i secret | ^ ^ ^ ^ ^ ^ i secret h ' b


[PDF]i secret | ^ ^ ^ ^ ^ ^ i secret h ' b - Rackcdn.comfc95d419f4478b3b6e5f-3f71d0fe2b653c4f00f32175760e96e7.r87.cf1.rackcdn.com/...

3 downloads 201 Views 5MB Size

§

I

'

SECRET

|

THIS DOCUMENT IS THE PROPERTY OF HER BRITANNIC MAJESTY'S GOVERNMENT

C(83) VJk

23

COPY NO

31

18 J u l y 1983 CABINET

£0^£TIVES FOR PUBLIC EXPENDITURE - THE LONGER TERM AND THE 1983 SURVEY

Memorandum by t h e C h i e f S e c r e t a r y , T r e a s u r y

INTRODUCTION^

I n our M a n i f e s t o f o r t h e General E l e c t i o n we promised f i r m c o n t r o l over

p u b l i c spending and b o r r o w i n g , because " l e s s spending by Government leaves

more room v ^ P ^ taxes on f a m i l i e s and b u s i n e s s e s " . On t a x a t i o n we said

that " f u r t h e r ftrwements i n allowances and lower r a t e s o f income t a x

remain a h i g h p r i o r i t y , t o g e t h e r w i t h measures t o reduce t h e p o v e r t y and

unemployment t r a p y j j j ^

t o

This continues autonomic s t r a t e g y on which we embarked i n 1979 , aimed t o promote s o u n c T ^ ^ f c t h i n t h e p r i v a t e s e c t o r . We have achieved a major and s u s t a i n a b l e f r o u c t i o n i n i n f l a t i o n . Reductions i n t h e P u b l i c Sector B o r r o w i n g Requirement (PSBR) have p l a y e d a major p a r t i n t h i s . But we have n o t been s u c c e s s f u l i n a c h i e v i n g our t a x a t i o n o b j e c t i v e s . Rather than f a l l i n g , t a x as a percentage o f Gross Domestic Product (GDP) has r i s e n from some 34 p e r cent i n 1978-79 t o 4 0 ^ t e r cent i n 1983-84. I f we are t o achieve more growth and a s u s t a n V A r e d u c t i o n i n unemployment, we must reduce t h i s burden. ^fi^W The main o b s t a c l e t o t h e a c h i e % a ^ p ! ^ o f o u r t a x o b j e c t i v e s i s t h e

c o n t i n u i n g h i g h l e v e l o f p u b l i c e x p e i m ^ ™ ^ , which - c o n t r a r y t o p o p u l a r

mythology - a c t u a l l y rose as a p r o p o r t i o n o f GDP d u r i n g t h e l a s t

P a r l i a m e n t . I f we wish t o reduce taxes T j f t i u s t f i r s t reduce t h e

Programmes o f e x p e n d i t u r e which t a x a t i o n ^ i d ^ ^ t h e r w i s e have t o f i n a n c e .

I n c r e a s e d b o r r o w i n g i s n o t t h e answer: i t I f c ^ ^ i m p l y push up i n t e r e s t

r a t e s and r e v i v e the i n f l a t i o n a r y p r e s s u r e i m u d v e have fought so hard t o

get down. Lower i n t e r e s t r a t e s and lower t a x f f i o n are e s s e n t i a l f o r t h e

soundly based and s u s t a i n e d growth which the c o u n t r y w i l l now expect t o

see.

LONGER-TERM OBJECTIVES

Hence we must r e l a t e our p u b l i c e x p e n d i t u r e p l a n n % M ^ L our t a x

°bjectives. I n p a r t i c u l a r we need t o c o n s i d e r now wli : of taxation

e should aim t o achieve by 1988-89 - the l a s t p o s s i b l e B % J 0 % > f t h i s

Parliament. t / ! * ,

w

I n t h e l o n g t e r m i t would be a r e a s o n a b l e o b j e c t i v e t o b r a j ^ j j e

P P o r t i o n of t a x t o GDP back a t l e a s t t o the l e v e l we i n h e r i t e ^ J ^ L

978-79 - t h a t i s , back from around 40 p e r cent now t o some 34 p o ^ ^ e ^ t .

u i s should b r o a d l y enable us t o reduce the b a s i c r a t e o f income rax^J^

, P c e n t , and t o b r i n g p e r s o n a l allowances up t o the l e v e l s o f t ^ T 1960s

r e l a t i o n t o e a r n i n g s . Because i n d i r e c t taxes and n a t i o n a l i n s u r a n c e

r o

e r

l n

^

^

^

^

^

^

I

SECRET H

'

B

#



SECRET

1

•ml ^P^k

|

H

c o n t r i b u t i o n s would s t i l l be l a r g e r than i n the 1960s the r a t i o o f t a x t o GDP would s t i l l be h i g h by h i s t o r i c s t a n d a r d s .

