleagues will have to face the music.
The hon. Gentleman amuses me when he talks about not spending before earning the money. He is a business man and knows very well that if he wants to increase the capital investment of the companies that he controls, the most likely way is to approach some underwriters, to form a public company, and to raise the money by borrowing. Only in that way can he expand. That is the traditional capitalist method of increasing industry: spending borrowed money before earning it.
Nothing of the kind. If I issue a prospectus for new capital, that capital becomes part of my organisation. That is part of the productive organisation. This is consumption. It is quite different.
The hon. Member for Plymouth, Sutton (Dr. David Owen), when we were discussing the question of school milk, said:
I feel that today public expenditure is out of control and there is no coherent planning or strategy lying behind it."—[OFFICIAL REPORT, 20th February, 1968; Vol. 759, c. 277.]
I entirely agree with him. It is wrong that this vast sum should go through Parliament without being properly investigated.
On the question of school milk, I would point out to the right hon. Lady the Member for Lanarkshire, North that, in order to make this Vote £5 million lighter, the Government, a fortnight ago, said that when a child left a primary school and went to a secondary school it could no longer have free school milk. Does the right hon. Lady agree with that? They have the impertinence to say that there was no longer any nutritional value in milk once a child went to a secondary school. What makes me so angry—and I have written and spoken about it—is that in this Vote there is an increase to the Arts Council of over £500,000, making its vote nearly £8½ million. We are robbing the children of poor working class people of their free school milk to give the Arts Council another £500,000 to provide "Arsenic and Old Lace" for middle-class people who can afford to pay for it. If that is the priority, I am against it and I am surprised that the right hon. Lady has accepted it.
It is not for the hon. Member for Louth (Sir C. Osborne) to decide what my priorities are. I could make another speech about my priorities. I dealt only with the points raised by the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter).
This is true, but the right hon. Lady made a great plea about spending money on socially desirable causes. I am pointing out that this Vote gives extra money to the Arts Council so that the well-to-do middle class might enjoy opera and ballet at cut prices, while the sons and daughters of working class people are denied free milk in secondary schools. I am sure that the right hon. Lady would not agree with that. Therefore, my criticism is valid.
Mr. Peter Jay, the Economics Editor of The Times—and he comes from a very good stable across the way—wrote from Paris last week—and I commend
what he wrote to hon. Members opposite—as follows:
A Budget increase in taxation of £450 to £800 million, or equivalent measures to restrain consumer demand
—that means to reduce the standard of living of our people. It is a nice way of putting it without frightening them with the brutal truth—
was urged on the British government at this month's meeting of the O.E.C.D.'s key working party No. 3, which is the free world's inner economic Cabinet. A consensus of British creditors favours the upper end of range.
If that is so, it means that the Chancellor of the Exchequer tomorrow has to take £800 million more from the people because we are recklessly spending money before deciding whether we are getting value for it.
This Vote on Account would have gone through on the nod but for our protests. Votes on Account ought in future to be examined much more closely, at greater length, earlier in the year, and not left like this. I protest most strongly at the attempt to get this Vote on Account through the House on the nod.
The hon. Member for Louth (Sir C. Osborne) very often talks good sense when he is not trying to do a propaganda stunt for his party. As a person who is accustomed to dealing with finance, he does himself less than justice when he deals in the way he has just done with a problem that he purports to examine. He mixes up national expenditure and Government expenditure, and gets quite confused. He is so anxious to prove that public expenditure is wrong that he shuts his eyes to everything else that is going on.
He is right to say that public expenditure should be examined critically. The Estimates Committee, on which hon. Members of all parties serve, does that in a businesslike way without introducing any party distortion at all. The Public Accounts Committee works in exactly the same way. Only on the Floor of the House do we get this party distortion of the national financial facts.
