Briefing Paper: Public expenditure control in the 1980s

Abstract

The past few months have seen well‐leaked ministerial bids for additional resources as the government prepares to consider allocations for the 1987‐8 financial year. There has also been an increasing number of calls from within the Conservative party for more public expenditure as a response to poor performance in the polls. The first part of this Briefing Paper provides a new dimension to the discussion of future spending plans by analysing the record of controlling public expenditure in the past. It outlines the reasons for uncertainty and the various ways by which the government has sought to keep expenditure under control and the limitations of the available information.On the basis of this analysis we look at the future and conclude that the government is unlikely to be able to keep expenditure within the plan for the coming year, or indeed for the rest of the decade. There has been a regular pattern of overspending in the past and this cannot be entirely explained by such factors as the miners' strike and the Falklands. Another conclusion is that the government has so far chosen to be seen to be keeping plans for expenditure growth down rather than providing realistic plans which allow for overspending, and is likely to continue to do so in the future.At a disaggregated level, analysis of the pressures on three major spending departments – Defence, the DHSS and Education and Science – suggests that these are unlikely to be completely offset by efficiency savings. Indeed it may be more difficult to make savings in the future because of past success in eliminating inefficiencies and slack in the system. The freedom of manoeuvre available to the government, including the use of the reserve, adjusting proceeds from the privatisation programme and the possibility of adjusting the figures themselves, is less than in the recent past. And the greatest potential scope for manoeuvre – policy changes to cut spending in areas that have a significant impact on the totals – is effectively denied a government wishing to present a caring image in the run‐up to a general election.