•^•^ 6. How f a r we can go towards t h a t o b j e c t i v e by 1988-89 depends W • e s s e n t i a l l y on two t h i n g s : the r a t e o f growth of GDP and the path of p u b l i c \^^expenditure. I f the PSBR c o n t i n u e s at i t s planned 1985-86 l e v e l (2 per cent ^ ^ ^ f GDP) and we achieve annual growth a v e r a g i n g 24 per cent ­ which would be ^ W g e o o d performance in c u r r e n t w o r l d c o n d i t i o n s - we c o u l d hope t o reduce the tax:GDP r a t i o t o about 36J per cent by 1988-89. But even t h a t would be • ^pss^ble o n l y i f we c o n t i n u e t o h o l d p u b l i c e x p e n d i t u r e t o i t s p r e s e n t l e v e l ^ ^ ^ terms t h r o u g h o u t the p e r i o d . I f economic growth f a l l s s h o r t of 2j per cent on average t h e n p u b l i c e x p e n d i t u r e would have t o be c o n t a i n e d at n even lower l e v e l or taxes would have t o be h i g h e r . l T 1

a

I do n o t t h i n k we can reasonably aim f o r l e s s than t h a t on the t a x front. I p r j i ^ s e t h e r e f o r e as a l o n g e r - t e r m e x p e n d i t u r e t a r g e t up t o 1988-89, to h o l d the t o t a l of p u b l i c e x p e n d i t u r e , i n c o s t terms, a t t h e l e v e l of about £103 b i l l i o n (1980-81 p r i c e s ) which i t reached i n 1982-83, and w h i c h t h ^ B | ^ 2 n t White Paper p r o j e c t s f o r 1985-86. I have to say t h a t achieve t h i % ^ B ^ e t w i l l r e q u i r e d e t e r m i n a t i o n . The p r o j e c t i o n s of e x i s t i n g p l a n s fl^^^Lend of the decade w h i c h were c a r r i e d out by o f f i c i a l s l a s t summer i m p l i e d f i g u r e s s u b s t a n t i a l l y h i g h e r t h a n t h i s , because t h e y allowed f o r s u b s t a n ' t j f ^ c o n t i n u i n g r e a l growth i n s e v e r a l programmes. Such growth does not show up i n the aggregate White Paper f i g u r e s f o r 1984-85 and 1985-86, because we a M ^ t ^ l l f e e l i n g the benefits o f the h a r d d e c i s i o n s taken i n 1979 and 1 9 8 0 T J ^ ^ i t c o u l d b e g i n t o appear i n 1986-87 ­ the final year of the new Survey, TOT which t h e r e are a l r e a d y s u b s t a n t i a l a d d i t i o n a l bids. i f achieve the p r o g r e s s towards our t a x o b j e c t i v e proposed above f o r the end of t h i s P a r l i a m e n t , we need t o get on the r i g h t path by t a k i n g now t h e necessary d e c i s i o n s r e l a t i n g t o 1986-87. That i s why c o n s i d e r a t i o n of t h e Survey, c o v e r i | ^ the medium term, cannot be separated o m these l o n g e r - t e r m c o n s i d e r a m j j j ^ t o

w e

a r e

t 0

fr

^' I f my c o l l e a g u e s are w i l l i n g ^ R ^ L n c i p l e t o work inwards t h i s e x p e n d i t u r e t a r g e t , I w i l l aim t o c i r o ^ R f c e p r o j e c t i o n : , i n September, t t i n g out a p o s s i b l e path up t o 198£ »^^U t h f o r the total of e x p e n d i t u r e d i n broad terms f o r the main programmes. Since t h i s w i l l i n v o l v e d i f f i c u l t d e c i s i o n s about p r i o r i t i e s i t w i ^ f t f t q u i r e c o n s i d e r a b l e d i s c u s s i o n . Cabinet may want t o a l l o c a t e more r e s o u r c e s t o one programme y r e d u c i n g o t h e r s . Once agreed i n broad t e ^ ^ , ^ L h e s e p r o j e c t i o n s would Provide a s t a r t i n g p o i n t f o r d i s c u s s i o n w i t h ctif/^gues i n the b i l a t e r a l s . would hope f i n a l agreement c o u l d be reached n i Cabinet i n the l a t e autumn. i t w i l l be f o r c o n s i d e r a t i o n whether they should be p u b l i s h e d ; but °ey would s e t broad p o l i c y g u i d e l i n e s w i t h i n w h i c h l o n g e r - t e r m Departmental P l a n n i n g c o u l d proceed and would a l s o p r o v i d e a framework f o r f u t u r e P u b l i c E x p e n d i t u r e Surveys. s e

a n

THE

SURVEY PERIOD

I n the meantime, we need t o set more s p e c i f i c obj ectT^^^^kr t h i s B-^ B L, s e x p e n d i t u r e Survey. I t is clear from the C h a n c e l l o r ^L.^A. Exchequer's memorandum (C(83) 2 6 ) , which s e t s the b a c k g r o u n d ^ d f t j j h e Prospect f o r next year i s much t i g h t e r than we thought at B u d g e T B ^ ^ . I t t h e r e f o r e e s s e n t i a l a t the v e r y l e a s t t o h o l d t o the expenditvB^Bktals P u b l i s h e d i n the l a s t White Paper. Vea

T

s

0

j; .

Given the u n c e r t a i n t i e s t h i s i s a modest, perhaps too modest, «Trget. i t w i l l r e q u i r e r e s t r a i n t by spending Departments. The figures i n e x A show t h a t f o r 1984-85 Departments have proposed i n c r e a s e s i n

V e n

n n

s o

2

^

J

^

^

^

^

^

^

^

|

SECRET ~|

| g

H

#

% . |«m M V #PL

1

SECRET

|

H

programmes t o t a l l i n g some £6.1 b i l l i o n over t h e e x i s t i n g p l a n s . For

1985-86 they t o t a l £6.8 b i l l i o n ; and f o r 1986-87 £7.0 b i l l i o n . Some o f

t h e s e , based on s t a t u t o r y e n t i t l e m e n t s and f i r m commitments, w i l l have t o

be accommodated. For 1984-85, approved l e v e l s o f s o c i a l s e c u r i t y b e n e f i t s

w i l l r e q u i r e an e x t r a £0.25 b i l l i o n . A g r i c u l t u r a l p r i c e s u p p o r t needs

£0.A2 b i l l i o n more. I e s t i m a t e t h a t a t l e a s t £0.5 b i l l i o n e x t r a w i l l be

^ ^ ^ l e e d e d f o r l o c a l a u t h o r i t y current expenditure.

