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Prospects for Economic Management 1973 - 77
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Chapter 4
The Course of Public Expenditure to 1977-78(l) by
Terry Ward
1. The basic source of any projections of public expenditure are the White Papers published towards the end of each year, Which present the official forecasts of public sector spending for the next four years or so. On the same day as the December 1973 White Paper, 'Public Expenditure to 1977..78' (Cmnd. 5519) was published, the Chancellor announced cuts to the proarammes for the financial year 1974-75 amounting to £1180m. at 1973 survey prices. These cuts were restricted entirely to expenditure on goods and services, principally capital formation which was reduced by £85lm. (over 14 per cent) below the level proposed in the White Paper. Any analysis of the projections presented in the 1973 White Paper must take these cuts into consideration, though it is not possible to do this unequivocally on the basis of the information at present available. Their scale certainly entails important modifications to the expenditure plans for the years after 1974-75, but no amendments have as yet been issued. Nevertheles' this chapter does make some suggestions as to what the effect of the cuts is likely to be.
2. The first section of this chapter, is concerned with expenditure in 1972-73 and 1973-74, waile the second section examines chanaes to the estimates for 1974-75, includin& the substantial cuts announced a few hourt after the publication of the December 1973 White Paper. The third section considers the whole course of · expenditure for several years beginnina 1970-71, as presented in the 1973 White Paper, compares these witb what was proposed in the two previous White Papers (Cmnd. 4829 and 5178). and attempts to estimate the effect of the cuts announced by the Chancellor on December 17. Finally the successive chan&es that have been made to the forecast of expenditure for tpe year lt74-75 since the present Government took office are brousht toaether on a co-.on price b·asia.
Changes to the Cmnd. 5178 Estimatet of Expenditure for 1972~73 and 1973-74 3. Table 1 tummarizes the successive chanses to the estimates of expenditure in 1972-73 ani 1973-74 between the publication of Cmnd. 5178 in December 1972 and the present ti.e 1 as described in the December 1973 White Paper and as implied by the latest nstieaal ineoa. fiaures. Although the lt73 White Paper seta out the revisions
made subsequent e. C.nd. 5178 in much areater detail than previous White Papers, which
(1) The full de~ivati. . of all the figurea in this chapter are available on request to t~e aut~.
4-2
is a very welcome feature, the division by economic category in Table 1 involves a good deal of approximation, though it probably gives a fair representation of the actual break-down.
4. The changes between December 1972 and May 1973 refer to the revisions announced in March and May of 1973, which were described by the Treasury in Eleventh Report from the Expenditure Committee, 'The May 21st Expenditure Cuts' (H.C. 398, 1972-73). It is important to note that our figures differ from the figures given in that report, tc the extent that they have been inflated very approximately from a 1972 price basis to 1973 survey prices, but mainly because certain items have been excluded from Table I altogether and indeed from the chapter as a whole. These items are social security upratings, the refinancing of home shipbuilding lending and of fixed rate export credits, investment grants, regional employment premiums and regional development grants. The reasoning here is that none of these represents a 'genuine' net cost to the Exchequer. (l) Other points which should be noted are that changes to the shortfall allowance are included under "goods and services", while those to the contingency reserve are included in the "other" category and treated as policy changes.
5. The table indicates that, in 1972-73, total underspending in relation to the sum of the individual programmes presented in the 1972 White Paper amounted to some £900m. at 1973 survey prices( 2), of which £300m. had been written by the Treasury into the forecast of overall expenditure in the form of shortfall (£lOOm. appearing under 'nationalised industries', £200m. remaining unallocated), This total of £900m. should be considered in relation to the figure of about £615m. on the definition of expenditure adopted here, which was expected by the Treasury in May and the details of which were outlined to the Expenditure Committee· in June, more than two months after the end of the financial year in question. In other words, a shortfall of almost.£300m., over and above the Treasury's June estimate,mostly falling on goods and services, materialised between June and December 1973.
6. The underspending was widely dispersed between the individual programmes, with five showing actual expenditure as being over £lOOm. less than estimated in the December 1972 White Paper. The items on which important shortfalls occurred include subsidies to agriculture and industry, nationalised industries capital expenditure, investment in roads and housing, payment of social security benefits
(1) To amplify this as regards R.E.P. and regional development grants, the argument is that the monetary cost tends to be offset by increased resource availability so that no net increase in revenue is required.
