House of Commons Hansard Debates for 8 Nov 1990

Mr. Major : I hope that the right hon. and learned Gentleman will forgive me for saying at the outset that that was an odd response from the shadow Chancellor, who keeps telling the markets that he would spend money only on child benefit and pensions. He produced a litany of areas on which the Labour party clearly thinks that it

Column 125

would be wise to spend a lot more money. [Interruption.] The right hon. and learned Gentleman is clearly sensitive about the deep split between himself and the shadow Chief Secretary on these matters.

Let me deal first with the questions that the right hon. and learned Gentleman asked. He made a point about recession. He used the word in the way most calculated to alarm--[ Hon. Members :-- "Answer the questions."] I will come to the specific points in a moment. The right hon. and learned Gentleman's use of the word recession conjured up an image quite different from the reality of what is happening or is expected to happen in future.

It is perfectly true that output will decline for a brief period during the second half of this year--

Mr. John Smith : And the first half of next year.

Mr. Major : --and during the first quarter of next year, but if the right hon. and learned Gentleman will listen for a moment he will hear, first, that it declines from a very high level. We shall be back into growth next year at an accelerating rate. Inflation will fall, savings will increase, the trade gap will close and investment will be 50 per cent. higher than in 1979. We shall still have more people in employment than any other European nation. It is clear from what is happening and from what I have been able to forecast today that the British economy is coming back on track--that is what the right hon. and learned Gentleman does not like-- [Interruption.] The Leader of the Opposition is occasionally wont to express the view from the Dispatch Box that he is glad that television is here. I hope that it is here at the moment to witness the way in which right hon. Members on the Opposition Front Bench are behaving.

In terms of investment, the past three years have seen both a record rise in total investment and in business investment and I quoted the figures a few moments ago on the difference in 1979. The fall next year will be modest and from a very high level. There is certainly a redirection within the employment programme which is broadly unchanged in cash terms. The Government will be spending more than £2 billion on training enterprise and vocational education. The savings on employment training have been made following a reappraisal of what employment training is delivering and there will be improved job clubs and other facilities as an alternative, and a considerable degree of extra resources and extra choice for training and enterprise councils in future.

The right hon. and learned Gentleman referred to child benefit and the vulnerable. He knows as well as anyone in the House that on each occasion that child benefit was not increased, extra resources were put into child scale rates and income support to more than make up the difference.

There is an increase in the environment budget of about £180 million in 1991-92 for the White Paper policies despite the fact that this is a very tight year for the survey. It is perfectly clear that although at the moment we find ourselves in the most difficult part of the economic cycle, we can now see our way through it and out of it during the course of next year.

Several Hon. Members rose--

Column 126

Mr. Speaker : Order. The House knows that this matter may be discussed in our debate on the Loyal Address specifically tomorrow and again next week. Hon. Members should ask single questions, please.

Sir William Clark (Croydon, South) : Does my right hon. Friend agree that this is a very tight public expenditure settlement and that both he and my right hon. Friend the Chief Secretary to the Treasury are to be congratulated? Although the pundits in the media and the press have been saying that there will be an overshoot of £12 billion on public expenditure, if we ignore the reserves there is an overshoot of only £4.5 billion. Despite our difficulties, more and more money is being spent on capital projects, unlike what happened under the last Labour Government who reduced public expenditure on the national health service and roads. Is not it about time that the Opposition stopped talking down Britain and our economy?

Mr. Major : In his latter remarks, my right hon. Friend asked for more than is likely to be delivered. It is perfectly true that to many commentators this will be a surprisingly tight package. It keeps public spending at £200 billion when many expected larger increases. The share of expenditure in national income remains unchanged when I think that many expected at this stage of the cycle that it might increase. As I said earlier, we still expect a substantial debt repayment in the present fiscal year. It is a tight settlement and it was necessary to be a tight settlement. We will continue to keep tight control of public expenditure.

