§ The Chancellor of the Exchequer (Mr. Denis Healey)The White Paper which we published in February this year set out our medium-term strategy for public expenditure.
In accordance with this strategy, we are holding expenditure in this financial year within the planned level by the rigorous application of cash limits, by new arrangements for regular consultation with the local authorities, and by refusing to accept new commitments which would breach the contingency reserve. In carrying out the 1976 public expenditure survey we have already made certain adjustments so as to keep within the February White Paper plan for each year, as modified by the measures I announced in July.
In order to achieve the new PSBR targets to which I have referred, we have now decided to reduce public expenditure programmes further by £1 billion in 1977–78 and £1frac12; billion in 1978–79 at 1976 survey prices. The details are being circulated in the Official Report and are available in the Vote Office, but I shall now describe the main further changes which are being made to the programmes as they emerged from the survey.
Once again we have avoided mechanical cuts across the board and have not reduced the main social security benefits, although we are concerned about the narrowing gap between them and the income of those in work. The cuts will therefore fall elsewhere.