It is right to say that, roughly, we divide our national expenditure into three sections: what we consume personally, what is spent for us by the Government, and what is spent in planting the seed corn—providing capital for the future. The hon. Member is quite right in saying that when we are only earning £1 we cannot spend 23s. It turned out when we took office that we were spending £800 million more than we were earning which obviously meant that spending had to be reduced in order to come within our income and production. That is simple economics.
There were three ways in which that could have been done. We could have stopped capital expenditure on building electricity stations, exploring for gas in the North Sea, making roads and redesigning the railways to give us modern transport. We could have left undone all those things as we had to just after the war. That may be the hon. Gentleman's policy but, if it is, he should say quite definitely that he wants the country to become a backwater. We are failing in this country because every American has about three times as much electricity and power behind his elbows as we have. The hon. Member's party objects to more electricity stations, objects to bringing the country up to date technologically, because that would be public expenditure. If those things were being done by his big capitalist companies, the hon. Gentleman would not have the slightest objection, but because it is done by the public he objects. That is economic nonsense. Whether it is done by the public, by I.C.I. or Unilever, it is still national expenditure. If it is done to develop the country's efficiency it ought to be spent by the Government, if that is the most efficient way of doing it.
It is true that we could save about £1,000 million of Government expenditure by turning the National Health Service over to private enterprise. That would cut Government expenditure, but it would increase national expenditure because the doctors and the druggists would expect to get more. Because it is run meanly though skilfully people complain about the National Health Service. In New York the other day there was a scavengers' strike and rubbish was heaped up in the streets. That was a saving of public expenditure because the scavengers did not have to be paid. People would have paid pounds to have their rubbish removed in a day. Dollars would have poured in for that purpose.
In our country public expenditure for removing rubbish, providing sewerage and cleaning the streets can be done for 8½d. per week per family. Does the hon. Member know of any private enterprise organisation which would do that? Every family in my country gets clean water for cooking, washing and everything else for 6d. a week. We send bottles of it to America where they pay more than 6d. a bottle for it to be drunk with whisky. If there were no public water supply the hon. Member would find it a difficult job to go out and get pure water from the rivers. He would not then have time to talk such rubbish. People talk about public expenditure as if it had something to do with smallpox; it is quite ridiculous.
Another way to cut down expenditure, is to cut the services which this House of Commons has decided are services we want, and to cut the number of people who provide those services. At a meeting of farmers I addressed I was asked if the Secretary of State could not get rid of a lot of civil servants. They had been reading some Tory speeches. I said, "That is a good idea." If farmers would stop sending in forms asking for subsidies. We could get rid of a thousand civil servants right away, but if farmers are to be paid subsidies of course we must have people to deal with them." It is no use talking about cutting public expenditure unless we say what we are to cut.
There may be a lot of waste in expenditure but it is for someone to show the administration anything that is wastful. Then it should be cut out, I agree, but hon. Members should not pick on these things in order to show that something is going wrong. If, however, this public expenditure is necessary, and it is necessary to have capital expenditure to bring the country into the scientific age as quickly as possible, the other place where we can cut is private expenditure and personal consumption. Of course this has to be done. Our Government got into a lot of trouble because they spent too much too soon.
If the hon. Member listens he will better understand. When the Government came in they had made promises, as the party opposite had made promises, based on a 6 per cent. increase in production. We never got the 6 per cent. increase in production, but we carried out the programme. The trouble was that that should have come only through a reduction in private expenditure and in personal consumption. We did not ask people to give up their motor cars but to wait for a wee while before buying a second car. That is cutting down private expenditure. The private sector wellbeing has gone up by leaps and bounds, even under this Government. It ought not to have gone up so quickly.
The Government have tried to get voluntary restraint so that old-age pensioners could receive an increase whilst others went without; but people were not prepared to go without so that old-age pensioners could have an increase. Wages, salaries, dividends and other forms of income rose whilst we were trying to do a public service, with the result that national spending rose and we were spending 23s. and earning £1.