Mr. A. J. Beith (Berwick-upon-Tweed) : Is not it clear that when we strip away the skilful and ingenious presentation, this statement amounts to cuts in many areas and inadequate investment in the key areas of transport, training and education because the Government must fund the massive inflation that they have caused and also because the Chancellor still has to leave room for the kind of income tax cuts that the Prime Minister keeps talking about without abandoning all semblance of fiscal respectability? Will the Chancellor confirm that the underlying rate of inflation will remain high throughout next year? Will he confirm that inflation minus mortgage interest rates will be high throughout next year? Is not that a serious problem and what is the Chancellor going to do about it?

Mr. Major : I expect underlying inflation also to fall next year-- [ Hon. Members :-- "How far?"] To broadly the level of the headline rate.

With regard to the programmes to which the hon. Gentleman referred, I have already said that something in excess of £ billion is being added to the education budget largely to finance the very dramatic increase in the number of students in higher education. The plans imply at least as much capital spending in schools and colleges next year as in the current year.

As there have been huge increases on transport in each of the last two surveys, the priority on transport this year is the extra almost £600 million mainly for the Jubilee line extension, the east-west crossrail and services for the channel tunnel. It is a very good settlement for public transport, for we are determined to produce an efficient and effective public transport service.

Column 127

Mr. Terence L. Higgins (Worthing) : Although it is very important for the long-term trend of public expenditure to decline as a percentage of national income, does my right hon. Friend agree that the primary role of the rate of interest must now be to keep sterling within the limits of the exchange rate mechanism and that, as a result, fiscal policy has become more important than ever? Against the present economic background, are not the increases in planned public expenditure which my right hon. Friend has announced entirely appropriate if we are to avoid the dangers of recession? In that context, is not the increase in transport expenditure which my right hon. Friend has just announced particularly appropriate?

Mr. Major : I see my right hon. Friend's point. He is, of course, entirely right about the necessity of remaining within the bands in the exchange rate mechanism to which we are committed, and equally entirely right that we will need to keep a very firm control of the trend rate of public expenditure in future years.

Mr. Robert Sheldon (Ashton-under-Lyne) : May I press the Chancellor further on the underlying rate of inflation? When the underlying rate was less than the RPI, the Government made a great deal of it. Now that it is likely to be more than the RPI, may we have his forecast of the underlying rate of inflation, excluding mortgage interest, at the end of next year, the fourth quarter?

Mr. Major : As the right hon. Gentleman knows--he is a very distinguished former Treasury Minister--the underlying rate of inflation has never been published, for perfectly understandable reasons.

Mr. Charles Wardle (Bexhill and Battle) : What happened to my right hon. Friend's forecast last year for the surplus on invisibles and to his belief that negative growth in GDP would be avoided this year? If his forecasts this year go even slightly astray, just how disinflationary will £200 billion of spending be? Are not there lesssons to be learnt from 1973-74?

Mr. Major : We do have a surplus on invisibles this year, and I would expect there to be a surplus on invisibles next year. The underlying premise of my hon. Friend's question is perhaps inaccurate.

Mr. Giles Radice (Durham, North) : Does the Chancellor of the Exchequer agree that, as the planned spending total to a large extent reflects the Government's failure to control inflation and the mess over the poll tax, there will be little room for improvements in vital public services? Will not the increase in the public spending total actually disturb the markets? In other words, are not we in danger of getting the worst of all worlds--disturbing the markets without satisfying the public?

Mr. Major : Of course, if the markets listen to the hon. Gentleman that would undoubtedly be the case. I suspect that the markets will notice that we have kept very tight control of expenditure in the circumstances that prevail, and I think that the markets will welcome the fact that we have been able to do so. It is clearly important that we do.

Mr. Ian Stewart (Hertfordshire, North) : Now that my right hon. Friend has announced the first part of his budgetary package on public expenditure and has shown very welcome restraint on the public expenditure totals, when the time comes will he be equally austere in

Column 128

presenting his Budget in the spring, because a tight fiscal policy is the best foundation for restoring economic growth?

