Parliament and Politics: Tories seek end to horsetrading on public spending

THE CABINET committee on public expenditure will attempt today to finalise cuts in public expenditure before the Conservative Party conference which opens in Brighton tomorrow.

Known as the EDX committee, the ministers have accelerated their meetings in the hope of avoiding secret horsetrading in hotel bedrooms at the conference.

Michael Heseltine said that the Cabinet battle over deeper cuts in public spending was still going on. The President of the Board of Trade hinted that he was resisting Treasury demands for cuts in infrastructure schemes, which could hit jobs.

Mr Heseltine made it clear the cuts would have to be deeper to stop devaluation leading to higher inflation. Public sector pay increases will be held tightly to about 2 per cent.

The Treasury has imposed a new regime this year, with a ceiling of pounds 244.5bn. The old system of bids, and bilateral meetings with a 'star chamber' committee of the Cabinet has been replaced by a Cabinet committee that will impose the cuts.

The EDX committee, chaired by Norman Lamont, the Chancellor, met for the fourth time last Thursday to consider the radical options for cuts put forward by Michael Portillo, the Chief Secretary to the Treasury.

He began needing to cut pounds 14bn off the bids. The committee has reduced it to less than pounds 3.5bn. Pressure has been increased by rising welfare payments, including unemployment benefit. Only social security, health and education are expected to receive increases in real terms.

Virginia Bottomley, Secretary of State for Health, has won an extra pounds 539m for the new community care programme next year, but is facing cuts in hospital building.

The Treasury is resisting a demand by Michael Howard, Secretary of State for the Environment, for an extra pounds 2bn to ease the introduction of the council tax. The third round of City Challenge awards for the inner cities - Mr Heseltine's brainchild - could be postponed. Parts of the pounds 12bn roads programme will be delayed, and the European Fighter Aircraft could be cut from the Defence budget.

One ministerial source explained: 'We had a bilateral with Mr Portillo. He said things were very difficult, a firm grip was needed on the fiscal side, the numbers are very difficult.

'The second stage came when Portillo put forward a view. Then we had some hard talking.

'What we are not doing this year is negotiating down from our own bids and splitting the difference. We are negotiating down from the amount promised last time. Portillo then went away and put in a paper to the EDX committee. They are looking across the board. If colleagues say 'You must protect this', he says, 'Here are some radical options, which do you want?'

'Unless you are on EDX, you don't know how it's going. You are allowed to put in a paper to EDX and then it goes to the Cabinet, where you can put in your pennyworth. Portillo has said all this talk about bids is wrong. He said this year he was going to want cuts from the baselines.'

Mr Portillo described speculation about excess bids as 'old speak'.

------------------------------------------------------------------------ Spending plans for 1993-94 ------------------------------------------------------------------------ Subject of expenditure (billion pounds) Social Security 71.2 Health 29.8 Defence 24.5 Scotland 6.7 Wales 3.0 N. Ireland 7.4 Others 35.6 Payments to local authorities 61.1 Nationalised industries 2.9 Less privatisation receipts 5.5 Reserve 8.0 TOTAL 244.5 ------------------------------------------------------------------------ Source: Budget 'Red Book', March 1992 ------------------------------------------------------------------------