The hon. Gentleman did not tackle it in that way. When it came to dealing with how it was to be cut out, we heard all the Tory propaganda about the huge scale of Government expenditure, not about matters being conducted in a businesslike manner. I believe that the proper way is not to allow private expenditure to go on increasing at the expense of social essentials. I am not a war-like person, but I believe that it is disgraceful that private people whose personal consumption is increasing are not prepared to part with a penny to provide the men we ask to fight for us with the tools to do the job. The Government of which I was a member decided that never again would we ask men to go into the Army without the proper tools to do the job. We are now subjected to this close scrutiny of public expenditure, with the result that everything has to be pared and the lives of those in the Services are endangered because people insist on having more motor cars, more enjoyment, and greater personal consumption. This is not sensible behaviour.
We all know what the Tory Party does when it comes to cutting private expenditure. Whenever the ship is sinking, it is the women and children who go overboard first. This has always been so. Instead of charging people for enjoying themselves, the Tories believe in charging people for being ill. This is a terrible thing, but we also are having to do it, not because we want to, but because the Conservatives have pampered to the hankerings of international financiers by screaming about prescription charges and about Socialist waste in the National Health Service.
The first task facing the Labour Government is that of getting the country into a state of solvency. They cannot do that if Members seek to foster the campaign of Tory M.P.s who seek to show that Britain is spending its money wastefully. Winston Churchill told America that we were squandering the American loan. No British statesman ever committed a greater act of treachery. That was disgraceful, but hon. Members opposite recently have been conducting themselves in like manner.
The Leader of the Opposition has been making speeches which have been causing dismay and despondency amongst our friends throughout the world. He has asserted that the Labour Government are bringing Britain to ruin. No one objects to public expenditure being examined, but we want honesty and patriotism when that is being done. Hon. Members opposite should not seek to score party points at the expense of Britain and her solvency. In a time of crisis, such as we had yesterday, hon. Members opposite should forget party propaganda for a little while and do something to help the nation to regain world confidence.
The right hon. Member for East Stirlingshire (Mr. Woodburn) was not justified in claiming a monopoly of honesty and patriotism. That is not the way to approach these great problems.
I want to make a few points on the Defence (Central) Estimate. The personnel figures for Defence (Central) are set out under that heading in Appendix 1 of the Defence Estimates. The problem is that there has been a certain amount of interchange of Estimates between the Headquarters of Defence (Central) and various headquarters of the Army, Navy and Air Force. This makes it difficult to follow what has happened and what is the real situation regarding expenditure on this topic.
I was privileged to be a member of an Estimates Committee which reported on the Treasury Control of Establishments in 1964. The right hon. Gentleman spoke of the advantages of the Estimates Committee which ensures that there is not too much party-political discussion on these matters, so I am sure that he will be interested in the recommendation number 6 of that Committee in 1964. It reads:
A specific inquiry should be undertaken Into the establishments of the reorganised Ministry of Defence as soon as the transitional period is over but certainly within two years.
The Treasury's observation thereon was:
This recommendation is accepted. The Treasury wish to point out, however, that the increase of 312 in the headquarters staff of the Ministry of Defence referred to in the Committee's report referred only to an increase in part of the staff; that this increase was to some extent offset by reductions in other parts of the headquarters staff; and that the net increase in the total headquarters staff as estimated at that time was 70. They wish to emphasise that within a unified Ministry the headquarters staff must be regarded as a single whole.
The point I make now is that we have separate debates in regard to the Army, the Navy and the Air Force and we have this separate debate also on the Central defence headquarters. It was said by the Treasury that the total headquarters staff would be reduced by about 300. That being so, it is impossible to find out what the position is because of the changes in the published estimates. The Treasury went on to say that
the organisation and establishments of the Ministry of Defence must be under continuous examination. Machinery specifically designed for this purpose is already built into the Ministry and is operating now. This process will not conflict with the specific inquiry recommended by the Committee.
