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Volume 976: debated on Tuesday 20 November 1979

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asked the Chancellor of the Exchequer how many letters he has received since taking office on public expenditure cuts; and how many of these were critical of Government policy.

I have received a large number of such letters. Whilst some have been critical of particular public expenditure decisions a large number have complimented the Government on their firm fiscal and monetary policies.

asked the Chancellor of the Exchequer (1) how much of the planned reduction of £3·5 billion in public expenditure will be offset by a reduced yield of (a) income taxes and (b) value added tax and other taxes;(2) how much of the planned £3·5 billion reduction in public expenditure was thought to have crowded out production of goods and services in the private sector; by how much output in the private sector is expected to increase as a result of the Government's actions; and what is the expected timetable for this.

For reasons which my hon. Friend gave in reply to the hon. Member for Newham, North-East (Mr. Leighton) on 14 November—[Vol. 973, c. 622]—I am not able to give estimates derived, as these would have to be, from a simulation of a macroeconomic model. The public expenditure measures should not be viewed in isolation, but as an integral part of the Government's commitment to reducing inflation via monetary and fiscal restraint as a prerequisite for a resumption of sustained growth of private sector output. The £3·5 billion difference refers to the previous Government's public expenditure plans which were widely recognised as being unrealistic. It would not therefore be particularly meaningful to offer empirical estimates of the type the hon. Member requests.

asked the Chancellor of the Exchequer, pursuant to the reply by the Chief Secretary to the right hon. Member for Heywood and Royton, Official Report, 12 November, columns 423–4, on the general allowance for shortfall, if he will give the reasons why he assumes for 1980–81 that higher expenditure plans will result in lower shortfall than assumed in Cmnd. 7439; how this compares with table 1 of Cmnd. 7746 which shows expenditure on programmes to be £1,040 million in 1980–81; and if he will provide an analysis as to what shortfall has been arranged for individual programmes in each of the years 1979–80 and 1980–81.