(2) £947m. if the items excluded from the analysis are reinstated.
4.3
Table I
Successive Changes to the 1972 White Paper Estimates of Public Expenditure in 1972-73 and 1973-74, £m at 1973 Survey Prices
Total
1972-73
Shortfall allowed for in Cmnd.5178 (Dec.l972)
Dec.l972 to May 1973
May 1973 to Cmnd.5519
Total changes to individual programmes, Dec.l972 to Dec.l973 (i.e. before deducting shortfall)
Difference between estimated outturn and sum of individual programmes in Cmnd.5178 (i.e. after deducting shortfall)
-300 -315 -287 -602
-902
1973-74
Shortfall allowed for in Cmnd.5178 (Dec.l972)
Dec.l972 to May 1973
May 1973 to Cmnd.5519: of which, increased shortfall
other
Total changes to individual programmes, Dec.l972 to Dec.l973 (i.e. before deducting shortfall)
Difference between estiuted outturn and sum of individual'programmes in Cmnd.5178 (i.e. af.t;er deducting all sho~tfall)
Additional underspending suggested by national income figures for 1st 2 quarters of 1973-74
-300 -350 -200 +622 +272
-228 .
-300
Economic classification of changes
Goods and services
Other
Policy Estimaung Pohcy Est1mat1ng
0 -300
0
0 -95
0
-20 -211 +80
-20 -306 +80
0 -220 -136
-356
-20 -606 +80
-356
0 -85
0 -61
-146
-300 -115 -200 -356
-471
0 -15
0 +304
+289
0 -135
0 +735
+600
-146
-971
+289
+600
0 -300
0
0
I
I
4-4
and expenditure on environmental services. Most of these were identified by the Treasury in June as being likely to experience major shor~falls, but the size of this appears in some cases, the 'Trade, industry and employment' programme, for example - to have been underestimated.
7. As regards the current financial year, 1973-74, Table 1 indicates that by the end of May 1973, the forecasts of expenditure presented in the December 1972 White Paper had been revised downwards by about £350m. at 1973 prices, in addition to the shortfall of £300m. initially expected. £lOOm. of this was associated with the May policy cuts to the 1974-75 programme, the remainder being estimating changes (mainly to agriculture and nationalised industries). In October, further reductions of £lOOm. to expenditure on goods and services were announced, as a consequence of the rephasing of building contracts and the postponement of the procurement of defence supplies. However, other changes made between June and December have had the effect of actually increasing the estimate of final outturn contained in the December 1973 White Paper above that expected in December 1972,· by about £72m. (£272m. on individual programmes, less an increase in the shortfall allowance of £200m.). In other words, during this time a net addition of over £400m. has been made to estimated expenditure. As the table shows, this comprises two very divergent tendencies. While spending on goods and services is now officially expected to be £600m. below the revised estimate presented to the Expenditure Committee in June, which would represent a total underspending on the sum of the programmes described in the December 1972 White Paper of £1100m., the forecast of expenditure on transfers and subsidies has escalated by more than £1000m., or by almost £900m. over the proposals of the 1972 White Paper.
8. As regards the latter, the two items sharing major responsibility for this increase are debt interest, payments of which are now estimated to be some £470m. in excess of the December 1972 forecast, and the housing programme, to which over £400m. has also been added, in the form of rebates, subs~dies and loans. For goods and services, in addition to the increase of £200m. to the shortfall allowance, reductions in investment in housing and nationalised industries account for much of the downward revision between June and December. Both of these are estimating rather than policy changes, and in the case of nationalised industries capital expenditure it seems worth noting that, for estimating reasons alone, the present forecast of 1973-74 outturn is some £360m. - if the initially expected shortfall is included - or over 16 per cent below the sum proposed in the 1972 White Paper(l).
(1) Much of this has materialised since June, as the Treasury gave evidence before the Expenditure Committee in June, to the effect that the underspending was expected then to be only about £80m. in addition to the shortfall of £lOOm. See Eleventh Report from the Expenditure Commdttee, op.cit., Minutes of Evidence, para.26.