11. Moreover I b e l i e v e i t i s c r u c i a l t h a t we s h o u l d keep i n t a c t f o r

^3^8^85 t h e £3 b i l l i o n r e s e r v e which appeared i n t h e l a s t White Paper. T M ^ i o u l d be l a r g e r than we had f o r 1983-84, b u t i s r o u g h l y t h e same s i z e , a f a p r o p o r t i o n o f p u b l i c e x p e n d i t u r e , as t h e r e s e r v e s f o r 1981-82 and 1982-83. A l t h o u g h a s m a l l e r f i g u r e might be s u f f i c i e n t t o accommodate t h e c o s t s o f p o l i c y changes, we have l e a r n t t o o u r c o s t t h i s year t h a t i t i s necessary a l s o t o a l l o w a w i d e r margin f o r changes i n programmes l i k e s o c i a l s e c u f l ^ y and a g r i c u l t u r a l i n t e r v e n t i o n which a r e demand-determined. I n a d d i t i ^ U need t o a l l o w n e x t year f o r t h e e f f e c t s o f i n t r o d u c i n g end­ year f l e x i b i l i t y , and t h e u n c e r t a i n t y over European budget r e f u n d s and t h e cost o f t h e Common A g r i c u l t u r a l P o l i c y .

^ ^ ^ ^ ^ ^

12. I t w i l l h ^ n i ^ s i b l e t o accept t h e f u l l £6.1 b i l l i o n o f b i d s . But w i t h i n t h a t , t h e most p r e s s i n g demands t o t a l some £2£ b i l l i o n . ^ We t h e r e f o r e need t o ^ H ^ a v i n g s elsewhere o f that o r d e r ( i n c l u d i n g the savings we hope t o secure on t h e n a t i o n a l i s e d i n d u s t r i e s ) s i m p l y t o s t a y w i t h i n t h e p u b l i s h e d ^ H O W f or 1984-85. Reductions o f at Least t h e same o r d e r w i l l be needed tti^J^r t o stay w i t h i n the published t o t a l f o r ^ 1985- 86, and t o keep t h ^ t o t a l a t a p p r o x i m a t e l y t h e same r e a l l e v e l i n 1986- 87, i n c l u d i n g adequate p l a n n i n g r e s e r v e s f o r these y e a r s . 13. The e x i s t i n g b a s e l i n e f i g u r e s make no e x p l i c i t assumption about pay

i n c r e a s e s n e x t y e a r . I s h a l l be * t i n g p r o p o s a l s t o d e a l w i t h t h i s i n

September.

CONCLUSION

14-

1 i n v i t e my c o l l e a g u e s t o agree ^ g i l ^ o r e ,

that:



a. We s h o u l d work towards t h e l o f i 3 A « r m o b j e c t i v e : ; f o r t a x a t i o n , and e x p e n d i t u r e d e s c r i b e d i n p a r a g r a f M B ^ above. b. I should i n September b r i n g f o r w a r t l ^ ^ e c t i o n s f o r t h e t o t a l

and f o r programmes up t o 1988-89, which f b u l d be c o n s i s t e n t w i t h

a c h i e v i n g these o b j e c t i v e s .

C We should aim i n t h e 1983 Survey t o h o l d t o t h e p u b l i s h e d t o t a l s

f o r 1984-85 and 1985-86, i n c l u d i n g adequate r e s e r v m which means

f i n d i n g savings o f some £2* b i l l i o n i n 1984-85 a A j J f a t l e a s t t h e

same o r d e r i n 1985-86 t o o f f s e t u n a v o i d a b l e i n c r e a s e s .

We s h o u l d s i m i l a r l y seek savings o f a t l e a s t t h % ^ ^ s i z e i n

d. 1986-87 i n o r d e r t o h o l d t o t a l spending c o n s t a n t i n ^ L w h ^ s .

r

e. I should discuss b i l a t e r a l l y w i t h colleagues a f t e r FhjjA^ess

how these savings might best be achieved. I would r e p o r t ^ 5 p R ^

Cabinet towards t h e end o f October.

P R Treasury

^

Chambers

18 J u l y 1983

3

|

SECRET

|

C9

H

"

SECRET



ANNEX A

I

SUMMARY OF P E S RETURNS

1.

