CAB128-94_A1b — Page 194

SECRET

SURVEY

SECRET

Previous Reference:

(89) 25.6

Page 194

5. The Cabinet considered a memorandum by the Chief Secretary, Treasury (C(89) 13), on the 1989 Public Expenditure Survey.

THE CHIEF SECRETARY, TREASURY, said that at the start of the bilaterals the bids he had received totalled some £13 billion for 1990-91, rising to £17 billion and £23 billion for the two later years. The Government was already committed to increases in 1990-91 of over £4 billion, and there was less scope for savings than there had been the year before. The room for manoeuvre had therefore been limited. Nevertheless, with the help of colleagues, he had had a satisfactory round of bilaterals and had agreed significant reductions in the bids. The additions to programmes which he now proposed totalled £7.5 billion in 1990-91, £9.7 billion in 1991-92 and £13.2 billion in 1992-93 There would in particular be extra spending on the priority vices. For example, spending on the National Health Service would rise by £2.4 billion between 1989-90 and 1990-91. Expenditure on roads would double between 1988-89 and 1992-93, and there would be an extra £1/2 billion a year to upgrade services and lieve congestion on the railways. Similarly, there would be an increase in planned capital spending, by central Governind the nationalised industries, of £1 1/2 billion a year, representing a real increase of 10 per cent on a year ago. Support for Housing Associations would more than double from £800m this year to £1.7 billion in 1992-93. There would be extra spending on capital investment on prison refurbishment and hospitals and a £1/4 billion package to alleviate homelessness. There would be significant extra help for the disabled. The number of police would rise by 1100. There would also be a big rine an expenditure on higher education. Civil Service running costs would rise by just under 10 per cent between this year and next: this implied a substantial reduction in the bis although it still meant higher growth than in previous years to acmodate cost rises and expansion in key areas.

As to the outturn for this year, the now seemed likely to be an overspend. On the old definition & the Planning Total he expected an excess of £1.1 billion. This was, however, more than accounted for by overspending by local authorities, which confirmed the need for the new arrangements for local authority finance which the Government was introducing.

Cabinet had agreed that the Government's objectives in the Survey were to maintain the downward trend in gener government expenditure (GGE), excluding privatisation proceeds, as a proportion of Gross Domestic Product (GDP) and to stick as closely as possible to existing plans. The outcome ratio of GGE to GDP would be the same in the first two the Survey period as in last year's Autumn Statement.

Fuat the

of

8

RET

Page 194

Page 194

SECRET