§ Mr. Murphy
asked the Chancellor of the Exchequer if he will set out the principal achievements of Her Majesty's Government within his Department's responsibilities since May 1979.
§ Sir Geoffrey Howe
This Government have pursued consistent and responsible monetary and fiscal policies designed to reduce inflation and to promote recovery. Inflation has fallen from a peak of about 22 per cent. in 1980 to below 5 per cent. now, the lowest level since 1968, and bank base rates are down to 10 per cent. from their peak of 17 per cent. We are on course to reduce the ratio of public expenditure to GDP and have improved control of public spending by the introduction of a cash planning system. The public sector borrowing requirement has been reduced as a proportion of GDP from an average of 7 per cent. in the five years before this Government took office to 3.25 per cent. last financial year. Our fiscal deficit is now among the lowest in the industrial world. We have substantially reduced official external debt.
The Government have in successive Budgets introduced measures designed to restore incentives, and to increase the scope for enterprise and initiative. The rates of income tax and the burden of capital taxes have been reduced and substantial progress has been made towards the abolition of the national insurance surcharge. We have also removed a wide range of controls—for example, pay, price, exchange, dividend and hire purchase controls —allowing market forces to operate more efficiently.287W
The Government have returned a number of major enterprises to the private sector. They have maintained pressure on the nationalised industries to secure increased efficiency and it has taken steps to reduce their monopoly power. The Civil Service is now smaller, by about 11 per cent. overall, and more efficient than it was when the Government took ofice. We are on course to achieve the smallest Civil Service since the end of the second world war. My own Departments have made a significant contribution to these manpower reductions, achieving savings of some 14 per cent. With lower inflation and interest rates domestic demand has been rising. Business confidence is improving and a continued recovery in output is forecast for this year and into 1984. The prospects for sustainable growth are better than they have been for many years.