Planning

Total

I cmnd

126,370.0

1985-86

132,260.0

721.0

1,097.0

127,091.0

133,357.0

1986-87



87Q9 I



<-. A q r e e d a d d i t i o n s 111



3.Bane1 1 n e

137,500.0

Baseline 1986-87

'i.Proposed a d j u s t m e n t s to proqrammes

.0

362.5

eg e

73-

1,0.5

'37.0

67.0

150 0

13.1

210.0

17<5

Ministry FCO

FCO

1,338.8



of Defence

- O v e r s e a s Development

Administration

9

128. «•





- Other

E u r o p e a n C o m m u n i t y

Intervention Board f o r A g r i c u l t u r a l

h.or\.n0

*2°

P r o d u c e

30.2





MAFF



-2.5

Forestry

Commission

Department



of Trade a n d I n d u s t r y

„ ||

ECGD

Department

o f [ .nerqy

Department

of Employment

Department

of Transport

-133.1

39.6



:

3

99.6

01'

58.0

58.0

5i,0

0

3

5'tO.O

K

5



62.0



5'tO.O



DOE •• Housing

DOE

- PS A

DOE

- OTHER

Home

84.5

96.5

"58-0



130 8

151.7

15'..7



49.5

70.9

-1.6

-0-3

mm

98.3

Office

l-ord C h a n c e l l o r s

Department

320 0

Department

of E d u c a t i o n

of A r t s

DHSS - H e a l t h DHSS • S o c i a l HM T r e a s u r y

and Libraries

and Personal S e c u r i t y

- Civil

Social

r7n I BC7IUL..3

2

-

27 0

S e r v i c e s

S

I

c

S u p e r a n n u a t i o n

H

C



Vnancellors'

'I 1°

e x p e n d i t u r e

, f .

e x t e r n a l f i n a n c e

Departments

1

19.8

87 '» 5

648.9

Sfi' 1

i 374 • 7

1,067.0 - •' !

:,0



,



m m

o ,

Scotland

Wa 1 e B

Northern Ireland

. • i

T e r r i t o r i a l d e p a r t m e n t s : f o r m u l a c o n s e q u e n t i a l

Local Authority current NationallR«d I n d u s t r i e s

11

390 . 0

and Science

12 'i Office

' •



n

J o b . 0

1 138 8

*•*" ^6" 0

^° •

51.4

459.6

1,355.6

.165.0

61.2

585.8 1,928.3 -970.0 59.7









1
rw.i

r D e p a r t m e n t s

i; , O t h eadjustments °-'Otql t o proqrammes

I n e t l

't

o. .-d -w< ol.J

o

l^H

8

11

oc i7 ­5 9

i

7 1045.8

mm

0

6-Net

changes

in Special

Sales

'*&B|

o f A s s e t s

TOTAL NET A D D I T I O N S 10 CMND 8789

AGREED. OR PROPOSED BY DEPARTMENTS. '/^t.dqel c h a n q o i a n d r e v i s e d e c o n o m i c

, noo T

6,082.3

Wirt

1

7,045.8



121

assumptions

n ^ T

^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^

... i V».30

1'

Defence

Tbe most i m p o r t a n t poiicy

U whether the U K ^

^

^ e n c e spending by 3 per cent per annum i n r e a l terms a f t e r «mp

l y w l t h

t Nh

e

A

T

T

o



• ^ M

r e a l g r o w t h t a r g e t that was r e c e n t l y extended t o

O

c

°stly (some E600 m i l l i o n i n 1986-87).

-

other MOD

bids , «

,1,300 m i l l i o n , are intended t

­

•Wence programme b y compensating f o r t h e e f f e c t s of 1983 A r m e d p r e c a s t i n f l a t i o n up to ,986-37.

Tbe MOD



P H

figures aiso inciude some S 7 5 m E

1986-87 Falklands costs.

Overseas A i d v

^ecially -

given

t o t

h

o

l

e



u

m

e

o f

aid stemming , o m past c o m m i t m e n t s t o muUUateral agencies

« H

EC i n s t i t u t i o n s and the World Bank Group) means that, on

d l r e c t l y

t o

n

g

countr.es ­

- U^ n e

P-iod, having already f a l l e n by at least a t h i r d since 1979

-



. e r ^ ^

80.

c

o

m

m

B i

t

m

e

n

t

s

S t a n c e to maintaining substantial b i l a t e r a l country programmes. Existing ca

» °e accommodated w i t h i n present plans. The additions proposed would:­ i­

1QR2-8 maintain aid d i r e c t to countries at> ii tt.s 1982 833 l e v e l i n cost t e r m s (including , an F A A m at at nresent increase in the A i d Trade Provision fr r o m E66m present t o E80m m 1986-8 n,

»•

maintain the aid programme at about 0.38 per cent of GNP.

iH.

allow

a iarger U K

c o n t r i b u t i o n t o t h e of seventh

I D A replenishment

H than

»

c u r r e n t l y provided f o r .

Foreign and C o m m o n w e a l t h O f f i c e T h

e main proposals for adjustment to the programme are:-

H

Provision t o m a i n t a i n or increase the levei of a c t i v i t y of .be B r i t i s b Councii; -

additionai provision for tbe BBC Externa, Services t o cover i n ^ * - f f e c . s

,

M

of tbis yea's BBC pay increase, .be modernisation of tbe mon.tonng se, the purchase of Bush House; Ui.

c e r t a i n increases in FCO a d m i n i s t r a t i v e expenditure including an allowance for p r e d i c t e d increases i n overseas i n f l a t i o n i n excess o f PES f a c t o r s and c e r t a i n

j

capital improvements (including the purchase of Hanslope Park); lv

-

an allowance

i,o «tPrline for p r e d i c t e d increasses i• n the s t e r l i n g costs o f i n t e r n a t i o n a l t

­

subscriptions i n excess of PES factors.

111 WS^^^

SECRET

IH J

4.