That was four years ago. When we debated the matter thereafter, the Financial Secretary said:
In regard to the specific inquiry recommended by the Committee, we think that it would be premature to put that in hand since the new organisation has been in existence for less than a year, but we intend to hold that
inquiry within the two-year period."—[OFFICIAL REPORT, 23rd February, 1965; Vol. 707, c. 289.]
Has that inquiry been held? If not, when will it be held, or shall we get into the position where Estimates Committees can spend some time discussing these matters and yet nothing is done? It is particularly important that it should be done, because neither my ingenuity nor that of others can find a way of discovering under exactly what Service Vote the particular expenditure and number of people employed is placed. In the Vote on Account little asterisks appear every now and then which refer to a note that:
Figures have been adjusted for transfers between Votes for purposes of comparison with 1968–69.
but that is quite inadequate to trace the number of personnel involved. This is very important, for the number of people concerned is considerable. The Estimates Committee thought it proper that there should be a reduction, a reduction was promised, and since then nothing has happened, so far as I know.
I should also like to mention the situation concerning the island of the Seychelles in the British Indian Ocean Territory, referred to on page 9 of the Central Defence Estimates. I do not understand what has been happening here. We find that a promise has been made by somebody that £.6½ million will be spent on an air strip that has not been started, but it is denied that it has anything to do with defence. That was the answer I received the other day when I questioned the Commonwealth Affairs Department, and I was also told that the contracts had not yet been concluded. But I see in the Defence Estimate an item of £600,000. Perhaps I was wrong, but I thought that the British Indian Ocean Territory defence project was one of those things that seemed to be good at one time, but turned out not to be good and was dropped completely. In any event, I presume that the Seychelles was not a place that ever could be used for defence purposes. Figures like that require some investigation. It is a peculiar thing that about three Ministries have become involved, and it is almost impossible to get a coherent answer.
I sought to intervene when the right hon. Lady the Member for Lanarkshire, North (Miss Herbison) was speaking about legal aid and Dr. Savundra. It is very important that it should be realised that there are two kinds of legal aid. With the first, the amount of contribution for civil cases is recommended after application to the Supplementary Benefits Commission. But there is a second kind of legal aid which requires a great deal more consideration to be given to it, and that is the legal aid that is given in criminal cases. In criminal cases the person who receives legal aid probably receives it at the same rate as the prosecution, but that does not apply in civil cases. In civil cases there is a deduction so that something comes back to the legal aid authorities if the case is won.
The main point I want to make is that we shall frustrate our Estimates Committees' inquiries if the result of a recommendation which on two occasions has been accepted and adopted by the Treasury is not carried through so that we can know the answers.
I hope that the hon. Member for Aldershot (Sir E. Errington) will forgive me if I do not follow his argument. He gave a very serious examination to the Estimates, as a member of the Estimates Committee.
I am drawn to my feet by the extraordinary speech of the hon. Member for Louth (Sir C. Osborne). We all enjoy his speeches, but he seems to me to be symptomatic of what I have always called "The English Disease". I was brought up to understand by business acquaintances that I should aim at the highest domestic personal expenditure and standard of life that I could reach and set out to earn it. Too much in this country today, in the examination of costs, both in private enterprise and in Government Departments, there is the setting of a figure and the assumption that it is the minimum figure that can be accepted, and then we get everybody else to meet that plateau of costs.
We get this sort of thing in industry. It has probably developed since 1938. When manufacturing associations discover that their industrial costs are rising at a certain rate, instead of using every dynamic they can to increase the efficiency of their plants to cover the cost and to get a profit, they get together and put up the price to the consumer. Over the past 30 years there has been a tremendous lack of drive in all branches of industry and commerce for higher proficiency in plants through new capital equipment or the most efficient use of labour because there has been an easier way out by the inflationary process of putting up the price. This attitude is spreading throughout the country.
