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continue to be guided by the assumption that they must contain expenditure within total commitments in the current agreed aid framework (allowing of course for any revision agreed subsequently by Finance Department without qualification as to the amount of cash expected to be available in 1977-78).
5. Departments spending plans are expressed in cash (as opposed to constant prices) and they should therefore already take account of increases in cost due to inflation.. Nevertheless there will be programmes, particularly those where commitments are expressed in currencies other than sterling and carry maintenance of value obligations, where extra cash will be required to provide the higher costs of activities to which we are already committed. These programmes will have to be given priority in any calls on the small amount of additional cash now available. The cuts in the aid programme will inevitably reduce the amount of flexibility we have to respond to new situations or to continue to implement the aid strategy (see below). It is therefore very important that departments allow for and explain changes in their spending plans when submitting revised aid framework bids. This aspect is particularly important for the years 1977-78 and 1978-79 if we are to identify such spare funds as there may be and maintain maximum flexibility in redeploying those funds to meet bids for new priority projects.
6.
The
Figures for the net aid programme for 1979-80 show an increase of £72 million, at 1976 prices, over 1978-79. Government has made it clear that plans for public expenditure in 1979-80 and after cannot be regarded as more than provisional at this stage and that they will be reviewed during 1977. But it is the Minister's wish to restore the aid programme to at least previously planned levels as soon as circumstances allow and, in submitting new or revised bids for 1979-80 and 1980-81, departments should in general aim to preserve the value of their programmes in real terms, provided that to do so is consistent with overall aid strategy. Proposals which increase the real value of programmes in priority sectors and which could be effectively implemented will be welcome but may have to be offset by reductions in other sectors.
The Strategy
7. Heads of Departments will have seen the Minister's recent statement on aid policy (TT5 of 28 January 1977). The objectives in that statement are contained in the Aid Programme Strategy Paper which has been endorsed by Ministers as the basis for planning the aid programme up to 1980-81. A summary of other main points contained in the Strategy Paper is at Annex A. We shall measure proposals for allocations in the new aid framework against the Minister's policy objectives and will be guided by the strategy and priorities
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