§ Mr. Wrigglesworthasked the Chancellor of the Exchequer if he will make a statement about the Government's policy concerning cash limits on expenditure programmes for 1979–80.
§ Mr. Joel BarnettThe Government propose to set and operate cash limits for the year ahead so that they support the observance of the Government's monetary targets and a public sector borrowing requirement for 1979–80 in line with the projection in the recent public expenditure White Paper—Cmnd. 7439.
In respect of prices, the cash limits for both central and local government will provide for price increases as in the Industry Act forecast published last November, which, consistently with the guidelines in Cmnd. 7293, implied a retail price index 8½ per cent. higher in the fourth quarter of 1979 than in the fourth quarter of 1978. The Government do not intend 335W to increase cash limits to accommodate any higher price increases.
In respect of pay, the cash limits will be set in accordance with the policy stated in Cmnd. 7293, together with the £3.50 underpinning subsequently announced. The Government will review each case as setttlements are reached. Certain adjustments may be necessary, but for central Government expenditure on manpower, the general principle will be that a substantial proportion of any excess cost above the provision already made will have to be absorbed within the existing cash limit. Local authority settlements are covered by the cash limits on rate support grant. It has been agreed that the cash limits should be increased in respect of the Government's contribution to the offer made to the manual workers. Whether the Government make any further contribution in respect of other settlements will depend on the circumstances of each case, but in no such circumstances will the Government contribute more than their standard share of local authority current expenditure.
For nationalised industries, the Government's policy is that external financing should be contained within the aggregate provision in Cmnd 7439.