Net payments t o European C o m m u n i t y Institutions

Projections of UK net payments to the C o m m u n i t y Budget are subject t o a wide margin

forecasting error since t h e Government has only an i n d i r e c t influence on the size of

Budget. The major f a c t o r a f f e c t i n g payments during the survey period w i l l be the decisi t The taken f o l l o w i n g t h e major review agreed by t h e European Council i n Stuttgart. f t h a l



European Council w i l l meet i n Athens on 6 December t o consider the outcome o

review.

5. The

IBAP

C L u t u r

Department's programme covers market regulation under the Common

Policy, almost a l l mandatory under EC Regulations.



Agri

A large p a r t is 1 0 0 % funded from

EC Budget, w i t h receipts c r e d i t e d t o the EC programme.

Programme expenditure is unpredictable, and dependent on a g r i c u l t u r a l market conditio ^

sll

F o l l o w i n g recent large increases i n production, p a r t i c u l a r l y f o r m i l k products, PP

expenditure is now expected

t o be substantially higher than the baseline.

For i v

^



c u r r e n t estimates point t o expenditure o f some £1230m compared to baseline provisio

some £800m.

About t w o thirds o f the increase represents e x t r a i n t e r v e n t i o n purcha

^



e

financed i n i t i a l l y by the Exchequer. EC r e c e i p t s i n respect o f financing and other i n c i d ade whe"

costs are received while the goods are i n store and reimbursement f o r losses is ma

d. fry

u n

stocks are sold. The remainder o f the increase is i n respect o f expenditure p r e - f



the EC. Smaller additional bids are also l i k e l y f o r the later years.

The revised forecasts are prepared i n conjunction w i t h estimates of t o t a l expenditure u ,b1ect to the

EC budget, and t h e U K n e t c o n t r i b u t i o n towards

it.

The estimates are

SUDJ

substantial v a r i a t i o n as that broader exercise proceeds. 6.

MAFF/DAFS/WQAD



This combined programme covers expenditure by the A g r i c u l t u r e and Fisheries ^ ^ ^ " ^ p p

n

in England, Wales and Scotland (including expenditure i n N o r t h e r n Ireland resting °

votes).

The t o t a l baseline, including some expenditure prefunded

f r o m the EC budg

£1030m i n 1984-85 rising t o £1088m i n 1986-87.

, de &

agreed i n the 1982 survey, adjustments t o the baseline are

, deman lT

Following a procedure

a

a

respect o f prefunded

EC expenditure and estimated changes i n take up unae

determined a g r i c u l t u r a l support schemes. Latest estimates, subject t o review in

point t o net additions o f £40m i n 1984-85, £29m i n 1985-86 and £29m i n 1986-87.



f

%

SECRET

of h

^ a r t n i e n t s propose a number o f self balancing changes w i t h i n the adjusted baseline,

e

v

°lving reduced requirements, e s t i m a t i n g increases and policy changes. The Treasury has

n S

served its position on these various adjustments.

he a t

a d (

i i t i o n , Departments have proposed f u r t h e r additional bids t o t a l l i n g £24m i n 1984-85

n

8 to £29m i n 1986-87. Some E22m per annum relates t o assistance t o farmers i n

Sinal

areas, E l m per annum f o r increased superannuation charges f o r commissioned

r c h and E l m rising t o £4.2m for the e f f e c t s of the cash squeeze on volume provision.

tllar

e a

a

l

^ i o n a l manpower provision o f 45-55 f o r M A F F i s sought a f t e r taking account o f

ef fi •

°y v i n g s . The Treasury has reserved its position on the policy changes concerned

sa

ie

does not accept the case f o r additions t o t o t a l provision i n respect o f any o f them; and

°nsiders tv,

<-nat net manpower savings could be achieved through increased e f f i c i e n c y .

c

* rt

7.

D

HgPjgtrnent of Energy

uding support f o r the nationalised industries no major new items o f expenditure are

a

s

• A reassessment o f requirements under existing energy conservation programmes ^ d the O f f

^ ^ o n s h o r e Supplies Interest R e l i e f grants Scheme, and Ministers' decision t o reduce

e

* p e n d i t u r e on t h e fast reactor results i n reduced requirements compared t o t h e

feline.

ifl iy

8.

D



- ^ g j l l m e n t of Trade and Industry

^ |

>r

largest i t

s in the t o t a l proposals for adjustment are an additional bid for Launch A i d

fa

+

l t e m

' 0If!

-p,

+£7 r

"-'Jin, +£80m), increases i n R and D and additional a d m i n i s t r a t i v e expenditure,

increase

e s

(

proposed are p a r t l y o f f s e t by a r e d u c t i o n on Regional Development Grants

Million, -E69 m i l l i o n , -£83 million) 9. s

E j {



—£H£j_Credits Guarantee D e p a r t m e n t

Net * .

Ur ° expected t o cease during 1983-84 u n t i l a f t e r the end of the

So P i o d . This is mainly because transfers o f outstanding refinance t o the p r i v a t e

"-tor

Q

F is

s

r e f i n a n c e

V

t

e

6

bou.t

co

°een

^ents.

e

a

t

r

e

er

C o

d

a

v

S l 0 C : e

a r st

^

e t

completed

while

ECGD

are s t i l l

making

advances

on existing

Forecasts f o r t h e interest support and cost escalation programmes are

a

r

*^ey

e

demand responsive and highly sensitive t o changes in assumptions

interest rates and cost increases. On current assumptions, interest support

ex

titn

P e c t e d to f a l l s i g n i f i c a n t l y during the survey period and by 1986-87, for the f i r s t > net Tp°sib *P o f i n t e r e s t equalisation f r o m t h e banks are expected, even allowing f o r shoty i o n i n Consensus interest rates. The forecast for cost escalation guarantees s

r e c e

t s

r e d u c t

n

, harp £ u j 1985,85 1986-87 due t o lower i n f l a t i o n assumptions and a reduced 6er j gfeements. The mixed credit matching f a c i l i t y has yet to be utilised.

s

aih n

a

0

n

10.