4-5
9. The outcome of these two opposing tendencies is to re~uce the forecast of outturn for the current financial year presented in the De'c· ember 1973 White Paper by £228m. below the sum of the individual programmes proposed in the December 1972 White Paper. {l) However, the final line in Table l indicates that, on the basis of the national income accounts for the first ha~f of 1973-74, an additional shortfall of some £300m. may well occur. More specific~lly this is the underspending on the December 1973 White Paper estimate which would result if the rate of current expenditure on goods and services in the first two quarters of the present financial year, as shown by the seasonally adjusted national income figures, at 1970 prices, were to be maintained over the remaining half of the year. Thus the increase in public consumption between 1972-73 and 1973-74, derived on the
1
basis of this assumption. is 2~ per cent as compared with a rise of 5 per cent implied by the details given in the 1973 White Paper; this represents a discrepancy of about £300m. if expressed in terms of 1973 survey prices.
10. As regards capital expenditure, any attempt to carry out a similar exercise is frustrated by the fact that the national income figure for this item with respect to the second quarter of 1973-74 is, at the time of writing, not available~ The rate of capital formation in the first quarter of the current financial year was substantially less than that necessary to achieve the volume of expenditure proposed in the 1972 White Paper for the year as a whole. However, the combined public and private investment figure for the second quarter of 1973-74. which has been published, shows a big increase over that of the first quarter. More importantly, the volume of fixed capital formation proposed for 1973-74 in the 1972 White Paper was markedly reduced, when the 1973 White Paper forecasts were formulated. As described above, almost all of the changes made to the estimates of spending on goods and services in 1973-74 between June and December 1973 fell on this particular item. In view of these considerations, the most reasonable assumption would seem to be that actual outturn as regards investment will be as
obforecast in the 1973 White Paper. Nevertheless even this ~ssumption the
apparent underspending on public consumption means that expenditure on goods and services in 1973-74 will be some £1400m. less than the sum of the individual programmes presented in the December 1972 White Paper - £127lm. being due to estimating reasons - providing no acceleration takes place over the second half of the year.
11. The above calculation makes no allowance for the effects of the present fuel crisis or for the reduction in expenditure expected in the last quarter of 1973-74 as a corollary of the cutback to the 1974-75 programme announced by the Chancellor
(1) £316m. if the items excluded from the analysis are reinstated.
4-6
on December 17. It merely indicates what would be the outcome if spending on goods and services were to continue at the same rate over the second half of the current financial year as over the first half. In other words, any effect on expenditure arising from the three-day working week or the situation as regards coal stocks would be additional to the shortfall of £300m. on the 1973 White Paper estimate suggested by the national income accounts. (l)
Ch~es to Exp~nditure iu 1974-75: 12. In the first section, the concern has been with the changes to the 1972-73 and 1973~·74 estimates bet't<;reen the 1972 \fuite Paper and the present time. Because of the size of the cutback to the 1974-75 programme made after the publication of the 1973 White Paper, expenditure in this particular year is considered separately in this section. Table 2 follows the pattern of Table 1 and shows the changes to the forecast for 1974-75 since December 1972.
Table 2 Chan~~etyeen Cmndo5178 and December 1972 to Expenditure in 1974-75
£m. at 1973 Survey Prices, ,,.___..,.,.. --eo---·~
ShmrtfaU allm·;acl fo:-: in Crond. 51/B (Dec .1972)
Dec. 1972 to 1-iay 1973
May 1973 to Cumd. 5519 of which: Shortfall
Other
.,._ _.,..
Total ch~:nges to individud prograrm.11es, Cmnd.5178 to Cmnd.5519 (Le. before deducting shortfc.ll)
·'"
Difference between expected outturn and sun of individual progr£<.mmes in Cmnd.5178 (i.e. after deducting all shortfall)
December
.
