Very well. The hon. Gentleman has made the same point twice. Surely he will not now expect me to give way to him again. I have explained to him what the nature of the additional spending is. I have also explained why I believe it was justified in all the circumstances.
I come now to the second leg of the hon. Gentleman's committee's criticism, where the Committee said,
By implication at least the Government ignored the likely impact on the crucial intervening years 1973–74 and 1974–75.
I find it very puzzling to see how, in the light of the evidence it received, the committee could have come to this conclusion. I can only assume that there was some misunderstanding of what the committee's witnesses were saying. The House must remember that Treasury officials were giving evidence to the Select Committee towards the end of January after the date of the Budget had been announced and therefore in the pre-Budget purdah period. The two years in question are the two years covered by the Treasury's normal short-term forecasts and therefore the Treasury witnesses quite rightly felt themselves constrained to silence by the rules of Budget secrecy. The House will recollect that in the public expenditure debate on 7th February I made exactly the same point.
That is not to say that the Treasury witnesses were just content to be silent. On no fewer than six separate occasions when answering questions from the General Sub-Committee about these two matter the leading Treasury witness explained that he could not comment on the points being put to him because of Budget secrecy.
Let me give a few examples. The witness really could not have put his point more clearly. For instance, at question 48 he was asked by the hon. Member for Ashton-under-Lyme (Mr. Sheldon) about personal consumption in the year ahead. Mr. Baldwin replied,
…that question takes us into matters of short-term economic management where we are under some difficulty in giving you useful evidence.
When pressed at question 49, Mr. Baldwin said,
ֵ I cannot take the discussion on budgetary policy which might or might not affect the policy of growth in the next few years any distance.
At question 50 Mr. Baldwin said,
I do find myself in some difficulty because the situation that will arise in the months to come will be affected by the decisions to be announced no doubt on Budget Day. …
The Select Committee did not let go, however, and pressed Mr. Baldwin again at question 52, in reply to which he said,
If I were to say 'yes' to that I would be in a position where it could be said I had forecast the action to be taken on Budget Day, and therefore I am giving no answer whatever.
I could go on and quote other answers, but perhaps I have said enough to make my point. In the light of the six separate refusals for reasons of Budget confidentiality, reasons which I would have thought were well understood by right hon. and hon. Members on both sides of the House, it remains very puzzling how the committee felt able to draw the implication in paragraph 10 of its report that the Government ignored the intervening years 1973–75. Certainly in these circumstances it seems a very slender thread on which to hang the serious criticisms which follow in paragraph 11. This is why I said earlier that I think that the committee has hardly been fair to itself or to its witnesses.
Nevertheless, the committee drew that implication, and on it based the third leg of its attack—namely, that as a consequence of this alleged ignoring of the impact of public expenditure in these two years, there will have to be a sharp cut-back in personal consumption, perhaps to no more than a 2½ per cent. annual increase—significantly below the growth of output.
The committee, in coming to this conclusion, drew on a short-term forecast supplied to it by its specialist adviser, Mr. Godley, itself based on material provided by the Department of Applied Economics at Cambridge. Forecasting is, as the House knows, an uncertain art and I concede of course that there is room for different forecasts.
All I can say is that my right hon. Friend the Chancellor does not accept the Godley forecast. Still less does he accept the conclusions which the committee drew from it. The Government's own forecast is contained in the Red Book, and if the House will refer to Table 4 it will see that we see a different picture from that painted in such sombre colours by the Select Committee. Percentage changes at annual rates are given for all the main components of demand for a variety of 12-month and 18-month periods. In every single case the forward figure for the growth of GDP exceeds the figure for the growth of total public expenditure. In every single case the figure for the growth of consumers' expenditure is over 4 per cent. per annum, significantly above the average of the last decade or so. Indeed, for the period which corresponds most closely to that taken by the committee—second half 1972 to first half 1974—personal consumption at 4·3 per cent. annual growth is only 0·9 percentage points below the growth of GDP.
We therefore reject the committee's conclusion that our public spending over the next 12 to 18 months will constrain personal consumption to a rate significantly below that of total output. It just is not true.
If, as a nation, we accept the discipline of the Government's counter-inflation policy, there is no reason why standards of living should not rise at a rate which is not only satisfactory in itself but would be significantly higher than the average for the last decade.
I must apologise to the House for having gone into this matter in some detail, but I hope that I have gone some way at least to answer the criticisms of the Select Committee and to convince the House that public expenditure is not out of control. In fact the reverse is the case and my right hon. Friends and I are determined that it shall remain that way.