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Autumn Statement

Volume 86: debated on Tuesday 12 November 1985

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3.33 pm

With permission, Mr. Speaker, I should like to make a statement.

I am laying before the House today an autumn statement which brings together the Government's outline public expenditure plans, proposals for national insurance contributions next year, and the forecast of economic prospects for 1986 required by the Industry Act 1975.

This year's autumn statement contains considerably more information than its predecessors. It breaks new ground by providing a forecast of the public expenditure outturn for 1985–86 for each Department, and the plans not just for the year immediately ahead but for each of the next three years. Both these innovations meet specific requests from the Select Committee on the Treasury Civil Service and I hope that they will be welcomed by hon. Members.

The outturn for this financial year is expected to be the same as set out in the Budget, that is, £134 billion. After allowing for inflation, this is lower than last year, which bore the brunt of the public expenditure cost of the coal strike.

The Government will continue to maintain firm control over public spending. Following this year's review, the planning totals for 1986–87 and 1987–88 will be held to the levels set out in the Budget —£139 billion and £144 billion, respectively. For 1988–89 the total has been set at £149 billion. Over these three years public spending in real terms is expected to be broadly flat at very slightly below this year's level. As a percentage of national output it will continue to decline as it has since 1982–83. By 1988–89 it should be back to its lowest percentage since 1972–73.

In order to meet contingencies, the plans contain large reserves, rising from £4½ billion in 1986–87 to £8 billion in 1988–89. The reduction in the reserve for 1986–87 as compared with the provisional reserve for that year, which I announced at the time of the Budget, chiefly reflects the fact that the passage of time allows part of the reserve in any given year to be allocated to individual expenditure programmes as their costs become known more accurately. But the £4½ billion reserve for the year immediately ahead remains a substantial figure.

Although I expect the planning total for 1985–86 to be the same as I did at the time of the Budget, the public sector borrowing requirement—subject to the usual margin of uncertainty at this time of year—is forecast to be about £ 1 billion higher—some £8 billion rather than £7 billion. This is due to lower sterling oil revenues. But even at £8 billion the PSBR would be the smallest that it has been as a percentage of GDP since 1971–72.

The PSBR would, of course, have been running at a higher level than this were it not for the proceeds from privatisation, to which I will turn in a moment. But even without the privatisation proceeds, this year's forecast PSBR would still be the smallest as a percentage of GDP since 1971–72.

The Government's privatisation programme is now getting into top gear and will continue for many years to come. [Interruption.] I am glad to see that the Opposition welcome that. I cannot stress so strongly the importance of this programme—now being emulated throughout the world—as a fundamental objective of Government policy. The transfer of state-owned businesses to the free enterprise sector of the economy brings enormous long-term benefits to the nation as a whole in terms of greater concern for the customer and increased efficiency. It also provides the opportunity for a massive boost to wider share ownership, among both the public in general and the employees of those great enterprises in particular.

The increased pace of privatisation means that the proceeds from this programme will rise substantially from £2½ billion this year to £4¾ billion in each of the next three years. In particular, the planned flotation of the British Gas Corporation is included for the first time. At the same time, however, there have been increases in a number of public expenditure programmes, so that the overall planning totals have remained unchanged.

However, this needs to be seen in perspective. Even if the proceeds from privatisation were to be ignored altogether, the public expenditure planning total would still be broadly flat in real terms, at less than 1 per cent. above this year's total, and public spending would still be on a steadily declining path as a percentage of GDP, reaching by 1988–89 its lowest level since 1972–73.

The annual review of public spending provides an opportunity to reconsider priorities and adjust the balance between programmes. While some programmes this year have been held back, it has been possible to make significant additions to others.

There will be increased spending on the National Health Service over previous plans of £250 million in 1986–87 and £300 million in 1987–88. On top of this, health authorities are able to spend the savings from their cost improvement programmes, which are expected to amount to £150 million this year and still more in future years. This should enable health authorities to meet demographic pressures and to deliver improvements in services as well.

