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asked the Chancellor of the Exchequer what progress is being made in fulfilling the objectives of his latest Budget; and whether he intends to take further corrective action in the next six months.
It would be unreasonable to expect to see evidence of progress at so early a stage.
I have no plans for further measures, but I shall of course be ready to act if the situation requires it.In view of recent Civil Service revelations about the budgeting or otherwise of the British Leyland bailout, does the right hon. Gentleman expect to announce compensatory cuts in public expenditure in the next six months?
The hon. Gentleman should know—if he does not, his right hon. and hon. Friends will confirm it—that rescue operations are always a claim on the Contingency Fund for public expenditure, rather than identified in advance. But when the Financial Statement and Budget Report is published, at the time of the Budget, it tries to make allowances for contingencies then foreseeable. Allowance was made for some aid to British Leyland in that so-called Red Book published at the time of the Budget, but at that time the Cabinet had not taken a decision on the precise way in which to respond to the proposals in the Ryder Report. However, my right hon. Friend the Secretary of State for Industry will be informing the House separately in the near future about legislation for the provision of up to £60 million for buying shares in British Leyland and of up to £200 million for the new equity issue.
Is my right hon. Friend satisfied with the means of monitoring the effects of his Budget?
Satisfied, no. Successive Governments have found it difficult to monitor public expenditure, particularly in local government, which rose by over 8 per cent. a year during the three years that the Conservative Party was in power. We are seeking to remedy that situation, notably by the establishment of the consultative committee which I announced in my Budget speech.
Is not the continuing unprecedented weakness of sterling the clearest possible storm signal that a Budget deficit of over £9 billion is causing widespread anxiety? Would the right hon. Gentleman care to have a bet with me that he will be back here cutting public expenditure as soon after the referendum as is decently possible?
I have only once taken a bet in this House, and I am glad to say that I won it. I do not propose to take any bets on this occasion.
I should like to respond to the hon. Gentleman's point about sterling. There has been a good deal of irresponsible comment on this matter recently. I should like to emphasise now that I do not want to see a further depreciation of sterling. As I indicated in my Budget speech, a continuing downward drift in our exchange rate would further increase pressure on both domestic costs and prices. Unless and until we bring down the rate of inflation in the United Kingdom to that of our main trading partners, there will obviously continue to be a risk of strongly adverse market pressure on the rate. I do not believe that the size of the public sector borrowing requirement was behind the recent pressure on sterling. It was more the inflation rate in Britain compared with other countries.16.
asked the Chancellor of the Exchequer whether he is satisfied with the reaction to his recent Budget Statement.
Yes, Sir.
I am grateful. Is my right hon. Friend aware that many of us are deeply concerned at the prospect of a further increase in unemployment? Is he aware that in recent months in Bebington and Ellesmere Port, for example, over 4,000 jobs have been lost, affecting a very wide travel-to-work area? Will he assure us that he will keep this matter actively before him and take action whenever it is necessary to prevent further rises in unemployment?
I took action twice last year to ensure that demand was increased to what I regarded as a reasonable level in Britain. As a result, there will be £1,000 million more demand in the economy in the current financial year. But, as I warned the House and the country on many occasions, wage increases vastly in excess of the guidelines voluntarily laid down by the TUC were bound to increase unemployment and limit the Government's ability to deal with unemployment when it occurred. I hope that I shall have the support of my hon. Friend in pointing out to the minority of workers who have been settling well outside the contract that they are putting other people and possibly themselves out of work by doing so, and making it very difficult for the Government to take the kind of action which Governments in other countries with much lower rates of inflation—for example. Germany and the United States—are now able to take.
Will the right hon. Gentleman follow that by taking this opportunity of driving the message home to those employed in the railway industry that no extra Exchequer funds will be made available to finance inflationary settlements and that the only consequences will be either higher fares or a substantial loss of jobs, including, perhaps, the withdrawal of certain services?
It would not be right for me to comment on the details of that negotiation since it is now under arbitration. I told the House at Question Time a month ago that I had no intention of allowing or compelling the taxpayer to pay for excessive wage settlements in the public sector.