Control of Government Borrowing

– in the House of Commons at 12:00 am on 25th May 1976.

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9.13 p.m.

Photo of Mr Ian Gow Mr Ian Gow , Eastbourne

I beg to Move, That leave be given to bring in a Bill to ensure effective parliamentary control of Government borrowing. There is widespread concern inside and outside Parliament about the extent to which the Executive is no longer subject to effective parliamentary control. Nowhere is this dangerous trend more obvious, and nowhere more welcomed by the Government, than in the Treasury.

Section 12 of the National Loans Act 1968 provides that the Government may borrow any money that they require in such manner and on such terms and conditions as the Treasury think fit and without the approval of this House. Subsection (3) goes on to state in the clearest terms: For the avoidance of doubt it is hereby declared that the power to raise money under this section extends to raising money either within or outside the United Kingdom and either in sterling or any other currency or medium or exchange, whether national or international. Effective parliamentary control over the Treasury, with its star-studded cast of faceless double firsts—and with Lord Kaldor, as special adviser to the Chancellor of the Exchequer—is desirable at all times. But the case for the House to have control over Government borrowing has never been stronger than it is today.

Between 31st March 1966 and 31st March 1976 the total public sector debt rose from £38,000 million to £70,000 million. In those 10 years, therefore, public sector debt virtually doubled—an increase of £32,000 million in that decade. In the 10 preceding years, from 1956 to 1966, by contrast, public sector debt had risen by only £6,000 million. The figure for interest on the public sector debt increased from £1,592 million in 196667 to an estimated £6,200 million in the current year.

Even if that estimate turns out to be right—and all the signs are that the figure is too modest—the amount of interest on Government debt will have almost quadrupled in 10 years, while the amount of the debt itself has nearly doubled. The Chancellor of the Exchequer told the House during his Budget Statement on 6th April that he was proposing this year to borrow £12,000 million.

Photo of Mr Ian Gow Mr Ian Gow , Eastbourne

My hon. Friend may well say "Too much". That is £1,000 million a month, £250 million a week, £35 million a day, £1⅓ million an hour, £22,831 a minute, and £381 a second. That is what the Government are borrowing, and all this without so much as an affirmative resolution from the House.

If this Bill were to become law, the Government would have to come back to the House for authority to borrow for each tranche of £500 million, in the same way that parliamentary approval is required for the borrowing by the nationalised industries, or for money for the National Enterprise Board.

In his rather discreditable letter to the Chairman of the International Monetary Fund on 18th December last, the Chancellor of the Exchequer wrote as follows: An essential element of the Government's economic strategy will be a continuing and substantial reduction in the public sector borrowing requirement. Alas, events have falsified those brave words. On the contrary, even since December of last year the Government have been proposing to borrow even more.

In his ministerial broadcast on the same day that he was appointed Prime Minister, on 5th April the Prime Minister, speaking as First Lord of the Treasury as well as Prime Minister, said: We are still not earning the standard of living we are enjoying. We are only keeping up the standards by borrowing, and this cannot go on indefinitely. The tragedy is that, despite the promises of the Chancellor of the Exchequer and of the Prime Minister, the borrowing goes on—and it goes on without the consent of Parliament.

This escalating burden of Government debt is the prime cause of the continuing decline in the exernal value of our currency. No amount of talk by the Chancellor of the Exchequer about an economic miracle, no so-called deal between the Government and the unions, no anodyne statements from the TUC-Labour Party Liaison Committee, will result in a revival of foreign confidence in sterling. An essential prerequisite of that revival is a dramatic reduction in Government expenditure, a return to a balanced Budget and an end to living on tick.

This Bill has a twin purpose. It is to re-asssert the supremacy of the House of Commons over borrowing by the Treasury, and it is an attempt to halt the disastrous slide towards national bankruptcy which borrowing on this scale inevitably involves.

9.20 p.m.

Photo of Mr Ronald Thomas Mr Ronald Thomas , Bristol North West

I rise to oppose the Bill. The speech of the hon. Member for Eastbourne (Mr. Gow) reminded me very much of the speeches of either Pitt or Gladstone—on reflection, pre-Gladstone—and it would have been relevant in the age in which, we understand, they used to count up the ends of the candles before the Chancellor went home in the evening.