Total public sector provision for housing is being increased by £220 million net of receipts in 1986–87 and £200 million in 1987–88, and the housing plans now provide for some £3¼ billion of capital spending next year. Within this total, the Government believe that there should be a substantial shift in priorities in favour of renovation of the existing public sector housing stock.

An extra £54 million in 1986–87 and £71 million in 1987–88 is being made available for capital expenditure on national and local roads.

Just over £1 billion is being added to the social security programme for 1986–87, largely as a result of the 7 per cent. increase in benefits taking effect this month. Expenditure in the subsequent years of the survey period is subject to decisions on the Government's social security review, on which a White Paper will be published shortly.

Additional provision has been made under the law and order programme to allow local authorities to direct extra spending towards the police.

For defence, the provision is unchanged. After the substantial real increases in spending since 1978–79, from which the defence programme will continue to benefit, the emphasis must now switch to improving our defence capability through greater efficiency and value for money, especially in procurement.

On employment, there were large additions in the Budget to fund an expansion of the youth training scheme and the community programme. In this survey, a number of new initiatives have been agreed, but savings are to be made by a reduction in payments from the redundancy fund. My right hon. and learned Friend the Paymaster General will be making a statement giving further details later today.

There have been significant improvements in efficiency and value for money in many programmes. It is a great mistake to fall into the trap of measuring public expenditure programmes solely in terms of the money put into them: it is improved output that matters.

Further details of these and other changes are contained in the autumn statement itself, and of course full details, together with information on running costs and manpower, will be given in the public expenditure White Paper to be published early in the new year.

I now turn to national insurance contributions. The Government have conducted the usual autumn review of contributions in the light of advice from the Government Actuary on the prospective income and expenditure of the national insurance fund.

The lower earnings limit will be increased next April to £38 a week, in line with the single person's pension, and the upper earnings limit will be similarly increased to £285 a week, broadly in line with earnings.

I announced in the Budget reduced rates of contribution for the lower paid and their employers—5 per cent. for those earning up to £55 a week, 7 per cent. for those earning up to £90 a week and 9 per cent. for employers of workers earning up to £130 a week. These took effect at the beginning of last month and are already starting to provide welcome assistance to the low paid and their employers, and a stimulus to the employment of the young and unskilled. The limits for these reduced rate bands will also be increased from April, in line with the lower and upper earnings limits, to £60, £95 and £140 a week, respectively.

There will be no change in the main class 1 contribution rates, which will remain at 9 per cent. for employees and 10·45 per cent. for employers. This is the third year running in which national insurance contribution rates have been held constant, despite a growing number of pensioners and the substantial uprating of benefits taking effect later this month.

My right hon. Friend the Secretary of State for Social Services will this afternoon announce details of these proposals, and will lay before Parliament the necessary order and the accompanying report by the Government Actuary.

Finally, I turn to the Industry Act forecast. The economy is progressing very much as I envisaged at the time of the Budget. Inflation is falling again, after the predicted temporary rise in the spring, although I now expect inflation in the fourth quarter of this year to be slightly above the Budget forecast: 5½ per cent. rather than 5 per cent.

The overall growth of the economy this year still looks like turning out at 3½ per cent.—the highest rate of growth since 1973.

The pattern of growth, too, has been much as envisaged. Exports and business investment, as expected, were the fastest growing elements in demand in 1985. The rise in total investment is now put at 4 per cent. in 1985; within this figure business investment is expected to be up by 7 to 8 per cent., to yet another all-time record.

As a result of this steady progress, there has been a substantial growth in the number of people in work since 1983. This has now been reflected in a levelling out in unemployment—albeit still at a sadly high level, not least because of the rapid growth in the total labour force. The prospect here is for some further improvement, assisted by the measures I announced in the Budget to help on the jobs front, which will have their main effect in 1986. But that improvement could easily be put at risk by excessive pay settlements.

The prospect for 1986 is one of continued growth and still lower inflation. The composition of growth is likely to change somewhat, with consumer spending taking up the running as exports—which had an exceptional rise of 7 per cent. this year—grow more slowly. The current account balance of payments surplus is forecast at £4 billion, compared with £3 billion in 1985. Fixed investment is expected to grow, once again, slightly faster than the economy as a whole.