On the Estimates Committee and the Public Accounts Committee we all do our jobs to the best of our ability. We examine expenditure as closely as possible. We examine witnesses. I have never seen party politics brought into the Estimates Committee. I have seen Conservative, Labour and Liberal Members acting objectively, most efficiently and effectively, surveying every £ spent, and they have done their job well. But I have always had a feeling—it was the same in the industrial enterprise I used to be in—that it is much easier to get agreement between bodies to put up the prices of products than to make the intellectual and technical effort to get greater efficiency in production.
When hon. Members opposite, including the hon. Member for Louth, criticise national expenditure in this form, they are doing their proper job. We are here to examine expenditure and to criticise it if we think that there is any waste, if we think that it is inefficiently planned or if we think that we are not getting value for money. That is the right thing to do. But if we are satisfied as a Committee, if we report to the House that this is a justifiable expenditure, it is our duty politically to tell the people that it is justifiable. All these Estimates have gone through the Committee. It has reported to the House and recommendations have been made to the Department of State. Generally speaking, over the whole field there is general agreement by the Estimates Committee and the Public Accounts Committee except in a few instances.
That may well be so, but, taking it year by year, the Estimates go through the Committee. Of course we cannot do the whole lot in one year but, year by year, we take them all. Departments and their expenditure are examined and usually, when the Committee reports, a large slice of the Estimates has been agreed by the Committee. There has then been detailed criticism here and there but, in general, the House has approved.
Parliament itself, on both sides, has year after year approved the general level and the rising level of expenditure. Under the last Government the Estimates were criticised objectively on both sides. Hon. Members opposite have made efficient criticisms, quite rightly. But, generally speaking, Parliament has approved the Estimates brought before it. This general approval arises because of the climate in the country that it is easier to put up the price of the product to the consumer, and to put up the price of Government to the consumer in the form of rising taxes, than to create higher efficiency. That is the attitude in the country. To trade unions, trade associations and marketing organisations, it appears much easier to raise the price of the product than to make a serious effort to get higher efficiency. For a long time I have felt this to be one of the grave weaknesses in British industrial life.
I am glad that the hon. Member for Louth is back in the Chamber. I understand something of his point of view, but I agree that he gets personal consumption expenditure mixed up with expenditure on capital account. They are two different things and perform two different purposes. The Conservative Party over the years have agreed to sponsor capital expenditure—that is, the circulation of money through channels which will increase productive effort and resources—and at the same time to subsidise consumption to the low income groups and all sorts of needy people. So we have, flowing and recirculating in the community, money which goes to subsidise people who cannot get enough by earning and money through productive processes which, we hope, will increase productive efficiency.
I agree. The function of the Opposition is to oppose. I think that we did it more effectively than do the Conservative Party, especially our Scottish Members.
The hon. Member for Louth referred to spending 23s. when we are earning only 20s. He said that we should not spend money until we earn it. He said that we should tell the people that it costs 23s. a head to provide them with educational resources, the police force, pure water supply, defence and so many other things and that we must say, "This is what you have, and you will have to earn it."
I was saying that I would prefer the hon. Gentleman to campaign not for cutting expenditure in all the infrastructure down to the 20s. level, but for a greater effort to be made in industry so that we could find the 23s. I want industry not to cut down the quality of the product, but to tell workers and managers to be more efficient so that prices can be maintained while quality is improved. I want more public expenditure and more amenity. I want more art galleries and more social services, but I want a hard-working, industrious, technological community which will enable us to do that. I agree that if those things are not done, we shall be heading for bankruptcy. I do not want the Government to stop spending money on these services. I want the Government to tell industrialists and workers to get cracking, to be more efficient and to employ labour more efficiently, so that all these services will not be a burden.
As the hon. Member for Worthing (Mr. Higgins) said, this is an unusual occasion. He said that he had researched as far back as 1945 and had not found another occasion on which a Vote on Account had been debated. I am grateful to the Opposition for giving me this opportunity, and I hope to remove many misconceptions about the control over Supply expenditure, the control over public expenditure, and the Government's intentions.