17
cuts
Total changes to programmes Dec. 1972 to Dec.l973
Total
-300 -603 -lOO +702
+99
Economic classification of changes
Goods and Services
Other
Policy 1 Estimating Policy Estimating
0
-555 I' I I o!' I I -;·63
-300 0
-lOO -73
0 -48
0 +229
0 0
0 +483
-492 -73 +181 +483
-301
I
-492
-473
+181
+483
-1180
-1180
0
0
0
-1081 -1672 -73 +181 +483
(1) The calculation, of course relates only to purchases of goods and services, and it may well happen that the factors mentioned might give rise to a
higher than expected increase in transfer payments, which as far as total expenditure is concerned would tend to offset any reduction in direct expenditure on resources.
4-7
13. The table indicates that in May 1973, cuts amounting to some £600m., falling mostly on goods and services, were announced to the 1974-75 proposals as presented in the December 1972 White Paper. This was largely in response to the very rapid decline in the level of unemployment over the preceding few months, However, between June and the publication of the December 1973 White Paper, this reduction in planned expenditure was more than counterbalanced by a rise in expected transfer payments. As occurred wi~h respect to 1973-74, substantial estimating changes were made to the forecasts of debt interest and housing subsidies~ loans and rebates, Moreover nationalised industries capital expenditure once again accounts for much of the downward revision to the estimate of spending on goods and serviceso
14, The cuts of £1180m, announced on December 17 result in the official forecast of expenditure on individual programmes in 1974-75 - that is, before allowing for the expected shortfall - being a total of £108lmo less than forecast a year ago and £1745m, less as regards purchases of goods and services considered in isolation. However~ when it comes to predicting che likely effect of the December cuts on the actual outturn for 1974-75, the size of the reduction involved and the limited time available to departments for instituting the necessary modifications to their plans are liable to be of crucial importance, It should be noted in Table 2 that the estimate presented in the 1973 White Paper of final outturn in relation to the sum of individual programmes included an allowance for a total shortfall of £400m, This represents the Treasury's forecast, based on past experience, of how much the various departments will underspend in normal circumstances But given the situation as it now 1s, the reluctance of each department not to break commitments already entered into and the easing of the pressure of demand - at least in the construction industry - it seems plausible to suppose that this shortfall might well fail to materialise. In other words, it is argued that the effective reduction 1n expenditure in 1974-75 resulting from the December cuts is likely to be much closer to £780m, below the level that otherwise would have occurred 9 than the sum of £1180m. which appears in the Chancellor's announcement,
Public Expenditure, 1970-71 to 1977-78 15, This section is concerned with the expenditure plans as they now stand in relation to what was proposed in the November 1971 and December 1972 White Papers (Cmnd,4829 and 5178), Table 3 presents indices of expenditure. both in total and by economic category, as derived from the constant price series given in the last three White Papers, taking 1970-71, the first year' covered by Cmnd.4829, as equal to 100. It should be noted that the base year figures as regards Cmnd.4829 refer to provisional outturn only, but it does not appear that there were any
4-8
substantial subsequent modifications to these. The derivation of the figures given in the table is shown in the appendix to this chapter.
Table 3 Indices of Public Expenditure, in total and by Economic Category, 1970-71=100
1970-71 1971-72 1972-73 1973-74 1974-75 1975-76 1976-77 1977-78
Expenditure on goods and services:
Cmnd.4829 (Nov .1971)
Cmnd.5178 (Dec.l972)
Cmnd.5519 (Dec.l973) as published after Dec. cuts*
Total transfers:
Cmnd.4829 (Nov .1971)
Cmnd.5178 (Dec.l972)
Cmnd.5519 (Dec.l973)
100.0 100.0
100.0 100.0
100.0 100,0 100.0
101.9 101.5
100.9 100.9
97 . 9 104 . 8 104.5
104.6 105.5
103.9 103.9
lOL3 114,. 2 llO. 7
107.5 111.3
106.7 104.8
103.5 117' 7 123.5
109o5 113 0 3
109,7 105.1
106.0 119,1 126,1
112o4 115,.8
112.8 107.0
108.5 120.3 127 . 2
118.1 115.0 109.2
119 0 9 130.0
117.8 112.0
134.3
Total Expenditure:
Cmnd.4829 (Nov .1971)
Cmnd.5178 (Dec.l972)
Cmnd.5519 (Dec.l973) as published after Dec.cuts*
100.0 100.0
100.0 100.0
100.3 102.8
102.2 102.2
103.2 108.8
106.4 106.4
105.9 113 0 8
113.,0 11L8
108.1 115.5
115,,8 ll3.0
110.9 117.5
118.2 ll4 .6
118.8 120.6
ll7 .o
124.0 120.4
Notes:
Transfers exclude the uprating of social security benefits, the refinancing of home shipbuilding lending and export credits, investments grants, regional employment premiums and regional development grants and include the contingency reserve. They also include, where appropriate, the adjustment to the relevant survey prices, or outturn prices in the case of Cmnd.4829,of past payments of social security benefits. The shortfall allowance is deducted from goods and services.
