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Paper 4 (P = 025)
existing basis, be
remove a large area of spending outside our definition of public sector expenditure. Given that
that the Airport Authority would be 100% Government-owned, this would be hard to justify. Yet we have already excluded
excluded the Airport Authority's spending on the new airport from
from our forecast of public expenditure in accordance with our existing definition.
12.
The creation of trading funds also begs questions as to their treatment in the context of public expenditure. Those trading funds which provide principally intra-Government services present little problem. The expenditure will merely shift from the supplier to the recipient of the service. Apart from the need to adjust for the relatively minor change occasioned by the basis of "full-cost" charging, this is of no impact on total public expenditure.
13.
However, certain trading funds will be created where the services are provided principally to the private sector. The intention to create trading funds for the Lands Registry and the Companies Registry are obvious examples, as are possible future candidates such as the Post Office and Water Supplies. Here we face a dilemma. One of the objectives of trading funds is to free them from financial controls to a significant extent
SO as to permit them to react to the demands of the market place. Yet, trading funds will remain part of the Government structure. On our existing definition we woula
would include the
expenditure of trading funds as public expenditure but we would
not be able to exercise direct control over the level of
expenditure incurred.
Summary
14.
Our fundamental concern is to ensure that the public sector does not grow in such a way as to crowd out the private sector in its quest for
its quest for resources. In attempting to achieve this objective we
we have a stated policy that public expenditure will not grow at a pace faster than GDP.
Whilst only being able
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