§ Let me now turn to the Government's new spending plans for the rest of this Parliament. In June, the Cabinet imposed tight ceilings on public spending over the next three years—a real terms freeze in the new control total over the next two years, with growth limited to 1 per cent. a year thereafter. In my view, as I have frequently said, nothing tougher has been attempted since this Government came to power in 1979.
§ Anyone who has actually run one or more of the big Departments of State knows how unacceptable it would be to contemplate cuts in the health service, in our education system, or in the resources needed to improve law and order. In a modern and civilised society, no one can regard all public spending as a bad thing.
§ Of course, more spending is not the only way to improve our public services. Quality public services also depend crucially on greater efficiency, better value for money, and, where sensible, on the involvement of private sector money, management and advice.
§ Earlier this year, my right hon. Friend the Chief Secretary launched a series of fundamental public expenditure reviews to establish more clearly what the Government's spending priorities should be. Already, this programme is producing dividends. The first four reviews have played a key role in this year's public expenditure survey.
§ I can now announce to the House that overall, even including the package of help with fuel bills that I have just announced, the Government's new spending plans are fully consistent with the tough limits agreed by the Cabinet in June.
§ For the next three years, Government expenditure will grow by substantially less than the projected growth of the economy. Public spending will therefore fall as a proportion of national income, from around 45 per cent. this year to 42½ per cent. in 1996–97.
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