* The figures relate to expected outturn in the light of the national income figures for the first half of 1973-74 and the December cuts. For fuller details see Table A.l in the appendix to this chapter.
16. Looking first at the indices derived from the December 1973 White Paper, it is
.~ -·
immediately apparent that transfer payments are planned to increase over the period up
to 1977-78 at a considerably faster rate than expenditure on goods and services.
This applies a fortiori if the December cuts are taken into account. The possible
effect of these cuts is indicated in Table 3, for the years from 1974-75. The
basic assumption, as set out in the previous section, is that the expected shortfall
4-9
in 1974-75 written into the Treasury's estimate of final outturn as contained in the December 1973 White Paper, will in fact not materialise, which implies that the effective reduction on direct purchases of resources will be £780m. rather than £1180m. It is further assumed that in subsequent years, expenditure will be lower than planned by at least this amount because of the mechanics of the operation and probably by more so. (l) A shortfall of £200m. rather than £400m. has therefore been deducted from the estimates for 1975-76, 1976-77 and 1977-78, implying the same rate of increase between these years as proposed in the December 1973 White Paper, but a slightly lower rate between 1974-75 and 1975-76. The 1973-74 figure, after December cuts, takes account of the shortfall suggested by the national income figures for the first half of the financial year.
17. The effect of the December cuts, as suggested here, is to reduce the average rate of growth of total expenditure proposed in the December 1973 White Paper for the period 1972-73 to 1977-78 from three per cent to 2! per cent a year, and on goods and services from 2~ per cent to 1! per cent. By contrast transfer payments are expected to increase over these five years at an annual rate of about four per cent on average . The index for total purchases of goods and services, however, conceals significant differences between the forecasts for capital as opposed to current expenditure. While the latter was expected in the December 1973 White Paper to increase by an average rate of three per cent a year between 1972-73 and 1977-78, the growth of investment was planned to be only slightly more than one per cent a year. This is evident in the appendix to this chapter which gives the breakdown between these two items. It also indicates that while the December cuts have only a small impact on public consumption, they lead to the volume of capital expenditure in 1977-78 being more than five per cent less than in 1972-73, if the assumption adopted here is realised.
18. Comparing the indices for Cmnd.5519 (December 1973) with those derived from the two previous White Papers, a notable feature is that the forecasts of expenditure on goods and services presented in the former bear a marked resemblance to the proposals contained in Cmnd. 4829, published in November 1971, despite the substantial revisions which occurred between times. This applies particularly to the estimates for 1974-75 and 1975-76. Increases in planned expenditure between November 1971 and December 1972 have therefore been almost precisely counter-balanced by equivalent reductions between December,l972 and December 1973. The division between current and capital expenditure, however, was substantially altered over this period, the forecast for the former presented in the December 1973 White Paper for the years 1973-74 to 1976-77 being actually in excess of the 1972 White Paper
(1) For example, many projects due to commence in 1974-75 would have produced their main effects on expenditure in subsequent years.
4-10
.
proposals. Oh the other hand, the plans as regards investment were cut back markedly and this item.is entirely responsible for the decline in the overall index of direct purchases of resources between these two White Papers.
19. In contrast to expenditure on goods and services, projected estimates of transfer payments have escalated dramati'cally over the past two years, primarily as a result of increases to debt interest and the various transfer elements included in the housing programme.
