Public Expenditure

Part of the debate – in the House of Commons at 9:31 pm on 21st April 1982.

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Photo of Mr Barney Hayhoe Mr Barney Hayhoe , Hounslow Brentford and Isleworth 9:31 pm, 21st April 1982

This is the first time that I have been privileged to intervene in a Treasury debate. I am grateful to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) for his courteous welcome to the distinguished group of people who participate regularly in these interesting debates. As he and my right hon. Friend the Member for Worthing (Mr. Higgins) said, this is the third go, because we have had the Budget, the debate on the Second Reading of the Finance Bill and now, out of turn this year, the debate upon the public expenditure White Paper. When I was young we used to have a hot roast for Sunday lunch, cold meat on Monday and Tuesday and on Wednesday and Thursday we had shepherd's pie. I can only assume that this is the shepherd's pie debate of this year.

This debate has been wide ranging, from the highly technical comments made by my right hon. Friend the Member for Worthing to savage criticisms of the Government's policy. I make no complaint about that because it is the essence of our parliamentary process that such complaints should be made. I shall seek to respond to them in the time available to me.

The right hon. Member for Stepney and Poplar (Mr. Shore) referred to the cost implications for the defence budget of the operation in the Falkland Islands. The right hon. Member for Ashton-under-Lyne became very excited at the prospects for defence spending. It is not possible at this stage to assess the total cost of the Falkland Islands operation. However, as the Government have made clear in the House and elsewhere, while there is no cash ceiling on the cost of the operation, it will be met in ways that are consistent with the Government's economic strategy. [HON. MEMBERS: "What strategy?"] The significance of that may escape those who have no strategy and no consistency, but my right hon. and hon. Friends will understand the significance.

Additional expenditure arises only when the cost of the operation proves to be more at the margin than the cost that would be assigned to the forces and individuals if they were engaged in other duties. At this stage, the extra cost represents a small proportion of the defence budget. As we have increased the defence budget from £7½ billion, which we inherited in 1978–79, to over £14 billion, even a 1 per cent. increment on that overall budget amounts to £140 million, which, on estimates that have been made, is well above the costs that have been incurred at this stage.

It has been suggested that our ability to respond to the Falkland crisis, or others like it, has been weakened by the Government's so-called cuts in defence spending. That is complete nonsense. The figures speak for themselves. This year we are spending £½ billion more in real terms on conventional naval forces than was spent in the year before we came to office. The conventional Navy still enjoys, and will continue to enjoy, as high a proportion of the defence budget—28 per cent.—as it did in that year. The current programme of modernisation and rebuilding will leave us with more ships and submarines operational in 1985 than today. Such good results flow from the Government's deliberate decision to give defence spending the priority it was previously denied.

The right hon. Member for Crosby (Mrs. Williams) referred to overseas broadcasts. They have been stepped up to the Falklands and to Latin America. Her more general comment is a matter for my right hon. Friend the Foreign Secretary.

The form of this year's White Paper has been widely welcomed. It uses a cash basis instead of funny money and that has found general support. Many right hon. and hon. Members are concerned about there being no effective way, as they see it, of making comparisons, particularly about the level of future spending. My right hon. and learned Friend the Chief Secretary has undertaken to examine all those matters in the light of the Select Committee's comments and of today's debate.

My right hon. Friend the Member for Worthing raised another important, highly technical matter about Bank of England funding operations and the purchase of commercial bills. I shall write to my right hon. Friend about that because it is a matter of considerable complexity.

The right hon. Member for Stepney and Poplar and others referred to housing. They pointed, as they were entitled to do, to the declining level of starts under this Government. They neglected to point to the more sharply declining level of starts that occurred under the Labour Administration. Perhaps that is understandable. They did not appreciate the substantial underspend by local authorities last year. With receipts from council house sales, the gross amount available for new housing investment in 1982–83 is about £3 billion. In cash terms, that is about 15 per cent. more than the amount available in the last year of the Labour Administration.

The right hon. Member for Crosby referred to housing improvements. She will recall, although she did not have the grace to refer to it, that the Chancellor, in his Budget, increased the amount available for housing improvements. I hope that the money will be fully taken up by individuals and local authorities.