HL Deb 03 December 1970 vol 313 cc769-70WA
LORD DIAMOND

asked Her Majesty's Government:

Whether they will publish a breakdown of the demand effect of the various items, suitably grouped, in Columns (b) and (c) of Table 1 of

CHANGES IN PUBLIC EXPENDITURE AND RECEIPTS, 1970–71
£ million at 1970–71 outturn prices
Receipts Expenditure Balance
A. RESOURCES
Net expenditure on resources 237
B. TRANSFERS, TAXATION, ETC.
Grants, subsidies and debt interest 5
Income tax —315
Corporation tax —90
TOTAL —405 5
BALANCE OF SECTIONS A AND B ("Balance of resources, transfers, taxation, etc.") —163
C. ASSETS
Net purchase of land, existing building and financial assets 87
Betterment levy, etc. —15
TOTAL —15 87
TOTAL RECEIPTS —420 329 —91

The demand content of transactions classified to category A in the table is high, broadly of the order of 80 to 100 per cent. Some three-quarters of the reductions in expenditure falls into this category. The demand content of the transactions in category B covers a wide range, from about 80 per cent. down to 20 per cent. or less. Income tax is in the upper half of this range. The reduction in the rate of Corporation tax from 45 per cent. to 42½ per cent. has only a small effect on the direct demand for resources in 1971–72, partly because of the normal delay with which actual

Cmnd. 4515 and also of the reductions in income tax, corporation tax and betterment levy proposed for 1971–72, all on the same price base.

EARL JELLICOE

The table below analyses the net total change in columns (b) and (c) of Table 1 of Cmnd. 4515 and the changes on taxation referred to in the question by the three resource use categories shown in Table 1.2 of Cmnd. 4234.

expenditure on fixed investment responds to such a change and partly because companies will to some extent reduce the borrowing which they otherwise would have made. Transactions classified to category C operate almost entirely on liquidity and in the short-run have relatively little effect on the demand for resources. Taking all these points into account the changes in public expenditure and personal taxation should in themselves be broadly neutral in terms of demand in 1971–72.

House adjourned at seventeen minutes past nine o'clock.