Successive Changes since July 1970 to Planned Expenditure in 1974-75'
20. During the period from the present Government taking up office to the time of writing, the public expenditure plans for the financial year 1974-75 have been substantially altered on no less than six separate occasions. Table 4 sets out the successive changes in terms of 1973 survey prices and shows the breakdown between revisions made for policy reasons and those made for estimating reasons, and the division between those changes relating to expenditure on goods and services and those relating to transfers and subsidies. As can be seen, the outcome of cumulative revisions amounting in total to over £5000m. is to reduce the July 1970 forecast, for a year which has still not yet begun, by £643m. The picture shown by the table must inevitably provoke questions as to whether the disruption and expense involved in so many changes of directicm on this scale were really necessary.
Table 4
Successive Changes to the Estimate of Public Expenditure in 1974-75, £m. at 1973 Survey Prices
l '~
j
Total
!
~'Previous programmes 1 i(July 1970) to ~mnd.4578 -(Jan.l971) -1073
:Cmnd .4578 to Cmnd ·. ;t.829 (Nov .1971)
'~mnd.4829 to Cmnd.
~178 (Dec.l972)
~mnd. 5178 to
~y 1973
~y 1973 to Cmnd.
· 519 (Dec.l973)
+535 +1076
-603 +602
~mnd.5519 to Dec.l7,
~973
-1180
i Total
-643
Policy
-1043 +006 +837 -603 +292
-1180 -1091
Estimating
-30
-71
+239
0
+310 0
+448
·
Economic classification of changes
Goods and services
Other
-597
-12
+434
-556
-109
-1180 -2020
.
-476 +547 +642
-47 +711
0 +1377
4-11
Appendix: to Chapter 4
1. This appendix describes how the figures used in the statistical analysis of the economic prospects and contained in the Appendix to this volume were derived from those used in compiling Table 3 of this chapter. The latter were taken from Table 3.2 of the December 1973 \{bite Paper, current expenditure on goods and services consisting of 'wages and salaries' plus 'other' and capital expenditure of 'gross domestic fixed capital formation' plus 'increase in value of stocks' minus 'shortfall'. These were first adjusted to allow for the estimated effect of the December cuts by the procedure described in the text. £329m- the amount of the cuts to consumption as given in Hansard Vol. 866, No. 35, Cols. 977-978- was deducted from current expenditure in each of the years 1974-75 to 1977-78, and £85lm- as given in the same·source- was deducted from the capital expenditure figures for the same years. The shortfall allowance of £400m was then added back onto the 1974-75 investment total on the grounds that it would probably fail to materialise, aiven the circumstances as described in this chapter - and half the shortfall allowance (f200m) added back to the figures for the years 1975-76 to 1977-78. Secondly, the current expenditure figure for 1973-74 was adjusted to allow for the apparent shortfa¥1 which, it was argued, will emerge if the national income,figures for the first half of this financial year are repeated in the second half. An increase of 2.5 per cent (instead of 5.1 per cent) was therefore applied to the 1972-73 \{bite Paper total for this item to obtain the expected 1973-74 total at 1S73 survey prices.
2. .To convert this set ·of figures .to the basis required for the statistical analysis, the first step is to deduct stock appreciation from the capital expenditure figures for each year. Secondly, we need to separate public investment in housing from total capital formation and this is done on the basis of the estimates given in Table 2.7 of the December 1973 White
I
Paper, the housing programme being exempt from the December cuts.
3. These adjusted series ~ave then to be expressed in terms of calendar rather than financial years an~d linked .to the national income figures which are
i
based on 1970 prices. The latt~r are available up to the third quarter of
1973 in the case of current exp~nditure and up to the second quarter in the
case of public investment. For. the former, therefore, a reasonable estimate can be made of the 1973 total from the seasonally adjusted national income figures. Estimates of public consumption for the ye~rs 1974 to 1977 in terms of 1970 prices are then calculated by converting the financial year totals, derived by the method described above, to calendar years on a
4-12 pro rata basis and expressing these in index form with 1973 equal to 100. Tne index is then applied to the 1973 national income figure - there being a close correspondance between the annual changes shown by the 1973 White Paper and the national income accounts for the years 1970 to 1972. 4. As regards capital formation, we know that expenditure in the first quarter of 1973-74 was almost certainly below trend. We also know that expenditure in the four~ quarter of this financial year was expected to be reduced by about £lOOm below what it otherwise would ~ave been as a consequence of the rephasing of public sector construction programmes announced in October 1973. (l) We therefore calculate the capital formation total for 1973 on the basis of assuming investment in the second and third quarters of 1973-74 to be equal and £lOOm above the level in the fourth quarter,and assuming investment over the financial year as a whole to be as estimated in the December 1973 White Paper. The same procedure ia then used to construct projections of capital expenditure for the years 1974· to 1977 as was employed in the case of public consumption. (The financial year estimates for public investment in housing in the 1973 White Paper were converted to a calendar year basis as above and linked to the national income figure for 1972.) 5. Table Al and A2 show, respectively, the derivation of the indices in Table 3 and our estimates of expenditure on goods and services for the years 197071 to 1977-78, from which the figures used in the statistical analysis are derived as described here.