The terms of the words on the Order Paper talking about "effective parliamentary control" are really a cloak to attack the level of the public sector borrowing requirement and, behind that, I suspect, to attack the level of public expenditure. That is what the Bill is all about, so let us be quite clear. Indeed, the hon. Member spent most of his time talking about the PSBR. He suggested that the level of the PSBR was responsible for the recent speculation against sterling. Yet a number of our competitor countries have a similar level of PSBR as a proportion of their national income and they are not subject to such speculation against their currencies. I suggest that hon. Members should check the currencies of the United States, West Germany and one or two other countries.

Secondly, there was no mention of the fact that a considerable proportion of public expenditure goes on capital investment in the publicly owned industries. Almost half of the gross domestic capital formation is in the public sector. When Imperial Chemical Industries decides that it wants to borrow £200 million for new capital investment, Opposition Members all cheer. However, if we borrow £200 million, or whatever, to meet the capital investment requirements of the publicly owned industries, they say that that is all wrong.

Furthermore, the hon. Gentleman did not mention the indefensible capitalist system in which we live, in which we are paying out between £3,000 million and £4,000 million to keep 1½ million people unemployed. That is a very important chunk of the PSBR. When the hon. Gentleman spoke of the PSBR he forgot to mention, of course, the interest on it. That argument has also been used by the Opposition Front Bench. But we know that a great deal of the interest payable on the PSBR comes back in taxation of one kind or another—and some of us think that it should be a lot more.

The Bill, therefore, is an attack on the PSBR and on public expenditure. What Opposition Members want to do is to cut back public expenditure, to increase unemployment, and to cut the social wage—we know that that is about the only thing that unites the Tory Party on these occasions—but of course, they want to spend more on defence.

Labour Members oppose the Bill.

Question put, pursuant to Standing Order No. 13 (Motions for leave to bringin Bills and nomination of Select Committees at commencement of Public Business):—

The House divided: Ayes 172, Noes. 191.