It is noteworthy that there has not been a debate in all those years, and one should inquire the reason. It is that this has not been regarded as an occasion for challenging any of the Estimates. This is the occasion when the Government ask purely for a payment on account so as to cover the period between the end of their last authority and the start of their next, a period of approximately four months. I do not agree that this is petty cash. To my mind it is substantial expenditure, for which I am responsible.
I must remind the House that there is every opportunity, on Supply days and other occasions, to examine any and all of the individual Estimates. We are well served by the two Select Committees, one chaired by the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) which examines the expenditure which the Government incur, particularly in relation to getting value for money. This is the occasion to look broadly at the situation rather than at any detail. If in the time available I am unable to answer all the detailed questions, I hope that it will be understood that there is ample opportunity for that kind of detailed examination, quite apart from the continuing work done by the Committees.
It has been complained that this Vote on Account is unusually large. I shall deal with that complaint, because the purpose of the debate is to examine requests for payment in general terms and to ascertain whether the scale of magnitude is reasonable.
I want to put into context the questions about the size of the Vote. I suggest that the Vote is valuable in terms of the control of expenditure by the House and its Committees and that this is where its value ends. I suggest that we are not serving ourselves well in terms of controlling public expenditure, which is what really matters, by having this kind of a series of cheques drawn by the Government—one's cheques must always be given authority—examined and misleading the House into believing that, by doing that, a real examination of the Government's public expenditure policies is taking place.
It is because I am anxious for more examination and, as every Treasury Minister must be, for more help in finding alternatives and more constructive criticism to achieve the same objective more cheaply that I shall speak somewhat critically of the Vote on Account, because I am anxious to get a better system and not because the present system rests heavily on my shoulders—far from it.
I will deal first with the size before referring to the nature of the Vote. It is a large increase compared with last year—10·7 per cent. The figures include certain items previously carried on the Consolidated Fund—there has to be a minimal adjustment for that—but the increase is still 10 per cent., which, at constant prices, is approximately 61 per cent.
These are large figures. Let us consider why. Certain items stand out immediately and are included because cheques have been drawn. If any hon. Member suggests that one can find out exactly how one has conducted one's affairs over the year in any economic sense by making a list of the cheques drawn, I would say that he has made a great mistake.
He will distinguish between cheques drawn for current and those for capital expenditure, for payments or repayments of loans, and wonder whether payments to his wife were current or capital expenditure. If she in her turn spent them, that is current expenditure, while if she saved them, it is capital or savings. If she does half and half, it is half and half. I remember a speech by my hon. Friend upstairs about curtains which suggested that he was not always sure about these payments at the end of the year—and which husband is? Until one knows, one cannot know the nature of the expenditure.
Therefore, this illustrates from everyone's daily experience the simple fact that a series of cheques means very little in economic terms, as the hon. Member for Worthing asked that I should deal with it. A series of cheques added up and called Civil Expenditure, of which the Vote on Account is a payment on account also means very little, but so far as it has any significance, let us deal with the criticism that it is excessively large. It is a large increase and includes this year several items which immediately make nonsense of such an attempt to compare. It includes the investment grants of £214 million, which replace investment allowances, which were deductions from tax revenue. In any economic assessment these are taken into account not a, expenditure but as a deduction from revenue receipts. It includes also £182 million for the rate support grant. These are the increases which we are talking about.
What has happened there mainly is that instead of the burden of expenditure, of a constant amount of expenditure, being carried by the ratepayer, it has been switched to the taxpayer. But the expenditure itself is unaffected by the switch. However, the Vote on Account shows the increase. There is an increase of £120 million for family allowances, which is to be mainly recovered by the Chancellor of the Exchequer when he addresses us tomorrow, an increase which will be clawed back by the tax system and therefore will represent an increase in taxation.
Therefore, in those three items alone, I have accounted for half the increase and demonstrated that these are cheques, but they are meaningless and totally irrelevant in comparing one year with another.