(1) See The Counter Inflation Policy: Stage 3, A Statement by the Prime Minister, Annex, p.9, H.M.S.O., October 1973, Cmnd.5446.
Table Al Public Expenditure, 1970~71 to 1977-78, according to Cmnds. 4829, 5178 and 5519
Cmnd. 4829
£,m at 1971-72 out turn prices· excl. R.P .E.
1
197G-7l 1971-72 '1972-73 1973-74 1974-75 1975-76 1976-h 1977
1. Current expenditure on goods
and services (C.E.G.S.)
9757
2. Capital expenditure (incl. stocks and deducting shortfall)
4614
3. Total goods and services
4.. 'J,'otal transfers incl. contingency
,. 14371 . 10121
5. Less investment grants, R. E. P.
703
6. Total 'genuine' transfers
9418
7. Total expenditure
23789
Indices, 197o-71 · lOO
a. C.E.G.S.
100.0
9. Capital expenditure
1op.o
.·lo. Total goods and services . 100.0
11. Total 'genuine' ·transfers
100.0
12. Total expenditure
100.0 .
10077
4572 14649
9834
618 9216 23865 .
103.3 99.1 101.9 97.9 100.3
10203
4822 15025
9919
382 9537 24562
104.6 104.5 104.6 101.3 103.2
10502 10713
4941 5027 15443 15740
9986 10127
243 9743 25186
146 9981 25721
107.6 107.1 10.7 .5 103.5 105.9
109.8 109.0 109.5 106.0 108.1
10973
5181 16154
10257
39 10218 26372
112.5 112.3 112.4 108.5 110.9
'
Cmd. 5178
£m at 1972 survel 2ricea
1. .C.B.G.S1
2. Capital expenditure 3. Total goods and services 4. Total tr~sfera, incl.
contingency
..s. Less investment gr~ts,. R.E-.P. etc.
6. Total 'genuine' transfers
7. Total expenditure
Indices, 197o-71 · lOO 8. C.E. G. S.
9. Capital expenditure 10. Total aoods and aervices
u. Total 'genuine' tx-ans fers
·12. total expenditure
10046 4834 14880
10509 4600 15109
10789 4912 15701
H~3
5261 16564
11446 -· 5413
16859
11803 5425 17228
12078 5494 17572
9933 10192 11350 11847 . 11830 ·11786 11627
697 9236 24116
100.0 100.0 100.0 100.0 100.0
512 9680 24789
804 10546 26249
104.6 . 107.4 95.2 101.6
10.1.5 105.5
104.8 114.2
102.8
·.
108.8
977 10870 27434
I
827
11003
27862
.
112.5 108.8. 111.3 117_. 7
113.8
113.9 112.0 113.3 119.1
115.5
671 11115 28343
117.5 112.2 115.8 120.3 117.5
551 11076 28648
120.2 113.7 118.i 119.9 118.8
'
Table A1 (cont.)
,.
'
~. ! 1970-71 1971-72 1972-73 1973-74 1974-75i 1975-76! 1976-77' 1977-78
Cmnd. 5519
!
i Em at 1973 survey prices
1. C.E.G.S. (i) as published
11244
11679
12049
12657
I
I
12948 13343
l
I
!