Mr. Major : I am grateful to my right hon. Friend for his early budgetary representation which I will consider with great care.

Mr. William Ross (Londonderry, East) : As the 1992 planning forecast has now increased by 4 per cent. and it is intended to increase that total by 7.5 per cent. the following year and by 5 per cent. the year after, does the Chancellor expect those increased sums to be met from the Revenue or will he dip once more into the public borrowing requirement?

Mr. Major : No, I am not at this stage anticipating a public borrowing requirement. As I indicated in my statement, our medium-term policy is to remain at nothing worse than balance in terms of public borrowing. I hope that we will keep to that fiscal balance. We have a surplus this year, against the expectations of many commentators.

Mr. Tim Smith (Beaconsfield) : Is my right hon. Friend aware that his statement today on public expenditure is most welcome because he has succeeded in containing the increase in spending below that necessary to accommodate inflation while at the same time providing substantial additional resources for priority programmes? Does not the substantial increase in cash spending next year show that urgent need to continue to press down on inflation? Will my right hon. Friend continue to take a tough stance on monetary and fiscal policy?

Mr. Major : I entirely agree with everything that my hon. Friend has said and see no reason to add to it. I could not have expressed it as well myself.

Mr. Ted Leadbitter (Hartlepool) : The Chancellor's statement suggested that he is still aware of the volatility of oil prices. However, is he aware that today there has been a reported 70 per cent. increase to £1.1 billion in the profits of the Shell oil company? It is therefore reasonable to deduce that there will be comparable increases for other oil companies. Does the right hon. Gentleman accept that the volatility of oil prices is beneficial for the oil companies, but that higher prices for oil buyers, such as motorists and industry, are disadvantageous? Does he agree that a lower profit margin and a more reasonable price would remove one element that has a serious impact on inflation, which so concerns the House at the moment?

Mr. Major : As the hon. Gentleman knows, that point has been examined by the Monopolies and Mergers Commission. The hon. Gentleman is right that the volatility of oil prices represents a damaging uncertainty for the projections that we and other countries must make. It is for that reason that I have taken the assumption, similar to that taken in many other forecasts, of an oil price that will be down to $25 by the end of 1991.

Mr. Anthony Nelson (Chichester) : Is my right hon. Friend aware that Conservative Members fully support the content as well as the style and tone of his statement? Will he also accept our congratulations to the Chief Secretary to the Treasury on showing clear political judgment in giving a priority to increased health spending? However, does he agree that if we are to increase expenditure on such areas--as we must--at a time when

Column 129

our constituents are having to tighten their belts, it would be quite improper to face them with an increased burden of taxation next year?

Mr. Major : I am grateful to my hon. Friend for his kind remarks to both myself and my right hon. Friend the Chief Secretary. As he knows, I believe that my right hon. Friend has produced a remarkably successful outturn to the public expenditure round. I believe that it is important to sustain expenditure on health and, on this occasion, we have managed to increase it in real terms by 5 per cent. again. I note my hon. Friend's point about taxation, but, as he knows, I must consider that only in the period between now and the Budget.

Mr. John Fraser (Norwood) : With "rooflessness", as the right hon. Gentleman calls it, going through the roof, how many extra homes for rent will be provided by the public sector as a result of this statement?

Mr. Major : My right hon. Friend the Secretary of State for the Environment will be making that clear in his own statement.

Mr. Nicholas Budgen (Wolverhampton, South-West) : Since my right hon. Friend is promising very substantial increases in public expenditure, will he confirm that there will be room for either substantial cuts in interest rates when it is safe to do that, or for cuts in taxation, but not for both?

Mr. Major : My hon. Friend is well aware that I cannot comment on the prospects of taxation, and I have no intention of doing so. I will not cut interest rates until I am absolutely satisfied that it is safe and secure to do so.