Overall, the economy in 1986 is expected to grow by a further 3 per cent.—the fifth successive year of growth at an average of 3 per cent. a year, and into the sixth, the best performance since before the first oil shock. At the same time, inflation is expected to fall further, to 3¾ per cent. in the fourth quarter of 1986.

Indeed, if the forecast is correct—and I am the first to admit its inevitable fallibility—1986 promises to be the first year since the 'sixties when inflation and growth will be within one point of each other. What is beyond doubt is that we are now achieving the steady growth with low inflation which successive Governments have sought in vain for a generation.

All in all, Mr. Speaker, the progress and prospects I have described amount to the clearest possible vindication of the policies we have been following these past six years, and will continue to follow.

The autumn statement is now available from the Vote Office, and the House will no doubt wish to take it into account when we debate the economy tomorrow. The framework of public expenditure control which it sets out should allow scope for considered and justified reductions in the burden of taxation; and these in turn will further reinforce the economy's flexibility and dynamism. It is on that prospect that the future prosperity of all our people depends.

The Chancellor, with characteristic modesty, claims an achievement which a generation of his predecessors sought but failed to obtain. The speaking note for Government Back Benchers, which has been circulated on today's subject—the economy—describes its state as a dream come true. Does the Chancellor regard the economy as a "dream come true" for the 3·5 million men and women who are unemployed, for the families whose child benefit is to be cut in real terms, for the 95 per cent. of taxpayers who are paying more now than in 1979 and for the owner-occupiers who are burdened by uniquely high interest rates?

Will the Chancellor tell us some of the details of his proposal? Why have we not this year been told the size of what is called the "fiscal adjustment"? Is it because last year the right hon. Gentleman so mismanaged and bungled his tax cut promises that he precipitated the January sterling crisis? Is it simply because, like so many other promises—especially tax cut promises—what started out as an estimate of fiscal adjustment ended with a promise that he failed to deliver? Or, more likely, has he failed to tell us the fiscal adjustment because he wishes to pretend that the sale of British Gas is not intended to finance the temporary tax cuts with which he hopes to solve some of the Conservatives' electoral problems?

If the Chancellor denies the connection between the sale of British Gas and the prospect of tax cuts, will he tell us whether the proposed temporary tax cuts could be financed without selling off those national assets? What other possible explanation can the right hon. Gentleman give the House for creating a private monopoly, already equipped with the power to fleece its consumers? When the Chancellor has explained the purpose of that privatisation, will he tell us about the long-term implications? What does he think should happen when the privatisation proceeds run out? Does he think that the tax cuts that they finance should be restored, or does he think that there should be more cuts in public expenditure? After British Gas is sold and that annual income to the Government is lost, how does the right hon. Gentleman recommend that it should be made up—not for one year or two years, but in perpetuity?

All that the right hon. Gentleman can buy with the proceeds of the sale of British Gas is time. I ask the Chancellor again: what happens when the privatisation proceeds run out? What happens when the oil revenues run out? What happens when the report by the House of Lords predicting a collapse in manufacturing industry is proved to be true? In short, is the Chancellor capable of thinking beyond, looking beyond and planning beyond October 1987?

Tucked away in the seventh paragraph of the Chancellor's statement was the aside that the public sector borrowing requirement had increased £1 billion above its target; yet, despite the PSBR being £1 billion out of line, the right hon. Gentleman still boasts about the economy's strength. As the Government have now been partly converted to the virtues of investing in public sector capital —a proposition that they derided and scorned last year when it was advocated by the Opposition—why does not the Chancellor at least allow the same overshoot next year which he has found tolerable this year to finance some more job creation through public sector capital expenditure? Is it because all his plans, all his intentions and everything revealed by this statement are concerned not with long-term investment but with short-term expediency?

