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Chancellor Of The Exchequer

Volume 927: debated on Tuesday 1 March 1977

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03.

asked the Prime Minister if he will list the responsibilities which he has allocated to the Chancellor of the Exchequer.

The Chancellor of the Exchequer is responsible for all Treasury business, including the direction of economic and financial policy and the control of public expenditure. He is the Minister responsible for the Inland Revenue and Customs and Excise and some other smaller Departments. The Chancellor is also Chairman of NEDC and a governor of the International Monetary Fund.

Can my right hon. Friend give the House his views on the proposal by the Cabinet Secretary for splitting the Treasury into different parts and, in particular, on the proposal, which had the support of his two predecessors, for putting the public expenditure part of the Treasury into the Civil Service Department?

I have been reading the evidence with very great interest and watching some of the articles appearing in the Press. I shall continue to give these matters my full consideration and if I have any change to propose I shall inform the House.

Will the right hon. Gentleman take this opportunity to tell the House and the country what he has so far refused to tell us, namely, what are the responsibilities between himself and the Chancellor of the Exchequer in view of his position as economic overlord, about which we have heard so much but seen so little?

I repeat that I have taken over no responsibilities from the Chancellor of the Exchequer, but I am still First Lord of the Treasury.

The problem of unemployment is one that afflicts the whole of the Western industrialised world. I propose to discuss these matters with President Carter when I visit the United States next week and also to raise them at the Rome European Council, because it is clear that no one nation can return to full employment on its own. It will require international effort and we shall bend all our efforts to secure that at the earliest possible moment.

Does the Prime Minister recall a letter that the Chancellor of the Exchequer wrote on 15th December 1976 to the managing director of the International Monetary Fund in which he stated that it would be a continuing part of the Government's strategy to reduce the share of resources taken by the public sector? Will the right hon. Gentleman take this opportunity of confirming that that is still an essential element of Government strategy?

Yes, we shall keep to the formula agreed with the International Monetary Fund. If circumstances change, we shall have other discussions with it. If the circumstances change, the arrangements can be changed.

If the rate of inflation is likely to rise to 17 per cent. year on year together with massive unemployment, the two things happening together, does that not suggest that the Treasury has failed in its purpose? Is it not time to reconsider the dismantling of the Treasury? If we are serious about job creation, should we not have an economic directorate to replace the parts of the Treasury that have singularly failed to intervene in the economy and done nothing to put right the shortcomings of a free market system?

Although there may be advantages in changing the machinery of the Treasury and in making other combinations, I express no view on that this afternoon. I do not think that will solve the fundamental economic problems that we face, although it may make for a better organising of them.

As a result of the depreciation of sterling last autumn, together with the increase in food prices, inflation will be at a higher level than we had expected or were working for in the first half of this year, but I repeat as strongly as I can that if we can get a third round in the wages agreement, on the present forecasts and from what we can see of matters such as the strength of sterling and the price of imported commodities and food and raw materials, there is every reason for there to be a substantial falling away in the rate of inflation in the second half of this year and the first half of 1978.

Is the Chancellor of the Exchequer still responsible for devising the formula by which the current rate of inflation is dinned into the public's mind? If so, by how much is it reduced from the 84 per cent., which is the figure that he gave us so clearly during the last election?

The figure of 8ยท4 per cent. has been explained many times as a short-term forecast over a period of three months. I try to give the House the most accurate forecasts but I regret to say that, as others have discovered before me and no doubt will discover after me, they are usually wrong. However, we must try to take some account of what is forecast. The best forecast that I can give the House now is the one that I have already given, namely, an increase during the first half of this year and a rapid falling away from the middle of 1977 to the middle of 1978.

Does the Prime Minister agree that it would be quite wrong for his hon. Friend the Member for Tottenham (Mr. Atkinson) to blame the Treasury for the high rate of inflation and the high rate of unemployment? Would it not be better if the Government considered their own record and did the necessary thing?

I do not think that it would be altogether fair to blame the Treasury. I blame the previous Government. The right hon. Gentleman was a distinguished ornament of a Government who printed money like a drunken sailor on his first night ashore. At least his Government hold this record, namely, that the rate of expansion of the money supply under the Administration of which he was an ornament has never been exceeded in this country before. Thank heavens a Labour Government came in and started to put matters right.