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Volume 973: debated on Thursday 8 November 1979

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asked the Chancellor of the Exchequer what is his latest estimate of the savings arising from cuts in public expenditure.

I refer the hon. Member to the White Paper on the Government's expenditure plans for 1980–81, Cmnd. 7746. published on 1 November.

Any savings in expenditure affect the poor and result in handouts to the wealthy—especially in switching expenditure from education to defence and from health to law and order. Will the Minister tell us the human misery effect in real terms that the cuts will have on the sick, the disabled, the elderly and schoolchildren?

As the premise was a travesty of the facts, I cannot answer the second part of the question.

When my right hon. Friend sees some benefits from the savings in public expenditure, will he consider the impact on families of the increased price of school meals and school transport, as there has been a transfer in money and wealth from families to other sections of the community? When the next Budget comes, will my right hon. Friend ask his right hon. and learned Friend to consider increasing child benefits?

My hon. Friend has asked a formidable question. However, I do not believe that he would suppose that I could seek to forecast my right hon. and learned Friend's Budget for next year.

Will the Chief Secretary clarify the unemployment effects of his public expenditure White Paper, to which he referred last week? He told us that the average number unemployed next year would be 1,650,000, excluding school leavers. Will he confirm, as his forecast shows, that if he includes school leavers the figure will be over 2 million by the end of next year?

The unemployment forecast to which the right hon. Gentleman refers was a working assumption. Any student of the exchanges between the right hon. Member for Leeds, East (Mr. Healey) and the hon. Member for Wolverhampton, North-East (Mrs. Short) will appreciate the distinction between those two terms. As far as there is an impact on levels of employment in the prospective year, it is to be derived not from the public spending White Paper, which predicates stabilised public spending, but from the recession which operates throughout the Western world.

Is my right hon. Friend aware that the most rapid increase in public expenditure revealed by the recent White Paper is in respect of interest rate charges? Has he noted that interest rates in the United States are now at a higher level than when General Lee threatened Washington during the American Civil War and that this is undoubtedly a symptom of an international interest rate war which has largely replaced the international tariff rate wars of previous eras? Is my right hon. and learned Friend the Chancellor contemplating an initiative with OECD countries to prevent any further advance down this road, which must lead to a world depression?

My right hon. and learned Friend is in constant contact with other Chancellors through the medium of OECD and other international institutions. I am sure that he takes my hon. Friend's point to heart.

Does the right hon. Gentleman not realise that just as alarming to the ordinary person is not merely the reduction in expenditure but the increase in charges in the White Paper, which will put up the cost of living considerably, the increases of VAT in the Budget, and the increases in nationalised industry prices still to come? What will be the increase in the retail price index following the White Paper? Does that include or exclude the increases in rates and rents that we now expect?

The increase in the retail price index next year, arising from the items specifically listed in the White Paper, will be approximately 1 per cent.