Let me give the House an obvious example from the document. The Chancellor boasts about growth next year. Every penny of that growth will be accounted for by personal consumption. According to the right hon. Gentleman's own figures, export growth will collapse to 2 per cent. and imports will grow by twice that amount. Of his asset sales, one tenth will go on capital expenditure and nine tenths will be used to finance the election bribes.

What is the right hon. Gentleman worried about?

I am worried about the economy. I am not worried about the Conservative party.

Finally, since we have heard so much about growth, will the Chancellor have the grace to admit that the real figure for growth during the entire life of this Government is an annual average of 1·3 per cent.? The real growth that we have had demonstrated today is a growth of panic about the Government's future.

It is clear that the right hon. Gentleman is in an acute state of panic about his electoral chances.

On the subject of growth, there was a world recession during the Government's early years. We went to the polls in 1983, having gone through that recession, and, of course, there was a low rate of growth. I do not know whether the right hon. Gentleman is trying to have a replay of the last general election, but I must remind him that the electorate returned the Government to office with an increased majority.

On the right hon. Gentleman's point about growth next year—I am glad that he accepts my forecast of 3 per cent. for next year—it is completely untrue to say that this is made up entirely of consumer expenditure, although I have nothing against that. There is a 3½ per cent. growth of fixed investment predicted—faster than the growth of the economy as a whole.

The right hon. Gentleman devoted a large part of his remarks to privatisation. If he had listened to my statement, he would have heard that public expenditure was declining steadily as a proportion of GDP, even if no account is taken of the proceeds of privatisation. Therefore, the scope for tax reductions is assured. To the extent that there is any relationship between the privatisation proceeds and tax rates, it enables the tax reductions which would take place in any case to be brought forward a little to the great benefit of the economy. As I have told the House on a number of occasions, the public sector borrowing requirement is always set after taking full account of the proceeds of privatisation. The privatisation programme will not merely carry on throughout this Parliament, as set out in the autumn statement; it will carry on throughout the next Parliament as well. The right hon. Gentleman asked what would happen when that programme came to an end. I am glad to learn of his confidence that we shall be in office for a further six years.

If allowance is made for the dubious accounting convention that treats the proceeds of asset sales as reductions in borrowing and public expenditure and excludes debt interest from the planning totals, does my right hon. Friend agree that domestic demand has been reflating and is planned to go on reflating?

No; I am afraid that my right hon. Friend is wrong on both counts. He calls the accounting convention dubious, but that is the international accounting convention. It is not a convention peculiar to this country. It was followed by the Labour Government when they were in office. The figures are clearly set out so that my right hon. Friend can make the adjustment that he seeks to make. He will see that general Government expenditure, including debt interest, declines as a proportion of GDP.

Is the Chancellor aware that the disposal of £5 billion of public assets represents sales of an exceptional magnitude and that it is essential that he does not hurriedly unload them to meet his public expenditure targets? Will he place a higher priority on this matter than he has done in the past by ensuring that, if necessary, such sales are postponed to avoid denying to the taxpayer and the British public the full worth of those assets.

The flotations of state-owned companies have been conducted with great and acknowledged success throughout the world. As a result, there is benefit to the companies themselves, to the people employed in them and to the nation. I hope that if the right hon. Gentleman catches your eye again, Mr. Speaker, at the end of these questions he will perhaps inform the House which of the companies that we have privatised or plan to privatise, he will not, if he comes to office, renationalise.

Does my right hon. Friend agree that, despite the prophets of gloom and doom, his statement will be widely welcomed not only in the House but in the country? An encouraging aspect of his autumn statement is the continual decrease of public expenditure in relation to GDP. Obviously, that will bring forward the time when tax burdens can be reduced. Does he further agree that our competitors overseas with a low proportion of GDP vis-a-vis public expenditure and low taxation are able to create jobs?

My hon. Friend is quite right. The two most successful economies in the world today are those of the United States and Japan. They have the lowest proportion of public expenditure in relation to GDP, and the lowest level of taxation in relation to GDP. Those are important facts to bear in mind, particularly in the context of how to create more jobs. In addition to our satisfactory record on public expenditure and the prospects there, the House will welcome the prospect of a further reduction in inflation to below 4 per cent.

