35.
If we are to maintain stability in our public finances, expenditure plans must be related to our longer term
prospects rather than shaped on the basis of just two years of
exceptional revenue yields. It follows, therefore, that any
adjustments in 1988-89 should relate primarily to revenue. In
the light of the results we have achieved and taking account of
our projections over the period of the Medium Range Forecast,
some further lowering of tax rates is thus possible; it has been earned by the efforts of the community. But you will not be
surprised to learn that the measures I shall outline to you
later retain а proper element of caution dictated by the
uncertainties against which we must continue to guard.
Strategy for expenditure
36.
Average annual growth in
in Consolidated Account
expenditure over the forecast period is projected to be 5.4% in
This is just a little higher than the 5.0%
contained in my 1987-88 budget strategy, but remains within the
trend growth rate assumption for GDP.
real terms.
37.
It is important not to lose sight of the fact that
such a growth rate in expenditure means that public sector
expenditure will almost double by the end of the next decade. As
we face this overall and perhaps inevitable growth in spending,
we must pay particular attention to recurrent expenditure; I have in mind staff and departmental expenses. We must ensure that these continuing and ever increasing commitments do not exceed our longer term ability to finance them. Against this
background, I draw attention to the fact that the detailed
estimates which I present today make provision for growth in
the size of the Civil Service of some 4% in 1988-89 (17). This
is largely due to the staffing impact of some major new medical
facilities and the build up of the Police Tactical Unit in
preparation for taking over the work of the British garrison. These and other factors push staff growth beyond our target of
2% a year.
(17)
After allowing for project slippage and savings from further Value for Money studies.
/38. There
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