Department of Employment

The

p r i n c i p a l increases proposed are for an extension to the Enterprise Allowance,

m a i n t a i n levels of service i n the general careers service and to meet the expected hig

costs of p r o v i d i n g sheltered employment.

The increases are p a r t l y offset by estimat

reductions i n expenditure on demand led measures and redundancy payments.

11.

Department of Transport

Three quarters of the increase proposed are for the motorway and trunk roads program

e als°

a r

to maintain recent levels of new

c o n s t r u c t i o n and s t r u c t u r a l maintenance.

There



major additional bids f o r a d m i n i s t r a t i o n , and f o r re-equipping the DVLC; and minor

shipping and c i v i l a v i a t i o n . There are additional bids f o r 98 s t a f f i n 1984; 441 i n 1985; 556 1986.

12.

Department of the Environment - Housing

s l l T l 1

The Department has made additional bids f o r 1984-85 t o t a l l i n g £540 m i l l i o n and for level oi

sums for the later years of the survey, p r i m a r i l y to maintian the current increase , wit"

d

l i n g

expenditure on home improvement grants and t o meet the additional costs o i aea

d e f e c t i v e public sector housing.

13.

Department of the Enviroment - Property Services Agency

The main increases proposed are: purchase of accommodation

i n the Millbank area

to enable

^

savings i n the r e n t a l b i l l i n later years (£25m i n 1984-85, E40 m i l l i o n i n 1985-86

o v a t i o n an«

£7 m i l l i o n i n 1986-87); expenditure on cost saving measures such as energy conser estate r a t i o n a l i s a t i o n (£10m

^

i n each year); and additional expenditure on maintenance

c i v i l estate (£35 m i l l i o n i n each year).

14.

Department of the Environment - Other

The o t h

e r

The major increase proposed is £63 m i l l i o n f o r the urban Programme and UDCs. i o f hazard " 0

r e l a t i v e l y small individual bids r e l a t e t o refuse disposal investment, c o n t r o l o

developments, d e r e l i c t land grant, h i s t o r i c buildings, and additional grant i n aid

Sports Council and other environmental bodies.

15.

Home O f f i c e

u

7 0

p e r

cent of

Proposals for increased provision for police and prisons account for more than tv r the bids i n 1984-85. Of the p o l i c e bid, some £30m a year is required f o r the addition of

the 1983 pay award, expected t o be 8 per cent.

^ ^

There is no b i d f o r addition

manpower but some provision (£4.4m) is sought i n the f i n a l year of the survey

SECRET

k

%

%

SECRET



H -eng.h „

t h e l e v e

,

"1.8. r

„ „

. „ n is sough.. This is ,0 enable s.reng.h t o r,se by 5, 7

iai

et

V „ 1,87, L

,

E 8 2

m e

a s s u r o e d i n

e.

Cmnd 878, (U ,500,. For prisons,

*

2

„ w c o m m i t m e n t arising mainly e

« - opening o

«able .he i n t r o d u c t i o n o t t h e common w o o i n g agreement, and to > >-* ac



, ^

=

»

_ •



ot overtime, provision i . also sough, for an increase, mainly m 1086-87 .0 allow

_

c e l e r a t i o n of the building programme.

Glance „

°

to



.he proposals amounts .o tt*. i n " 8 4 - 8 5 .

t

This includes some s m a l l



C l o n a l provision tor m a g n a t e s ' cour.s and .he p r o b a t i o n service .0 mee. increased

*»Moads. C r i m i n a l Injuries Compensation expenditure is also expected t o mcrease.

1 6 ,

Lord Chancellors D e p a r t m e n t

^

.he baseline i n 1,86-87 maRes no provision.

The reduced

ot slippage ,n .he Cour. B u i l d i n g Programme. |

-T^~£

addi.iona, h i d i n 1,86-87 re.lec.s .he con.inuing grow.h i n L e g a l A i d

"M-M

t o cope U



Manpower .. expected

to

»



r se

.he con.inuing increase i n worhload and s.ar. .0 t a l l m 1,86-87

- O H ot various changes (eg. e f f i c i e n c y , computerisation, c o n t r a c t i n g out e.cl.

17

Department of Education and Science

-

^ ^ J ^ L

.

*• *



•**•««. tor ,he f u t u r e , greater than those assumed In Cmnd 878,, an -"-U:

designed i n general t o o f f s e . .he e f f e c . of

provision t o r c u r r e n . e x p e n s e , p a r . i c u l a r l y spending hy local au.hor, e

n



to numbers o i .eachers and lec.urers and . a n g accoun. ot .he grow.ng numbers

_

W

th

0 S e

0 v

e r 16 w i t h i n f u r t h e r education.