Mr. Alex Salmond (Banff and Buchan) : Am I correct in thinking that the Chancellor has assumed £2,700 million in oil revenues for the current year, bringing to a round £90,000 million the total by which Scottish oil revenues have bankrolled the Government in the past 10 years? What has happened to the additional North sea revenues as a result of the higher oil prices which, according to the brokers' forecasts, are running at £20 million per day? How much of that has gone to the oil companies and how much to the Chancellor? I am sure that the right hon. Gentleman will appreciate the anxiety of people in Scotland to find out the answer to that question today, given the announcement of further steel closures and the further abandonment of North sea steel markets to the Japanese and the Germans.

Mr. Major : The hon. Gentleman did not, of course, put the reverse point to me some time ago when oil revenues fell dramatically after accidents in the North sea. He should look at both sides of the equation . Oil revenues are important to the Exchequer, but they represent a relatively small element of income.

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak) : Does my right hon. Friend accept that many of us have been disturbed at what we have read in the papers, which we always believe, that the Government are dismantling the health service? How is it, then, that we are told that we will spend £3.2 billion more this year? If that is dismantling the health service, what would we have to spend if we were trying to improve it?

Column 130

Mr. Major : I am grateful to my hon. Friend for his most helpful observation. It is certainly the case that, on any measure, expenditure on the health service has risen dramatically over recent years to accommodate not only an improving service, freely available operations which previously were not available, and more doctors, nurses and dentists but a general improvement, as well as the largest capital building programme for hospitals that we have ever known.

Ms. Diane Abbott (Hackney, North and Stoke Newington) : Does the Chancellor accept that the figures that he announced on the extra money that he is lavishing on the health service do not mean much except in the context of the outturn figure of inflation and the relative price effect? As the Chancellor will know, the health service as a whole has a higher rate of inflation than the rest of the economy. That point was made by the Treasury and Civil Service Select Committee in its report on last year's autumn statement.

Mr. Major : The relative price effect in health may

conceivably--statisticians disagree--add about 1 per cent. over the normal GDP deflator. On that basis there is still a large real increase in health spending yet again next year.

Mrs. Elizabeth Peacock (Batley and Spen) : I heard my right hon. Friend say that investment is slowing down, but is he aware of investment that has recently taken place, is now taking place and is planned to take place in the near future in manufacturing industry in Yorkshire? Is not that a sign of great confidence in the future of manufacturing and our country?

Mr. Major : I entirely agree with my hon. Friend. There has been a considerable degree of investment in manufacturing in the past few years. Equally as important as the quantum of investment has been the quality and nature of the investment that we have seen during the past few years.

Mr. D. N. Campbell-Savours (Workington) : Is not it true that any old Chancellor can reduce inflation if he is prepared to kick people out of work and reduce consumption by in effect strangling the whole economy? Is not the real art to reduce inflation by keeping people in work and maintaining demand? Why does not the Chancellor pursue such a strategy? Is that not in the national interest?

Mr. Major : How curious it is, in view of the hon. Gentleman's remarks, that we have more of our population in work than any other nation in Europe.

Mr. John Townend (Bridlington) : May I congratulate my right hon. Friend on resisting the demands of the Opposition and, indeed, some of his colleagues, for higher expenditure? Is he aware that by continuing to run a budget surplus and repay the national debt he is doing a great service to our children and grandchildren? He mentioned wage increases. Does he agree that the public sector must set an example this year if we are to bring down inflation as quickly as we hope?

Mr. Major : I am grateful to my hon. Friend. He is right about the repayment of the historic national debt which, by the end of this year, will have amounted to about £29 billion over the past four years. Consequently, there has been a considerable year-on-year saving in interest which

Column 131

will no longer have to be paid on that debt. My hon. Friend is right about the need to restrain wage increases generally.

Mr. Keith Vaz (Leicester, East) : The Chancellor will recall that a couple of weeks ago he was a most unwelcome guest in my constituency [ Hon. Members :-- "Shame."] While he was dining at the Grand hotel with the chairman of the Conservative association, did the chairman tell him that the current waiting list for hip operations in Leicestershire was 29 weeks? As a result of the Chancellor's grand proposals, how much less will people have to wait for operations in Leicestershire?