Can the Chancellor tell us whether one of the programmes to be held back is overseas aid? If so, is that the Government's response to the massive lobby of this House by people of all political persuasions about the Government's reaction to Third world problems?

Can the Chancellor confirm that if, for some reason or other, the privatisation programme is delayed—and today he mentioned some of the difficulties involved—tax cuts will be put off with it?

Is the Chancellor's statement an admission by the Government that monetarism does not solve the undoubted problems of pay settlements? If he accepts that that is so in his statement, can he tell us what the Government will do about pay settlements in the next two years? Please do not say, "Appeal to the CBI."

One question is quite enough, and I will answer the first question that the hon. Gentleman raised which I expect is closer to his heart—the matter of aid. I assure the hon. Gentleman that there is no reduction in the aid budget. The aid budget has been increased and will be maintained in real terms throughout the survey period.

As my right hon. Friend is now giving more weight to interest rates and less to monetary targets, may I ask whether he now considers this to be a suitable time to apply for entry to the European monetary system?

Does the Chancellor expect manufacturing output in 1986 to recover to its 1979 level? When the right hon. Gentleman says the assumption in the forecast is that the exchange index will remain at about 81, is the implication that if the dollar falls, the pound will be allowed to fall, too, part way against the deutschmark?

It is not helpful to go into details about assumptions of exchange rates. As the hon. Gentleman rightly said, the assumption is that the exchange rate, the weighted average, will remain broadly at this level. In answer to his first question, I hope he welcomes the fact that we now look like going into the sixth successive year of steady growth at around 3 per cent. a year.

While welcoming the increase in the proceeds of asset sales, I should like to ask my right hon. Friend whether he is aware that some of his hon. Friends are disappointed that the Government have not been able to reduce public expenditure and regret that, before the deduction of asset sales, Government spending will increase by over £7 billion in the next year?

My hon. Friend should remember that, unlike previous Governments, we are steadily reducing public expenditure as a share of gross domestic product.

What predictions has the Chancellor made about the impact of this autumn statement on the level of unemployment?

The autumn statement in itself is but a small part of the Government's overall policies. Those policies have brought about a greater growth in the number of jobs than in all the other countries of the Common Market put together. Over the last six months we have seen a flattening out in the level of unemployment.

Does my right hon. Friend accept that he is to be warmly congratulated on preparing the way for a series of Budgets which will reduce the level of personal and other taxation and increase public capital spending where it is needed? That will be done against a background of falling inflation and rising output. As he said, that has been an aim of Governments for many years and hitherto it has not been achieved. When he looks at the scope of tax cuts, will he consider whether there is room for returning to a lower rate of tax of, say, 25 per cent.—the kind which existed previously —so as to reduce the disincentives to those who are first going to work?

I will certainly be happy to look into the suggestion that my right hon. Friend has made.

Is the Chancellor aware that he is not only selling off the country's silver to balance the books, but selling off some of our great national institutions? The Institute of Psychiatry is having to sell itself to private American firms in order to keep going. The Chancellor should be deeply ashamed of pimping for this financial prostitution.

The right hon. Gentleman is a little bit confused. These enterprises are sold not to American firms, but to the British people.

If my right hon. Friend seeks more effectively to rebut arguments such as that which has just been presented—that we are burning the seedcorn by financing current expenditure not only with the proceeds from privatisation but with the proceeds of North sea oil—is there not a compelling case for the Government doing what every prudent individual and company has to do, which is to account separately for the capital income and outgoings and for current income?

I take entirely my hon. Friend's point. It is one which I have considered on a number of occasions. I have some responsibility in this matter. The different figures for current and capital expenditure are shown much more clearly in the national accounts for anybody to see. These distinctions are not always very, not very—[AN HON. MEMBER: "Helpful."]—helpful. Thank you very much. To take one example, some expenditure on education—not all, but some—which is classified as current expenditure is in fact an investment.

