§ In the 1980s, across the rest of Europe, the modern state remorselessly took an ever greater share of almost every nation's wealth. We in Britain held the line. The proportion of GDP going into Government spending in the United Kingdom is now 8 per cent. lower than the average in the rest of the European Union. If our spending had risen to continental levels we would now have to raise nearly £2,300 a year more in tax from every British household.
I have set a target of 40 per cent. or below for the share of national income that goes on public spending. Making progress towards that desirable target means tough 158 decisions on public spending every year, but this year we have had to cope with the costs of BSE, and with larger than expected increases in the costs of social security, as more and more elderly and disabled people receive benefits to which they are entitled.
Against that background, we had to keep the rest of public spending within the tightest possible limits, in order for us to spend more on the public services that people really care about: education, combating crime and our national health service. This country has been well served by my right hon. Friend the Chief Secretary who has successfully tackled that problem. Despite all the difficulties, we have been able to reduce public spending plans over the next three years by a further £7 billion in this Budget. Public spending next year will be more than £24 billion lower than was projected when I became Chancellor—a reduction of 7 per cent.
We have been able to reduce spending plans because we have lower inflation, falling unemployment, a continuing campaign for efficiency in the public sector, sensible policy priorities and a Government capable of taking decisions about those priorities. On top of that, the Government's relentless drive against fraud and the abuse of tax and benefits will be stepped up another gear.
Next year, we will meet our target of 40 per cent. for the share of national income that goes on public spending. In last year's Budget I said that I would make 40 per cent. in 1997–98. This year's Budget secures that important goal. So long as we keep—as the next Conservative Government will keep—the growth in public spending down below the growth in the economy, we will go below that.