Mr. Major : The hon. Gentleman is too gracious in his welcome. The chairman of the Conservative association did mention that in the period up to 1979 there were virtually no hip operations anywhere in the national health service.

Mr. Yeo : Would it be fair to characterise my right hon. Friend's statement as one that puts teachers and textbooks before tax and patients before prisons? Has the achievement of containing public spending in real terms at the same time as directing resources to those highly desirable areas been made possible by the success of the Government's policies over the past decade in defence and law and order?

Mr. Major : My hon. Friend is entirely right. He certainly analyses the autumn statement correctly. Had it not been for the staunch and successful way in which the Government decided to station cruise missiles two or three years ago and the effects that followed from that, I doubt whether we could safely have reduced defence expenditure today.

Mr. Skinner : Why does the Chancellor of the Exchequer come to the House of Commons with nothing less than a cock and bull story? During the past 11 years, the Government have accumulated more than £120 billion in extra revenue through privatisation and North sea oil revenues. As a result of those 11 years, we now have a public sector debt repayment which, according to him, will be only £3 billion next year and will disappear from view the following year, a trade balance of £15 billion and invisibles that are almost invisible, whereas they used to amount to £700 million a month. No wonder he says that the economy must be put back on track. He is running an economy that is off the rails.

Mr. Major : I am bound to say that a PSDR of only £3 billion was not a beast that I recall during the period of the Labour Government. The hon. Gentleman referred to a cock and bull story. We know which of those he talks.

Mr. Richard Alexander (Newark) : My right hon. Friend told the House the total amount of saving in the national debt which will be achieved as a result of this statement. How much saving to income tax payers will be represented by the fact that they no longer have to pay the interest payments on that capital sum?

Mr. Major : It will be a considerable sum. I cannot give my hon. Friend a precise answer, but we are talking about approximately £2.5 billion a year which is perhaps equivalent to 1p or 1.5p on the standard rate of income tax.

Column 132

Mr. Paul Flynn (Newport, West) : Will the Chancellor of the Exchequer comment on the claimed increase in what he might describe as "bedlessness" in that, by next April, 3,500 hospital beds will close to comply with the Government's "finance first and patients last" policy? What effect will today's statement and the closure of those hospital beds have on waiting lists next year? Will they stay the same, increase or decrease?

Mr. Major : The hon. Gentleman should perhaps look at the whole question in the round. The cash increase for the hospital and community health services budget was more than 10 per cent. in 1990-91. Even on the basis of health service inflation, which the hon. Member for Hackney, North and Stoke Newington (Ms. Abbott) mentioned, that is a substantial increase over and above inflation. The same health authorities to which the hon. Gentleman referred are also planning to spend more than £220 million on service developments. If there are volume increases on that scale, I see no reason for the shortfall to which he refers.

Mr. Michael Morris (Northampton, South) : I congratulate my right hon. Friend on giving the House such a clear financial strategy, which contrasts with the questioning from Opposition Benches. May I congratulate him on a realistic planning total for reserves? To return to the welcome 5 per cent. real increase in health expenditure, will he say whether the planning total on which this is based is at least no lower than the planning total for the current year?

Mr. Major : Yes, I can certainly confirm that it is a 5 per cent. real increase. It is there specifically to reflect the priority that we give to health. I am grateful to my hon. Friend for his early remarks, particularly those about the increase in reserves. With the present uncertainties, it is wise to increase them to £3 billion, £7 billion and £10 billion respectively. Events may yet show that.

Mr. Wareing : Is not the Chancellor of the Exchequer misleading the House when he tells us that, despite tight control of public expenditure, vulnerable people are to be protected? How does he justify a cut in Government grant for the first time in history to the Royal National Institute for the Blind to assist it with the production of braille material? How long will it be before people, such as blind people, are not expected to bail the Government out of the economic mess for which they are responsible? Who is responsible for that decision and what is the justification for it?