Will the Chancellor reflect on the consumer-led boom that he has predicted and give the House some indication about the effect of the boom on imports, and in particular on our propensity to import manufactured goods?

I am sorry that the hon. Gentleman is so gloomy at the prospect of the consumer doing a little bit better. I can give him the answer. We expect the current account surplus of the balance of payments to rise from £3 billion this year to £4 billion next year.

Does my right hon. Friend recall that when Noah sent the animals from the Ark two by two, he said to them, "Go forth and multiply"? Unfortunately, two of them coming out were snakes and they said, "We can't; we're adders." Some of us are a bit concerned because the adding up of the Budget in recent years has meant restriction. I am glad to know that in his statement he is adding to the amount of money spent on housing and the infrastructure. Will he continue that process for the next few months?

I always listen carefully to the advice of my Leicestershire neighbour. I read in the papers recently that, after a long and distinguished career in this House, he is not proposing to stand at the next election. I wish him a happy retirement.

Will the Chancellor of the Exchequer come clean and tell the House that the Government have done an about-turn? Is it not true that the Government are reflating the economy by selling off public assets? Does not the flood of press releases from Government Departments this afternoon, boasting about their public expenditure increases, demonstrate that fact?

If the Chancellor has a fiscal adjustment to make later in the year, will he also ensure that that resource goes into creating jobs and helping those who have been hit by the mistaken policies of the past five or six years—those who are unemployed and need jobs and help with the poverty that they are facing?

As I said, the employment prospect, although not as good as I should like, is clearly improving.

The only about-turn of which I am aware is by those former members of the Labour party who are now members of the SDP.

Would it create any problem for my right hon. Friend's financial strategy if, in the ensuing year, he permitted water authorities to borrow in the market rather than to implement their capital investment programmes through increased charges? Is he aware that this year the Anglian water authority has said that it can carry out its capital investment, if it is able to borrow in the market, with increases of only 7 per cent., but that if it has to be done by charges the figures will be 11 per cent? Farmers and business men very much resent having to pay increases that are higher than inflation and higher than the water authorities themselves would wish.

It is not the case that the water authorities could borrow more cheaply in the market than they do from the Government.

My hon. Friend raises the very interesting question of the privatisation of the water authorities. My right hon. Friend the Secretary of State for the Environment is thinking very deeply about that.

Has the Chancellor of the Exchequer any idea how deeply offensive it is for him and other members of the Government to talk of six years of steady growth in those areas which have suffered six years of 20 per cent. unemployment, particularly when they are hit by cuts in Government regional and other aid? When will the boasted prosperity reach those areas?

I have never sought to deny the problem of unemployment in particular parts of the country. By the same token, I hope that the Opposition will not seek to deny the success in economic growth and lower inflation that the Government have achieved.

Given my right hon. Friend's welcome commitment to infrastructural refurbishment, while at the same time keeping a firm hand on public borrowing, will he now relax the rules governing the amount of their own money that local authorities can spend? Has he heard the old adage that a stitch in time saves nine?

The reasons for the restriction on the pace at which local authorities can use the receipts from council house sales were set out clearly in the debates in the last Session. I do not see that the position has changed at all from that time.

Given that the Prime Minister told the House at the Dispatch Box a year ago that increased infrastructure was not a cost-effective way of increasing jobs, and that in January she said that it would cost £37,000 for an unemployed worker to go into public sector house building, is the Chancellor's statement today intended to increase or decrease unemployment?

As I said in reply to the hon. Member for Kingston upon Hull, West (Mr. Randall), the Government's policy, among other things, is designed to do what it can to help to create new jobs. New jobs are being created faster than in the whole of the rest of the European Community put together.

Does my right hon. Friend accept that, in the circumstances, the record he has put before the House is by any standards a measure of outstanding performance? It is the envy of all democratic Governments and beyond the wildest dreams of the Labour party, We should be very grateful to him for it.

My right hon. Friend did not mention interest rates, which are hitting British business and its prospects for growth? Will he please say something on this subject?