Division No. 154.]AYES[9.24 p.m.
Adley, RobertHayhoe, BarneyPattie, Geoffrey
Aitken, JonathanHeseltine, MichaelPenhaligon, David
Arnold, TomHicks, RobertPeyton, Rt Hon John
Atkins, Rt Hon H. (Spelthorne)Holland, PhilipPink, R. Bonner
Bain, Mrs MargaretHooson, EmlynPrice, David (Eastleigh)
Beith, A. J.Howell, David (Guildford)Pym, Rt Hon Francis
Bennett, Dr Reginald (Fareham)Howells, Geraint (Cardigan)Raison, Timothy
Benyon, W.Hunt, David (Wirral)Reid, George
Berry, Hon AnthonyHunt, JohnRenton, Tim (Mid-Sussex)
Biffen, JohnHutchison, Michael ClarkRidsdale, Julian
Biggs-Davison, JohnJames, DavidRippon, Rt Hon Geoffrey
Boscawen, Hon RobertJohnson Smith, G. (E Grinstead)Roberts, Michael (Cardiff NW)
Boyson, Or Rhodes (Brent)Jopling, MichaelRoberts, Wyn (Conway)
Bradford, Rev RobertJoseph, Rt Hon Sir KeithRoss, Stephen (Isle of Wight)
Brotherton, MichaelKilfedder, JamesRoss, William (Londonderry)
Bryan, Sir PaulKing, Evelyn (South Dorset)Rossi, Hugh (Hornsey)
Buchanan-Smith, AlickKing, Tom (Bridgwater)Scott, Nicholas
Bulmer, EsmondKitson, Sir TimothyShaw, Giles (Pudsey)
Butler, Adam (Bosworth)Latham, Michael (Melton)Shepherd, Colin
Carlisle, MarkLawrence, IvanSilvester, Fred
Carson, JohnLawson, NigelSims, Roger
Chalker, Mrs LyndaLe Marchant, SpencerSinclair, Sir George
Churchill, W. S.Lester, Jim (Beeston)Skeet, T. H. H.
Clark, Alan (Plymouth, Sutton)Lewis, Kenneth (Rutland)Smith, Cyril (Rochdale)
Cooke, Robert (Bristol W)Lloyd, IanSmith, Dudley (Warwick)
Cope, JohnMacCormick, IainSpeed, Keith
Cormack, PatrickMcCusker, H.Spence, John
Corrie, JohnMacfarlane, NeilSpicer, Michael (S Worcester)
Crawford, DouglasMacGregor, JohnSproat, Iain
Dean, Paul (N Somerset)McNair-Wilson, M. (Newbury)Stainton, Keith
du Cann, Rt Hon EdwardMarshall, Michael (Arundel)Stan brook, Ivor
Dunlop, JohnMarten, NeilSteel, David (Roxburgh)
Edwards, Nicholas (Pembroke)Maude, AngusSteen, Anthony (Wavertree)
Elliott, Sir WilliamMawby, RayStewart, Donald (Western Isles)
Emery, PeterMeyer, Sir AnthonyStradling Thomas, J.
Evans, Gwynfor (Carmarthen)Miller, Hal (Bromsgrove)Tapsell, Peter
Eyre, ReginaldMills, PeterTaylor, Teddy (Cathcart)
Fairgrieve, RussellMiscampbell, NormanTebbit, Norman
Farr, JohnMitchell, David (Basingstoke)Thatcher, Rt Hon Margaret
Fell, AnthonyMolyneaux, JamesThomas, Dafydd (Merioneth)
Fookes, Miss JanetMonro, HectorThomas, Rt Hon P. (Hendon S)
Forman, NigelMontgomery, FergusThompson, George
Fowler, Norman (Sutton C'f'd)Moore, John (Croydon C)Trotter, Neville
Fox, MarcusMorgan, Geraintvan Straubenzee, W. R.
Freud, ClementMorgan-Giles, Rear-AdmiralWalder, David (Clitheroe)
Fry, PeterMorris, Michael (Northampton S)Wall, Patrick
Gardiner, George (Reigate)Morrison, Charles (Devizes)Warren, Kenneth
Gardner, Edward (S Fylde)Morrison, Hon Peter (Chester)Watt, Hamish
Gilmour, Sir John (East Fife)Mudd, DavidWeatherill, Bernard
Godber, Rt Hon JosephNeave, AireyWelsh, Andrew
Goodhew, VictorNelson, AnthonyWigley, Dafydd
Gorst, JohnNeubert, MichaelWilson, Gordon (Dundee E)
Gower, Sir Raymond (Barry)Newton, TonyYoung, Sir G. (Ealing, Acton)
Grant, Anthony (Harrow C)Nott, JohnYounger, Hon George
Gray, HamishOnslow, Cranley
Grimond, Rt Hon J.Page, Rt Hon R. Graham (Crosby)TELLERS FOR THE AYES:
Grylls, MichaelPaisley, Rev IanMr. Ian Gow and
Hall, Sir JohnPardoe, JohnMr.Nicholas Ridley
Harvie Anderson, Rt Hon MissParkinson, Cecil
NOES
Abse, LeoBottomley, Rt Hon ArthurConlan, Bernard
Armstrong, ErnestBoyden, James (Bish Auck)Cook, Robin F. (Edin C)
Ashton, JoeBradley, TomCronin, John
Atkins, Ronald (Preston N)Brown, Hugh D. (Provan)Crosland, Rt Hon Anthony