Mr. Major : The answer to whether I am misleading is categorically no. The hon. Gentleman asked about the blind. He would do well to reflect upon the changes that I made in the Budget specifically to help people with that most distressing ailment.

Sir Ian Lloyd (Havant) : The Chancellor will doubtless agree that if the claims of every organisation in the country which said that it was underfunded were met, the Chief Secretary would be coming before the House with a claim for about 60 per cent. of the national income rather than the figure that he has announced. The Chancellor told us that the increase in output in real terms is likely to be 2 per cent. and probably not much more in the foreseeable future. Against that, those very expensive organisations --the national health service and local government--have

Column 133

received increases of just over £5.5 billion or 5 per cent. in real terms. If those claims are met in real terms which sectors of the economy will pay for them in real terms?

Mr. Major : My hon. Friend is right about the inevitable claims that could be placed upon the public purse, often for quite legitimate schemes which, if the resources were available, one would be pleased to meet. The substantial increase for health and local government is at the expense of other areas in which we have been able to make savings and, of course, at the expense of a smaller debt repayment than might otherwise have been the case.

Mr. John Evans (St. Helens, North) : Will the Chancellor confirm that, despite his words about protecting the most vulnerable groups in society, his statement contains no additional community charge resources for northern metropolitan boroughs such as St. Helens? Does he agree that any system that gives the borough of Westminster twice as much money per child to care for children at risk from abuse and poverty than it gives to children in St. Helens is corrupt and indefensible?

Mr. Major : The hon. Gentleman has uncharacteristically overlooked the enormous increase of £2.5 billion made available to cushion community charge payers, often from unjustified levels of expenditure. He has equally uncharacteristically forgotten the £3 billion increase in social security that is specifically to help vulnerable people.

Mr. Quentin Davies (Stamford and Spalding) : I congratulate my right hon. Friends the Chancellor and the Chief Secretary on striking an extremely skilful balance in achieving a £200 billion public expenditure outturn. Does my right hon. Friend agree that in the fight against inflation there is a trade-off between the public sector surplus or net debt repayment and private sector savings? In that context, one of the most encouraging features of the past few months has been the rise in the household sector savings ratio. Does he agree that that will continue to play a key role in the fight against inflation?

Mr. Major : I strongly agree with my hon. Friend. The savings ratio has increased significantly over the past year as a result of increased savings and reduced borrowing. I hope that that trend will continue because it is greatly in all our interests for it to do so.

Mr. Stuart Bell (Middlesbrough) : The Chancellor said that there was central Government provision for the poll tax of about £3,000 million. He also said that the poll tax had helped to double the retail prices index from last year's forecast of 5.75 per cent. to 11 per cent. He also accepted that local government borrowing had been higher because of the slow collection rate of the poll tax. Is it any wonder that the poll tax is as unpopular today as it was when it was introduced?

Mr. Major : The community charge added 1 per cent. to the retail prices index. The hon. Gentleman is entirely correct about that. However, it was not so much the community charge itself but the increasing level of expenditure reflected in a high community charge that added to the retail prices index. It is difficult to avoid the fact that in the first year of the community charge there was a quite unprecedented increase in local authority expenditure. That was because many local authorities took

Column 134

the opportunity on the introduction of the charge to increase their expenditure in the hope of blaming the Government for it.

Mr. Jonathan Sayeed (Bristol, East) : Will my right hon. Friend remind the House what happened to the ratio of public expenditure to national income in previous periods of slower growth and what were the consequences for inflation?

Mr. Major : My hon. Friend touches on an important point. Both in this country and elsewhere, at times in the cycle similar to that in which we now find ourselves, the ratio of public expenditure tended to rise dramatically with an impact on taxation and frequently on inflation, too.

