Public Expenditure: Reserve

Lord Barnett Excerpts

Monday 9th May 2011 Lords Chamber

Asked By

[Lord Barnett]

To ask Her Majesty’s Government whether the public expenditure reserve is adequate to meet any potential requirement.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the contingency set aside in the Government’s public expenditure plans over the period 2011-12 to 2014-15 amounts to 0.6 per cent, 0.8 per cent, 0.9 per cent, and 1 per cent of each year’s total managed expenditure. The Government believe that this is a prudent level of contingency to hold against unforeseen costs during the 2010 spending review period, but it is not intended to cover all possible eventualities.

[Lord Barnett]

I thank the Minister for his Answer, but would not some flexibility be positively helpful? For example, if growth was not as good as we all hoped and unemployment continued to rise, could not additional funds for the contingency reserve be a sort of plan B? The Chancellor need not call it that but just do it, as it would be positively helpful. Indeed, that would help the deficit reduction by increasing growth and reducing unemployment.

[Lord Sassoon]

No, my Lords, that would not be the right approach at all. The words of a distinguished former Chief Secretary to the Treasury in another place on 17 March 1977 got it absolutely right:

“It is no good drawing up elaborate spending plans without the determination and means of ensuring that the planned total”,

expenditure,

“is not exceeded. We have that determination … The contingency reserve regime is strict. We do not allow additional expenditure to count against the contingency reserve until we are fully satisfied that offsetting savings are not to be had”.—[Official Report, Commons, 17/3/77; col. 641.]

That is what the noble Lord, Lord Barnett, said in 1977, and he got it absolutely right.

--- Later in debate ---

[Lord Sassoon]

We are straying a bit from the subject of this Question but, as there do not seem to be many other noble Lords wanting to get in, I will say that I know how difficult it is for the ONS to produce these statistics. I am sure that it will continue to look at all ways of improving the way that it deals with the data. There was a one-off change to the way in which construction data were reported and the industry is questioning that. I am sure that the ONS is on the case.

[Lord Barnett]

My Lords, I am flattered that the Minister thought it necessary to research what I said 34 years ago when I was that much younger, but could he try to answer my supplementary Question this time?

[Lord Sassoon]

I am hearing that people seemed to think that I gave quite a sufficient answer the first time around. The noble Lord got it absolutely right when he was Chief Secretary and that is what my right honourable friend the present Chief Secretary will be doing.