A much smaller item but which illustrates the point is the Post Office Vote for the B.B.C. and television licence fees. If we increase the licence fee, we increase the Post Office's Vote, because whatever comes in by way of licence fee goes out through the Post Office Vote to the B.B.C. Therefore, the larger the licence fee, the greater the income, and the smaller the net demand on resources the larger the supply account in the Votes. It goes precisely contrary to the demand on resources and demonstrates that to have regard to supply is absolutely meaningless in this context.
I am trying to follow the right hon. Gentleman's argument closely, but if he reads what he has said he will find that it does not make sense. Surely the fact is that if the licence fee increases and the B.B.C. spends more on paying various people and employing more resources, the demand on resources must increase.
I am sure that the hon. Gentleman will listen carefully. I will repeat what I said. I never said one word about the B.B.C. paying more. That is a separate issue. I said that the transaction here consists of increasing the licence fee. If the licence fee were not increased, the constant cost, whatever it is, of running the B.B.C. would have to be borne out of public expenditure. Assuming no increase in cost at all, the very fact—[interruption.] The hon. Gentleman should not import an element which I am not importing into my argument. I am simply demonstrating that the Post Office Vote carries a transfer to the B.B.C. of the licence collected, and the greater the licence fee, the larger the Vote. Therefore, the Vote does not indicate increased expenditure by the Government at all. It indicates additional income to the Government.
That is a minor point. The major point which I wanted to make was that part of the expenditure is accounted for already in the three items which I have mentioned.
Surely the right hon. Gentleman's argument about family allowances is fallacious. There is a true increase in expenditure financed from hypothecated taxation.
I do not think that the right hon. Gentleman would want to pursue that argument. If he thinks about it, it is not such an increase, but if it comes out of taxation, ergo the additional spending power of some families is matched by the reduced spending power of others. If some families spend more others have less to spend.
This is a switch and it does not affect the total demand on public resources. I therefore maintain that this increase is meaningless as a comparison. But if the right hon. Gentleman thinks that it is meaningful as a comparison, I have to deal with the question of whether it is out of line with comparisons which ordinarily occur.
I look immediately to what happened when the right hon. Gentleman's Government were in power and, in addition, to the time when he was Chief Secretary. In the year 1959–60, the payments shown by the Vote on Account increased by 10.8 per cent. One item there was a special item of £100 million of the railway deficit which was transferred to Votes, which had not previously been carried on Votes and is merely another illustration that this is a rather meaningless exercise.
If the right hon. Gentleman thinks that I should make this comparison, I am saying that if we look back we find an exactly comparable period then. It dropped in the following year, because there were no such odd items, to 5·7 per cent. The right hon. Gentleman was then appointed Chief Secretary and he worked well and fruitfully. In the following year, it rose to 8·2 per cent. under his custodianship. In the year after that, it rose to 9·4 per cent. His custodianship then came to an end.
No doubt by a slip of the tongue, the right hon. Gentleman attributed to me the office of Chief Secretary in 1959–60, when, I think he will find, the office did not exist. Leaving that aside, does the right hon. Gentleman appreciate that the comparison which he is making is wholly invalid with, on the one hand, a period when there was slack in the economy and it was the proclaimed policy of my right hon. Friend the Member for Barnet (Mr. Maudling) to produce a measure of reflation, and a period such as the present, when the Chancellor of the Exchequer is suggesting that the most rigid economy is needed?
Having very little time to answer a long debate, I will not attempt to give an answer to the lengthy interruption and speech which has been made yet a second time. The right hon. Gentleman had a full opportunity to make his speech in the first place.
The point which I am making, and which the right hon. Gentleman has not taken on board, is that one can make the comparison. It shows that there is no difference between the kind of rises which occurred under his custodianship and ours but that the comparison is worthless because it refers merely to a series of cheques and not the function of those cheques or the purpose which they serve.
