Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 12th March 1973.

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Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford 12:00 am, 12th March 1973

Perhaps I should make a good auctioneer. Although the National Plan was thrown out of the window, the public spending plans of the previous Government were not. I take the figures from the Labour Government's last public expenditure White Paper of December 1969. They knocked up annual increases of 6·7 per cent., 6·6 per cent. and 9 per cent. in three successive years between 1965 and 1968. That, as the House will appreciate, was considerably higher than even the two years, 1973–74 and 1974–75, which represent the hump in our five-year programme.

I shall go further. If the National Plan projection had been on the same basis as our 2½ per cent., the figure would have been no less than 5 per cent. per annum—that is twice the rate which we are now planning. Perhaps I can leave the right hon. Gentleman and the editor of The Times to pursue their researches together in unaccustomed harmony. I only hope that next time they manage to agree—and it does not happen very often—they will do so with greater regard for historical accuracy.

I now turn to the recent report of the Select Committee on Expenditure. The report, published last month, contained much more specific criticisms related to the two years 1973–74 and 1974–75. These criticisms can be briefly but I hope accurately summarised as follows.

First, since last year's White Paper there have been large additions to planned expenditure not only for 1972–73 and 1973–74 but for later years as well. The committee said that that was not what it had been led to expect last year. It is right to point out that it is referring not to evidence which it was given but to a statement in one of its previous reports.

Second, although evidence by Treasury officials suggested that the additional programmes were justified on the grounds that there was room for them in the first year of the period 1972–73 and again in the last two years 1976–77, the committee said that By implication at least the Government ignored their likely impact on the crucial intervening years 1973–74 and 1974–75. That, the committee said, was contrary to the principles of orderly planning.

Thirdly, as a consequence of this, the committee said that the Government will have to restrict the growth of personal disposal incomes and consumption to a rate of 2½ per cent. between now and 1974, which is significantly below the rate of growth of total output.

The House will recognise that these are serious criticisms. If they were true they would lay the Government in general, and the Treasury in particular, open to censure. However, I must tell the House that in my view, and that of the Government, the committee has been less than fair either to itself, to its witnesses or to the Government.

I hope that the House will bear with me for a few moments while I seek to justify that view. I start with what I hope will be common ground. There has been no serious doubt cast—and certainly none cast by the Select Committee—on the acceptability of the Government's spending programmes in the medium term. Table 1.2 of last December's White Paper, which I explained at some length in the debate on the White Paper of 7th February, demonstrates in particular that on any reasonable assumptions about the growth of GDP our public expenditure programmes over the whole five-year period are consistent with an acceptable rate of growth of personal consumption after the requirements of private investment and the balance of payments have been met.