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Public Expenditure

Volume 645: debated on Tuesday 25 July 1961

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I now come to public expenditure. It is now so great that unless it is brought into a proper relationship with the resources likely to be available in the long term, our chances of sound growth will be gravely prejudiced. I also want some immediate contribution from the public sector towards lightening the present overload on the economy. In making these adjustments, we must see that priority is given to whatever directly affects national efficiency, and that we do not wastefully disrupt programmes under way. We shall, therefore, not interfere with the investment that the nationalised industries require for attaining their financial targets and providing essential supplies and services.

The sums required for assistance to industry will fall away next year, and we shall apply very strict criteria to any new proposals. We shall have to look critically at the level of agricultural support during the 1962 Review. In the services provided by central and local Government, we shall have to ask for desirable proposals to be postponed or abandoned. Authorisations and loan sanctions to local authorities will have to be considerably reduced.

The house purchase scheme under the 1959 Act, which is now costing about £40 million, will, in consultation with the Building Societies Association, be suspended.

Next year, unless checked, Government supply expenditure will rise substantially. I intend to do my utmost to keep this increase at a level not more than 2½ per cent. in real terms, which should be within our expanding capacity to carry; that is to say, about £125 million above the estimates for 1961–62.

This increase in Supply expenditure over 1961–62 Estimates will be broadly offset by the savings below-the-line following the completion of the steel loans and the suspension of the house purchase scheme. Taking it all together, I would put the effect of the decisions which we have taken as being to reduce the load in 1962–63 by some £175 million compared with what it would have been otherwise, to which can be added £125 million on account of the savings below the line or about £300 million in total.

I do not wish to create any false impression about this; except for the below-the-line items these are not cuts on this year's figures; they are part of the process of containing future expenditure for which I ask the House's wholehearted support.

With regard to this year's expenditure, it would be a waste of resources to delay work in progress or to postpone necessary maintenance. Nevertheless, there will be a stringent re-examination to see what savings can be made in administration and in other respects.

On one particular matter affecting public expenditure my right hon. Friend the Minister of Education will tomorrow inform both sides of the Burnham Committee that, while recognising that teachers have a good case for some increase in pay, the Government cannot agree to the size of the increase in salaries for teachers in primary and secondary schools as proposed in the Burnham Committee's provisional agreement. The Minister is also concerned about the distribution of the proposed increases. He will, therefore, ask the Committee to make some reduction in the increase and will give them his views on how the revised sum might best be distributed to meet the needs of the education service.

My right hon. Friend will also discuss with the constituent associations how in future the Government's views can best be made known to the Committee at an earlier stage. The present procedure is not satisfactory.