§ The public expenditure White Paper setting out our spending plans for the next three years was approved by the House last week. Today I want to consider the important issue of Government spending in a rather wider perspective.
§ For far too long, public spending has grown faster than the economy as a whole. As a result, the tax burden has steadily increased and income tax has extended steadily lower down the income scale.
§ We have seen a massive enlargement in the role of the state, at the expense of the individual, and a corresponding increase in the dead weight of taxation holding back our economic progress as a nation.
§ This process has to stop. But it has arisen because much public spending is directed to eminently desirable ends. This raises difficult issues which deserve the widest possible consideration and debate.
§ The Government are therefore publishing today, in addition to the customary Budget documents, a Green Paper on the prospects for public spending and taxation over the next 10 years. It examines past trends, discusses the pressures for still higher spending, and examines the rewards for the individual and the benefits for the economy if these pressures can be contained.
§ The Green Paper concludes that, without firm control over public spending, there can be no prospect of bringing the burden of tax back to more reasonable levels. On the assumptions made in the Green Paper, the burden of taxation will be reduced to the levels of the early 1970s only if public expenditure is kept broadly stable in real terms over the next 10 years.
§ The Government believe that the issues discussed in the Green Paper merit the attention of the House and the country.
§ In contrast to previous years, I have no package of public expenditure measures to announce in this Budget. The White Paper plans stand.
§ I can, however, make one announcement, which I think the House will welcome. Within the published plans the Government have been able to provide the National Heritage Memorial Fund with additional resources which will enable it, among other things, to secure the future of Calke abbey. My right hon. Friend the Secretary of State for the Environment will be announcing the details later today.
§ The House will recall that proposals for the new rates of social security benefit to come into force in November are not now made at the time of the Budget. Following last 292 year's legislation to return to the historic method of uprating, price protection is measured by reference to the retail price index for May. My right hon. Friend the Secretary of State for Social Services will be announcing the new rates of social security benefits, including child benefit, when the May RPI is known.
§ Before leaving Government spending, I should add a word on public sector manpower. At the beginning of the last Parliament, the Government set themselves the target of reducing the size of the Civil Service from 732,000 in April 1979 to 630,000 by April of this year. That target will be achieved. We have now set ourselves the further target of 593,000 by April 1988. I am confident that a smaller Civil Service will continue to improve its efficiency. The tax changes that I shall be announcing today will reduce manpower requirements by at least 1,000 in my own Departments, which will help towards meeting the 1988 target.