Atkinson, NormanBrown, Robert C. (Newcastle W)Cryer, Bob
Barnett, Guy (Greenwich)Buchan, NormanCunningham, Dr J. (Whiteh)
Barnett, Rt Hon Joel (Heywood)Callaghan, Rt Hon J. (Cardiff SE)Davies, Bryan (Enfield N)
Bates, AlfCampbell, IanDavies, Ifor (Gower)
Benn, Rt Hon Anthony WedgwoodCarmichael, NeilDavis, Clinton (Hackney C)
Bennett, Andrew (Stockport N)Cartwright, JohnDeakins, Eric
Bidwell, SydneyClemitson, IvorDempsey, James
Blenkinsop, ArthurCocks, Michael (Bristol S)Doig, Peter
Boardman, H.Cohen, StanleyDormand, J. D.
Booth, Rt Hon AlbertColeman, DonaldDouglas-Mann, Bruce
Duffy, A. E. P.Jones, Dan (Burnley)Rodgers, George (Chorley)
Edge, GeoffKerr, RussellRooker, J. W.
Ellis, John (Brigg & Scun)Kilroy-Silk, RobertRoper, John
Ennals, DavidLambie, DavidRose, Paul B.
Evans, Fred (Caerphilly)Lamborn, HarryRoss, Rt Hon W. (Kilmarnock)
Evans, Ioan (Aberdare)Lamond, JamesRowlands, Ted
Ewing Harry (Stirling)Lewis, Ron (Carlisle)Sandelson, Neville
Faulds, AndrewLitterick, TomSelby, Harry
Fernyhough, Rt Hon E.Loyden, EddieSheldon, Robert (Ashton-u-Lyne)
Fitch, Alan (Wigan)Luard, EvanShore, Rt Hon Peter
Flannery, MartinLyons, Edward (Bradford W)Short, Mrs Renée (Wolv NE)
Fletcher, Raymond (Ilkeston)Mabon, Dr J. DicksonSilkin, Rt Hon S. C. (Dulwich)
Fletcher, Ted (Darlington)McCartney, HughSkinner, Dennis
Foot, Rt Hon MichaelMcElhone, FrankSmall, William
Fowler, Gerald (The Wrekin)MacFarquhar, RoderickSmith, John (N Lanarkshire)
Freeson, ReginaldMcGuire, Michael (Ince)Snape, Peter
Garrett, John (Norwich S)Mackenzie, GregorSpriggs, Leslie
George, BruceMackintosh, John P.Stallard, A. W.
Ginsburg, DavidMaclennan, RobertStoddart, David
Golding, JohnMcMillan, Tom (Glasgow C)Stott, Roger
Gould, BryanMcNamara, KevinStrang, Gavin
Gourlay, HarryMadden, MaxSummerskill, Hon Dr Shirley
Marshall, Jim (Leicester S)Taylor, Mrs Ann (Bolton W)
Graham, TedMaynard, Miss JoanThomas, Jeffrey (Abertillery)
Grant, George (Morpeth)Mikardo, IanThomas, Ron (Bristol NW)
Grant, John (Islington C)Moonman, EricTierney, Sydney
Grocott, BruceMoyle, RolandTinn, James
Hamilton, James (Bothwell)Mulley, Rt Hon FrederickTomney, Frank
Hardy, PeterMurray, Rt Hon Ronald KingUrwin, T. W.
Harper, JosephNewens, StanleyVarley, Rt Hon Eric G.
Harrison, Walter (Wakefield)Noble, MikeWainwright, Edwin (Dearne V)
Hart, Rt Hon JudithOakes, GordonWalden, Brian (B'ham, L'dyw'd)
Hatton, FrankO'Halloran, MichaelWalker, Harold (Doncaster)
Heffer, Eric S.Orbach, MauriceWalker, Terry (Kingswood)
Hooley, FrankOvenden, JohnWeetch, Ken
Howell, Rt Hon DenisOwen, Dr DavidWeitzman, David
Hoyle, Doug (Nelson)Padley, WalterWellbeloved, James
Huckfield, LesPalmer, ArthurWhite, Frank R. (Bury)
Hughes, Rt Hon C. (Anglesey)Park, GeorgeWhitlock, William
Hughes, Robert (Aberdeen N)Parker, JohnWilley, Rt Hon Frederick
Hunter, AdamPavitt, LaurieWilliams, Alan (Swansea W)
Irvine, Rt Hon Sir A. (Edge Hill)Peart, Rt Hon FredWilliams, Alan Lee (Hornch'ch)
Irving, Rt Hon S. (Dartford)Pendry, TomWilson, Alexander (Hamilton)
Jackson, Colin (Brighouse)Perry, ErnestWilson, William (Coventry SE)
Jackson, Miss Margaret (Lincoln)Price, William (Rugby)Wise, Mrs Audrey
Janner, GrevilleRichardson, Miss JoWoof, Robert
Jay, Rt Hon DouglasRoberts, Albert (Normanton)Wrigglesworth, Ian
Jenkins, Hugh (Putney)Roberts, Gwilvm (Cannock)Young, David (Bolton E)
John, BrynmorRobertson, John (Paisley)TELLERS FOR THE NOES:
Johnson, James (Hull West)Robinson, GeoffreyMr. Dennis Canavan and Mr. Stan Thorne.
Jones, Barry (East Flint)Roderick, Caerwyn

Question accordingly negatived.