HC Deb 06 March 1978 vol 945 cc527-8W
Mr. Baker

asked the Chancellor of the Exchequer whether he will publish estimates of the extent to which the relative price effect was off-trend in each of the years 1973–74 to 1977–78.

Mr. Joel Barnett

The relative price effect in public expenditure is made up of different price movements for different economic categories. These are shown in the chart on page 139 of Command 7049-II. Over the 11-year period shown, the relative price effect adds approximately ½ per cent, per annum to the growth of public expenditure in total. Figures for individual years up to 1979–80 are shown in table 5.5 of Command 7049-II.

Mr. Baker

asked the Chancellor of the Exchequer why no estimates have been made for the relative price effect in 1980–81 and 1981–82.

Mr. Joel Barnett

Projections of the relative price effect depend upon a number of detailed assumptions about future relative price movements: the main categories are shown in chart A on page 139 of Command 7049–11. There is a considerable degree of uncertainty in these pro- jections. The further ahead the projections are made, the greater the degree of uncertainty. For this reason, the projections in Command 1049 stop at 1979–80.

Mr. Baker

asked the Chancellor of the Exchequer whether he will estimate the quantitative effect on the relative price effect, in million of pounds and percentage terms, of the introduction of the 2 per cent, national insurance surcharge on 1st April 1977 and the reduction on 1st April 1978 in the National Insurance contribution rate payable in respect of employees who are contracted out of the upper tier of the State pension scheme.

Mr. Joel Barnett

I shall write to the hon. Member in due course.

Mr. Baker

asked the Chancellor of the Exchequer what assumptions he has made about the extent of the return to trend of the relative price effect by 1979–80.

Mr. Joel Barnett

For the years 1977–78 to 1979–80, assumptions were made about the movements in the relative prices of various economic categories of expenditure. The main assumptions are shown in the chart on page 139 of Cmnd 7049—II. Table 5.5 in that publication shows that the relative price change in 1979–80 over 1978–79 for public expenditure as a whole is put at +0.7 per cent. close to the long-term average.