§ 12. Mr. MacGregor
asked the Chancellor of the Exchequer whether he has any proposals to strengthen the Treasury's operations in relation public expenditure.
§ Mr. Lawson
asked the Chancellor of the Exchequer why public sector gross domestic fixed capital formation at 1976 647W survey prices for the years 1968–69, 1969–70 and 1970–71 was given as £5,991 million, £6,072 million and £6,375 million, respectively, in the Written Answer to the hon. Member for Blaby on 4th February [Official Report, column 483]; and as 6,475 million, £6,275 million and £6,475 million, respectively, in the Written Answer to the hon. Member for Blaby on 16th March [Official Report, columns 235–36]; and which of these two answers is the correct one.
Mr. Joel Barnet
, pursuant to his reply [Official Report, 23rd March 1977; Vol. 928, c. 585], gave the following information:
The Question answered on 4th February concerned public sector investment only. In that case the figures published in Cmnd. 6721, at 1976 Survey prices, were projected backwards from 1971–72 using the volume changes shown in the national income accounts. This is the best measure for general purposes including comparison with other national income accounts figures. The Question answered on 16th March concerned the whole of public expenditure. In this case national income accounts figures could not be used to carry all the White Paper figures back, because transactions in goods and services only, and not transfers and lending, are estimated in the national income accounts at constant prices. Volume changes before 1971–72 were, therefore, assumed to be as shown in the public expenditure White Paper of December 1973 (Cmnd. 5519) in all cases.
There is a substantial difference in the estimates of the changes in the volume of public sector, excluding nationalised industries, gross domestic fixed capital formation over the years 1968–69 to 1971–72 in Cmnd. 5519 and those in the national income accounts. The investment was mainly in housing and other construction work, and the conversion of figures of the value of construction work done—at contract prices sometimes fixed years before—to a constant price (volume) basis always presents severe technical problems. The public expenditure Survey and White Paper estimates for those years are an aggregate of estimates by individual Departments using a variety of methods. Improved methods have now been introduced for general use and the 648W differences from the national income accounts have been narrowed.
It would be possible to carry the public expenditure series back to 1968–69 in detail, using public expenditure Survey records; the results would probably be close to those obtained using the figures in Cmnd. 5519, and the considerable expense would not be justified.