^ « » « . . are also sough, i n .he l e v e l o f cer.ain services, including e

-tio„

»0c.

a l i s a t i o n a

n

d

i m p t o v e m

t i o n a l s u p p o r t s t a [ [

|

e n . s o t school, college and universi.y premises; .he 1 e l

r e l a t i o n t o p u p i l



numbers; and support f o r scientific research.

is

'I

l8

'

Q ^ i c e of A r t s and L i b r a r i e s

^ s . m e n , ro osed P

P

are designed^ .o minimise

^

^

^ " t i e s by r e s t o r i n g i n l a t e r years t h e cuts unavoidably unposed m 1,83 "*

^

^ P

- s e n m s and galleries building and maintenance, and for heri.age

-~-.moda.ing .he Increasing love! of e*pe„di.ure envisaged ^tog, e u i t l s

and

b

y

a





on .he new B r i t i s h L i b r a r y

n g l o c a l au.hori.ies to sa.isfy a broadly cons.an. demand fo.

o w i

and libraries services.

in

|^^^



SECRET



_ H

19.

H e a l t h and Personal Social Services

The proposed increases are due t o : ­ 1.

"realism" on pay and prices,

. :

real

n

the Deparment considers that the Cmnd 8789 provision implies a cut

2.

resources in the light of Government assumptions on i n f l a t i o n ;

demographic change,

nr

oV6 f

the rising numbers of old and very old people which are expected to occu

the p e r i o d places increasing demands on the h e a l t h and social services;

3.

Government

commitments

on

services for old, m e n t a l l y i l l ,

and

rnenta

of Ntf s



handicapped people; and on the c o n t i n u i n g geographical r e - d i s t r i b u t i o n

resources;

r d i t of

4.

revised forecast of expenditure on the f a m i l y p r a c t i t i o n e r services in the

B

the o u t - t u r n in 1982-83.

n

In additon there are bids f o r a number of specific

a

p a r t i c u l a r to the v o l u n t a r y sector and c o m m u n i t y care, accute t r e a t m e n t shortag- »

c a p i t a l investment.

The major issue of policy is how

far the Government is c o m m i t t e d

to provide real g r o *

the resourcs f o r h e a l t h i n the face of increasing demand.

20.

Social Security

Two

thirds of the increases proposed are f o r demand d e t e r m i n d

•marily ° services prim

n

19°

r e t i r e m e n t pensions - the result of a changed view of l i f e expectancy

following

^ ,,niber

census, and on housing b e n e f i t , the result of an earlier underestimate of the

beneficiaries and of average payments of this new



1 ting ' service improvements reia

es °

benefit.

SECRET

1984-85

1985-86

1986-87





The most significant bids f o r b e n e f i t improvements are:

i.

New b e n e f i t s t o replace H N C I P

2

6

and the "household duties test"

- - c o n t r i b u t o r , i n v a l i d i t y person B Com , m

„.

t l e e

t o

ss

< H s c u

s b

or,l

t o remove the d.scr.m.na.i J a paper b

y

A l i n i n g a number o f options.

y

_

the

w

o

u

l

d



r e q u i r e

That p r e f e r r e d by the Secretary

additional expenditure as shown and

cost 50 s t a f f .

Invalid Care allowance for ly

4

married women caring t o r

12

"

IS



elderly relatives.

* -»»».

unsuccessful, bid i n l a s , y e a r , Survey proposing a wider extension o

w

o



l

e

n

w

o

u

l

d

h

a

v

e

c o s t a r o u

„ d E60 m i l l i o n i n a t u i i year and 2 0 s t a . Re

.CA «o

t

ct .

irlprlv r « Proposal t o those m a r r i e d women caring f o oeider re l a t i v e reduces the ^ cost

•v

• _

_

101*1

sh

-own. But would mean m a r r i e d women caring f o r others

n d

w

°uld not benefit. The proposal costs 50 s t a f f .

"i-

Restore 5 % abatement of

, .

20

1

61

°*



Invalidity benefit T

^

bating

— b e r „„

1 9 8

0

|

„,

n e « t , „he unemployment b e n e f i t , was reduced b y 5 % i n

tovalidity

p a r t l y

a

•I

b e

a p r o . for ,a* and p a r , , as a -

s

;

;

* «

;

:

- --

. A c t i o n . There is a c o m m i t m e n t t o t h e abatement once t h e benef.t bas

b

e

e

n

p

o

s

t

p

o

n

e

d

i n d e f i

*



^

H

.



br «

n i , e , y . No simiiar c o m m i t m e n t was g.ven



M

" - n , bu, ,„at is t o be r e s t o r e d f r o m November, f o l l o w i n g t a a a t i o n f r o m M y 19S2. Posts.

1 6

lv

«

Increase income disregards f o r

Supplementary b e n e f i t and Housing

^

^

g



benefit

T h

=

Propose, is to increase

^P.em 4 i s

"Sard

e n t a r y

b

e

n

o l h a l ( e

a



e

i

[

n

u

g

a

s

n

b

e

d

h

o

u

s

i

t

w

e

e



income n

u

g

b e

disregarded

when

calculating

„ e „ , fron, ,4 a weeK t o U

a weeh

-

'

"

^



A sepa

and MO for one parent famil.es would be .ncreased



« and £30. Costs 62 s t a f f .

SECRET

i

-

r, a I

SECRET

21.

Scotland



The bulk of the expenditure is, as i n recent surveys, t r e a t e d as a block. Aggregate provisi°

is adjusted p r o p o r t i o n a t e l y by reference to changes agreed for comparable English ana

programmes.

Normally, additional bids on block expenditure are not submitted. But

for ^

A

year, increases are proposed to meet the "knock-on" e f f e c t s in c i v i l service pay, ana

shortfall

following

the introduction

o f Property

Repayment

Services.