Mr. Peter Hardy (Wentworth) : The Chancellor seems to strike a rather complacent note on the creation of jobs. Will he confirm that a very much larger proportion of the jobs created in Britain in the past few years has been casual, low paid and part time--far more casual, low paid and part time than the jobs created in our main competitor countries?

Mr. Major : The hon. Gentleman is correct in that some, but not all, of the jobs are indeed part time, but that reflects many people's demand to work part time. They are now able to satisfy themselves on that count as they were previously unable to do. Whichever way one examines the labour market, we have a significantly higher percentage of our population in work than any other European nation, including Germany.

Mrs. Edwina Currie (Derbyshire, South) : Am I right in thinking that we are spending a lot more on education--that in fact education has done rather well out of this statement? But do we have systems in place that will ensure that the money is spent--especially in counties such as Derbyshire--on improving the quality of education and the physical fabric of our schools and not, as it is at the moment, with excessive administration expense, on free newspapers, educational advisers who have nothing to do with education, and subsidised baked beans for school meals?

Mr. Major : My hon. Friend is quite correct. The figure of £520 million which I quoted earlier was the central Government increase. There is also a significant increase in local government spending in education, a large part of which is financed by the aggregate external finance settlement.

Mr. Robert Hughes (Aberdeen, North) : Does not the very elegant Treasury prose which the Chancellor read so beautifully--especially the part that said that the higher than expected inflation had not been allowed to feed through into Government public spending--disguise the fact that, never mind any improvements for the very vulnerable in our society, the health service and others will have to make cuts simply to keep pace with current demands?

Mr. Major : No, it does not. I illustrated to the House where the savings had been made to provide increased resources for the vulnerable ; for education, social security and health. I set out where those savings had come from. So the hon. Gentleman's premise is, I fear, inaccurate.

Mr. Nicholas Winterton (Macclesfield) : Although I warmly welcome the additional resources allocated to

Column 135

health, education and infrastructure in the announcement made by my right hon. Friend this afternoon, does he agree that manufacturing industry is the only genuine source of non-inflationary economic growth and that he would be able to allocate even more resources to those deserving and necessary areas if interest rates came down and if manufacturing industry could play a more positive and productive role in the economy?

Mr. Major : As my hon. Friend knows, the thrust of the Government's present fiscal and monetary stance is to move to a position where we can see inflation falling significantly which will open the possibility, when it is safe and secure to do so, to reduce interest rates. I shall certainly do that, but not, alas, until I am convinced that it is safe and secure to do so. To do so prematurely would not be in the interests of manufacturing industry or of any other part of the economy.

Mr. Peter L. Pike (Burnley) : The Chancellor forecast that he would receive £5.5 billion from the proceeds of privatisation. He is going to repay national debt to the tune of £3 billion. If he was producing a balance sheet, would not he have to show that he is using £2.5 billion to subsidise the programme for the year ahead and that he will end up with £5.5 billion less in assets? What will he do when there is no more family silver to sell?

Mr. Major : The £5.5 billion is next year and the £3 billion is this year. If we were borrowing at the rate at which the last Labour Government borrowed, there would be a £50 billion borrowing requirement.

Several Hon. Members rose--

Mr. Speaker : Order. A very important foreign affairs debate will follow the autumn statement. I wonder whether, exceptionally, I could have an arrangement with those hon. Members who are standing. If I call them on the autumn statement, may I ask them not to rise on the business statement?

Mr. Richard Tracey (Surbiton) : My right hon. Friend's allocation of resources to health, transport and education will be particularly welcomed in my constituency and in London generally. As we are not allowed by the rules of the House to question the Opposition on the various intemperate promises that they have dangled before the public, will my right hon. Friend speculate on how a Labour Government could possibly pay for the kind of promises that the Opposition have made? What extra taxation and borrowing would be needed?

Mr. Major : They would not, of course, pay. My hon. Friend and other taxpayers would pay. I am not sure that Mr. Speaker's ruling is quite so welcome to me as it is to my right hon. Friend the Leader of the House.

Next Section

Home Page