§ Mr. Lawsonasked the Chancellor of the Exchequer if the statement in Her Majesty's Treasury's 1972 publication "Public Expenditure White Papers: Handbook on Methodology" that the net effect of the retail price effect adjustment is to increase the growth rate of total public expenditure by some 0.6 per cent. per annum is still valid; and, if not, what the trend effect of the retail price effect is now reckoned to be.
§ Mr. Joel Barnett, pursuant to his reply [Official Report, 24 January 1979; Vol. 961, c. 160], gave the following information:
The statement in the publication cited by the hon. Member refers to the relative price effect, not the retail price effect.
In principle the underlying trend in the relative price effect as defined in Cmnd. 7439 is largely determined by the underlying growth of productive potential, assuming no persistent differential between the rates of increase in public and private sector pay.
In practice, however, short-term effects predominate over any underlying trend, as table 5.12 and the charts on page 235 of Cmnd. 7439 indicate.