Public Spending Aggregates

Ways and Means – in the House of Commons at 3:31 pm on 29th November 1994.

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All my efforts to help businesses and help the unemployed will be to no avail if I did not keep a firm grip on public spending.
I have already dealt with spending by each Department. But I have not yet described what will happen to public spending overall as a result of our decisions. Last year's spending round delivered substantial cuts in overall public spending. This year's has not been easy because of that.
Public spending control is not only about controlling costs. It is about choice of priorities. That is the language of politics.
Within this year's settlement, my right hon. Friend the Chief Secretary and I have succeeded in producing real increases in resources for priority programmes such as the national health service and the police service.
We have also managed to protect the delivery of public services generally by focusing our search for savings on administrative costs.
We have avoided our tight settlement last year being turned into a wasteful one by ensuring that success in lowering inflation does not simply increase the volume of spending on programmes.
I am glad to tell the House that that approach has allowed us to make overall savings which are even greater than those achieved last year.
Last year, we managed to reduce the control total by £8 billion over the three years. This year we have done a bit better—not 10, not 15, not 20, but another £24 billion off the control total over the next three years on top of last year's reductions.
Last year we reduced public spending plans so as to reduce general Government expenditure by £15 billion over a three-year period. This year, on top of last year's reductions, we will reduce general Government expenditure by £28 billion. That is a total reduction in Government expenditure over the four years covered by my two Budgets of £43 billion.
Those savings have allowed me to reduce my projection for the public sector borrowing requirement. Taking into account the tax and public spending measures, I now expect to be able to reduce borrowing from £30 billion to £21½ billion in 1995–96, from the previously forecast £21 billion to £13 billion in 1996–97, and from £12 billion to £5 billion the year after that. This reduced borrowing should provide an added stimulus to business confidence, strengthen the recovery further and give us the healthy public finances that we need to put our economy and our economic policy on course.