I am grateful to my hon. Friend for his accurate assessment of the Government's record.

As I have said on several occasions, interest rates will be kept no higher than is necessary to ensure that there are monetary conditions sufficient to reduce inflation. I will not take any chances with inflation.

What is the Chancellor's estimate for the deficit on the balance of trade in manufactures?

I do not think that the deficit on the balance of trade in manufactures will be very different this year from last year.

I also thank my right hon. Friend for his statement, in particular for the extra injection of money into the National Health Service. It comes at a critical time in the Health Service which has resulted in some contraction of services. I hope that my right hon. Friend will discuss with the Secretary of State for Social Services the need for some reappraisal at district level so that the valuable extra money may be used speedily.

I am grateful to my hon. Friend for his remarks. The whole House knows of his concern for and the work that he has done in the Health Service—in particular, the hospitals—over many years. However, I am still concerned about the waste that takes place within the National Health Service. There is scope for achieving enormously greater value and output from the existing expenditure, in addition to what may be gained from any increase in expenditure. I hope that those responsible in the Health Service will address themselves very quickly to achieving those savings.

I am quite relaxed about receiving an uncivil answer from a Chancellor who can be as rude to Conservative Members as he is to the Opposition. Does he understand that many people, not only in the Labour party, and not only my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore), are deeply concerned to hear what some of us did on Friday about the affair of Johnson Matthey? Why is he so coy—

Order. I find it very difficult to know how the hon. Member will relate his question to the autumn statement.

It relates to the general handling of the economy. The question is simple: why is the Chancellor so coy about having an inquiry? In December 1984, was he told the extent of the alleged fraud—

Order. I do not think that the hon. Gentleman's question has much connection with the statement.

I welcome the Government's continuing programme of asset sales. Will my right hon. Friend take the trouble to stress not only the arguments for asset sales as an offset to increased public spending on worthy projects but those for wider share ownership and, most importantly, the fact that the companies concerned, when returned to the private sector, will be contributing to the revenue by way of personal and corporate taxation?

My hon. Friend is right in thinking that the purpose of privatisation is to benefit the nation through the greater efficiency of the companies concerned. Every one of them has done better in the private sector than it did when it was owned by the state. The purpose is also to accompany it with a greater expansion of share ownership—doubling the number of individual shareholders throughout the country. That is the purpose of privatisation, and that is why it is here.

Can the Chancellor be more positive about unemployment? Can he give even an assessment of how many people he expects to get work, thereby reducing unemployment, as a result of his asset-stripping and his statement?

As the hon. Gentleman knows, it is not the custom to give forecasts of unemployment. I expect the growth in the number of people in employment, which is greater than in the whole of the rest of the European Community, to continue.

Order. There is another statement to follow. I shall call those hon. Members who are on my list for this statement on the next statement if they wish to take part then.

The Chancellor told me that the sale of British Gas did no more than bring forward tax reductions. Will he, therefore, confirm that there could be no tax reduction this year or next year without the sale of British Gas?

Order. I said to the hon. Gentleman that I would take his point of order after the statement. I know what it is about, because he has kindly given me notice of it.


On a point of order. Some of my hon. Friends—some but not all—thought that you, Mr. Speaker, were a bit quick on the draw in ruling out of order my question to the Chancellor of the Exchequer. I asked him to reflect on the issues concerned because they were about public and private assets. At your convenience, Mr. Speaker, perhaps you will write to me about your reasons for that ruling.

I shall not give my reasons. I do not think that the House would appreciate that. I hope that I was not quick on the draw. If the hon. Gentleman had mentioned "privatisation", or something of that sort, that might have been easier for me.

In relation to the statement by the Chancellor of the Exchequer and the ensuing questions, especially the one that was asked by my hon. Friend the Member for Linlithgow (Mr. Dalyell), some of us find it strange and difficult to understand that when the Chancellor of the Exchequer had the opportunity to clear his name by having a public inquiry into the Johnson Matthey affair—

Order. I must stop the hon. Gentleman. I cannot help him, because it is not a matter for me.