I
13674 14050
(ii) after Dec. cuts
11244 11679 12049 12350* 12619 13014 13345 13721
2. Capital expenditure (i) as published
5679 5393 5531 5393 5614 5741 5787 5883
(ii) after Dec. cuts
5679 5393 5531 5393 5163 5090 5136 5232
3. Tot.a1 goods and services {i) as published
16923 17072 17580 18050 18562 19084 19461 19933
(ii) after Dec. cuts
16923 17072 17580 177{J3* 17782 18104 18481 18953
4. Total transfers ,incl. cpntingency
10894 11207 11990 13433 13502 13473 17613 14003
5. Less investment grants, R.E.P., etc.
759 612 775 919 721 581 436 389
6. Total 'genuine' transfers
7. Total eX'!'enditure
10135 10595 11215 12514 12781 12892 13177 13614
{i) as published
27058 27666 2tl795 30564 31343 31976 32638 33547
(ii) after Dec. cuts
27058 27666 28795 30257* 30563 30996· 31658 32567
Indices, 197o-71 · lOO
8. C.E.G.S.
(i) as published
100.0 103.9 107.2 112.6 115.2 118.7 121.6 125.0
(ii) after Dec. cuts
100.0 103.9 107.2 109. 8* 112.2 115.7 118.7 122.0
9. Capital expenditure
(i) as published
100.0 95.0 97.4 95.0 98.9 101.1 101.9 103.6
(ii) after Dec. cuts 10. Total goods and services
(i) as published (ii) after Dec. cuts 11. Total 'genuine' transfers 12. Total expenditure
{i) as published (ii) after Dec. cuts
100.0 95.0 97.4 95.0
I
100.0 100.9 l 103.9 106.7
100.0 100.0
i100.9
104.5
I !
!
I
103.9 110.7
I
I
i: i
104. 8* 123.5
i!
-I
!
'
I
100.0 1 102.2 lOO .0 .· 102.2
I 106.4
I
106.4
i
i
'
!
113.0 111.8*
I
90.9 ij9.6
109.7 105.1 126.1
112.8
107 .o
127.2
115.8 118.2 113.0 114.6
I
90.4 92.1
115.0 109.2 130.0
117.8 112.0 134.3
120.61 124.0
117 .Q I 120.4
I
Notes The figures are derived from Table 3.8 of Cmnd. 4829 and Table 3.2 of Cmnd. 5178 and Cmnd. 5519. C.E.G.S. is equal to the sum of wages and salaries and other current expenditure, capital expenditure includes stock revaluation but has shortfall deducted from it. Transfers include the contingency reserve and where appropriate the adjustment necessary to convert past payments of social security benefits to constant price terms. Total 'genuine' transfers excludes investment grants, regional employment premiums and regional development grants as well as the refinancing of home shipbuilding lending and export credits.
* Based on the national figures for the first half ..of 1973-74.
4-15
Table A2
Public Expenditure on Goods and Services, 1970-71 to 1977-8, As Estimated for Statistical Analysis, £m at 1973 Survey Prices
1. Current expenditure on goods and services
2. Capital expenditure (excl. stocks and deducting shortfall)
1970- 1971- 1972- 1973- 1974- 1975- 1976- 197771 72 73 74 75 76 77 78
11244 11679 12049 12350 12619 13014 13345 13721
5587 5318 5294 5264 5061 5040 5068 5168
Of which:
3. Housing
4. Other
5. Total goods and services
1243 4344
944 4374
860 4434
916 4348
833 4228
696 4344
674 4394
671 4497
16831 16997 17343 17614 17680 18054 18413 18889
Notes:
The figures are taken from the December 1973 White Paper, Table 3.2 and Table 2.7,
in the case of Housing, and are adjusted as described in the text to allow for the estimated effects of the cuts aqnounced on December 17, 1973. In addition the 1973-74 figure for current expenditure has been revised downwards in the light of the national income figures for the first half of this financial year. The figures in the table have then been converted to a calendar year basis and linked onto the national income estimates according to the method described in this appendix. The resulting projections are shown in the Appendix to this volume.
Dublin Core
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Title
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Chapter 4 The Course of Public Expenditure to 1977-78
Creator
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Terry Ward
Source
A related resource from which the described resource is derived
Prospects for Economic Management 1973 - 77, pages 4-1 to 4-15
Date
A point or period of time associated with an event in the lifecycle of the resource
1974