On nonj:—-—­

expenditure, there is an additional bid for asistance to industry.

H M Treasury - C i v i l Superannuation

22. The

additonal bid for 1984-85 relates t o transfer payments t o other pension schemes

respect of

s t a f f who are being transferred out of the C i v i l Service w i t h t h e i r work as P

aft

the h i v i n g - o f f and p r i v a t i s a t i o n programme. The additional requirement for 1986-87 d e r i from

t h e expected

v

1 0

rise i n t h e number o f pensioners, a f a c t o r n o t allowed

for

s t r a i g h t f o r w a r d percentage increase method used to construct the baseline for that year­

23.

Wales

ck

bl° '

As

i n previous surveys, most o f the Welsh O f f i c e prgorammes are t r e a t e d as a



Aggregate provision is adjusted p r o p o r t i o n a t e l y by reference t o t h e changes agre *

comparable English programmes.

r



A d d i t i o n a l bids are not generally made for the block because o f the formula apP ... cervix described i n paragraph

1.

The only exception

5



consists o f t h e Other Public

programme, where c e n t r a l i n i t i a t i v e s apply to pay and general a d m i n i s t r a t i v e expend

^



e r

^



The am

^



On account o f t h e inadequate provision made f o r t h e "knock-on" e f f e c t s o f e a r h awards, an additional bid is necessary t o m a i n t a i n agreed s t a f f i n g levels.

involved are £0.8 m i l l i o n , £1.2 m i l l i o n and £1.7 m i l l i o n f o r t h e years 1984-85 through

1986-87.

24.

Northern Ireland

b e

will As i n recent Surveys, t h e block arrangements w i l l apply whereby t o t a l provisio

adjusted by reference t o changes on comparable programmes i n Great Britain

.

,

e

to °

application of the c o m p a r a b i l i t y formula. A l l o c a t i o n s w i t h i n the block w i l l continu

e

^

the Secretary of State's discretion according to local p r i o r i t i e s . There are no additon

i i

this year.

SECRET

f

1

%

SECRET i5>

Local A u t h o r i t y C u r r e n t Expenditure

i°cal authorities account L

G

for over

a fr**v, i f t h of total

public puDii

expenditure b u t C e n t r a l

°vernment has no d i r e c t c o n t r o l .

lsh C

' >

«3,

,oca, a u t h o r i t y r d e v a r t , current expenditure i n .983-84 to Orea,.Britain i . .

5 5 7 m i l l i o n

<° " hillion. e

L

o

c

l

a u t h o r i t y

b u

d e , s suggest t h a t .his provision may he„

«

8

^

M

P

L o c a l a u t h o r i t y overspending against t h e i r " t a r g e t " (framed ,n te, ,„s

MM

*Penditure) w i l l be penalised by loss of grant.

Whit, P »

a p e

r

million.

»'

a

MM

« M P

c

„„„i„s provision

tor reievan.

That f i g u r e did no, ,.,he

insurance surcharge i r o n , H

« P « provision is

i n ,984-85 »|



account ., the Budge, d e c s i o n ,o reduce ,h

_

t o 1 per cent.

current

expenditure

Adjusted t o r t h a , change, ,he

MM

m i l l i o n . 0.6 per cen, g r o w t h over „ „ - » * P « " " « *



be

»•

^ c r e t a r y „, s t a t e tor the Environment put p r o p o s e s Cor ,he appropriate provision f o r

— a n t

_

H

current expenditure i n Bngiand i n 1984-85 i n his l e t t e r o f IS July t o the

Resident for discussion i n E(LA) on 19 July.

2 6 >

or

Nationalised I n d u s t r i e " E x t e r n a l Finance

*

nationalised industries are discuss,,, in de,ai, in the annua, Lnves,

— / t h e

" » - • tog Review (IFR), w h i c h has heen suhmi.ted t o Ministers separately ^ i e s ' -

h,s cover

"--.as, M

«



-



«

investment programmes and a l l components o f nationalised mdust r y externa,

included i n D e p a r t m e n t a l programu.es. The coverage of this y e a r , ,FR

*

MM

mt and

y

ear

except

that

Department

o f Energy

expenditure



— WM

e

on t h e R dun an

Payment Scheme RMPS> is hrough, w i t h i n the scope of the I r R t o r (

MM MM

he f,r

M

»•". the Welsh Water A u t h o r i t y is included in the section on the Water industry. *«•

I

*°"> d r e

16

Industry is now t r e a t e d as a nationalised i n d u s t r y f o r a l l p r a c t i c a l purposes.

H

P-posed changes t o na.iona.ised industries' EFLs are as shown i n the tah.e. Details given i n this year's IFR.

' S i a n c e l l o r o f the Exchequer's D e p a r t m e n t s

\ ^ 4

l

*

1

and

E 5

4 m i l l i o n i n 1986-87 to cover the cos, o, pay awards, additions t o . , . « . .

|

« t h increases i n the number of taxpayers and slippage i n achievement of sav.ngs

SECRET

\\.J

|





For Customs and Excise additional bids of E3.7 m i l l i o n i n 1984-85, E3.5 m i l l i o n in 1985-8°'

and E4.5 m i l l i o n i n 1986-87 arise mainly as a result o f proposed additional manpower. Other

c o n t r i b u t o r y items are t h e continuing cost o f absorbing the 1983 pay settlement, addition computer requirements, and a more cautious view t h e department receipts f r o m merchants' charges.

t

' . '

'

3 1

u r e

has taken of f u t