I turn now to the more important part and demonstrate why we cannot rely on the Vote on Account and why the House should concern itself with public expenditure and not with Supply expenditure, which is meaningless and which the Press fully understood was meaningless.
As Press quotations have been given, I will quote only one journalist, Peter Jay, who has been mentioned before and who discussed this matter effectively in The Times. When talking of the Supply expenditure, he said that the figures have no economic or financial significance. He described this in a number of ways and he said:
In countless other ways, 'Voted' cash disbursements misstate the true economic and financial impact of public expenditure. Indeed, the whole system of Supply expenditure is a relic of Parliamentary history and bears no relation to the way in which Government spending is planned and controlled in Whitehall.
He was right.
If any hon. Member is interested in the House having real control over public expenditure, as it should—which is one of the reasons why we are all Members of Parliament and responsible to our constituents—the way to achieve that measure of control is to recognise that Supply expenditure means very little indeed. It is an element in our control but is an out-of-date one. What we should be turning our attention and our minds to is the control of public expenditure.
The reasons are obvious to everybody, because Supply expenditure refers only to central Government expenditure and not to the country's expenditure. It refers to only part of central Government expenditure. Other items are included. It takes no account of expenditure like insurance funds, which are enormous, or local authority expenditure, although it takes account of the expenditure of a contribution by the central Government to local authorities in respect of that expenditure. It is a meaningless exercise, and we have at hand a really meaningful approach through public expenditure—which was started by the party opposite when it published its first document on public expenditure following the Plowden Report and set a perfectly good example following the Plowden Report. We have followed that up ourselves.
The public expenditure figures are turning out as planned, and the cuts have been made, and as a result of cuts having been made we shall be on target in 1969–70, and in 1969–70 we shall be running at a rate of increase in public expenditure of only I per cent. It was slightly above 1 per cent. in the second year during which I was Chief Secretary. We shall be back to that figure of an increase of 1 per cent., and we can then decide in the light of those circumstances what is compatible with the growth of the economy at that stage, having achieved our first exercise. It is not right, therefore, to say either that the cuts have not been achieved, or that public expenditure is out of control—it is exactly on control—or that it is out of relationship with that of the previous Government. The previous Government for the last five years had an increase in public expenditure of a little over 4½ per cent. We shall have an increase in public expenditure in our first five years of slightly less than that average rate of increase in real terms per annum.
That is what one has to realise, and to realise what is the political content in some of the speeches which have been made. One has to remember the speeches which have been from the other side recommending an increase in this kind or that kind of public expenditure, promoting this and promoting that, and then when we come to the total we find that there is objection to the total. I have often wondered how on earth right hon. and hon. Gentlemen opposite reconciled their criticism of the total of expenditure with their support of all kinds of detailed items of increased expenditure. Of course, one can get popularity for supporting individual items. Then they realise, in relation to tomorrow's events, that that total has to be paid for, and it is the paying for it which hon. Gentlemen opposite, particularly the hon. Gentleman the Member for Louth (Sir C. Osborne), object to.
What every sensible society has realised is that what an individual wants mostly is provided by the community. It is much cheaper—[HON. MEMBERS:"NO."]—it is much cheaper to provide schools, for example, for the community, than that every individual should have his or her tutor. It is much cheaper to provide university education, it is much cheaper to provide hospitals and a whole host of services, it is much cheaper to provide roads publicly than privately—as every frontager on a private road knows only too well.
No. It is not the only way. I will write to the hon. Gentleman to deal with the answer to his question. He asked if the Estimate Committee's Report was being considered. Of course it is being considered. The hon. Gentleman should not feel any anxiety about that.
The Vote on Account we are considering is not abnormal, and the explanations of it are simple to everybody who has read and understood it. It is a document which does not mean a great deal, and means practically nothing in relation to public expenditure. Public expenditure is under control, it is on target, and it is something of which the House approves as a sensible way of providing the social wage. It is a method of redistribu-tion—