A Perspective on Cash Planning

  • Grahame Walshe
Chapter

Abstract

Cash planning was introduced in 1981 to take effect in the financial year 1982/83. The intention was to operate in 3-year cycles with a medium term cash plan. Therefore, an analysis of the cash outturns for the first two cash planning cycles is possible. Alternatively, the objectives of the MTFS may be viewed in the light of outturns for public spending, borrowing and taxes in relation to GDP. As was noted in Chapters 3 and 6, these GDP-based data have assumed some importance as intermediate, and perhaps ultimate, targets of the strategy. Thus there are three objectives: to establish how successful has been the aim of sticking to cash plans; to gain an impression of the volume consequences of cash planning; and to assess the pattern of GDP-based outturns for spending, borrowing and taxation.

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Notes and References

  1. 1.
    Each year there are a number of more or less minor alterations to the definition of public expenditure which affect the continuity of the time series for cash spending. These are described fully each year in part II of the PEWP. For example, PEWP 1987, Cmnd. 56-II, pp. 26–28.Google Scholar
  2. 2.
    The full details may be consulted in the FS & BRs for 1982, 1983 and 1984.Google Scholar
  3. 3.
    See, for example, the 1983 PEWP, Cmnd. 8789-I, para 5, p. 4.Google Scholar
  4. 4.
    In the Third Report from the Treasury and Civil Service Committee, Session 1982/83, The Government’s Expenditure Plans 1983/84 to 1985/86, HC204, Appendix 2, p. 29, the Treasury estimate the effect in 1982/83, the first year of gradual abolition, to be about £¼ billion.Google Scholar
  5. 5.
    See Second Report from the Treasury and Civil Service Committee, Session 1985/86, The Government’s Economic Policy: Autumn Statement, HC57, Appendix 4, Table 2, p. 49.Google Scholar
  6. 6.
    A point made by A. Likierman, ‘Squaring the Circle: Reconciling Predictive Uncertainty with the Control of Public Expenditure in the UK’, Policy and Politics, vol. 14, July 1986, p. 292.CrossRefGoogle Scholar
  7. 7.
    See R. Robinson, ‘Restructuring the Welfare State: An Analysis of Public Expenditure, 1979/80 – 1984/85’, Journal of Social Policy, vol. 15, 1986, p. 3.CrossRefGoogle Scholar
  8. 8.
    Some commentators regard this as giving a better impression of the level of public spending. There are still some privatisation proceeds embedded in the data for departmental spending — for example, the proceeds of council house sales are netted off housing expenditure — and it might be appropriate to take these into account: the arguments for and against such a treatment are inconclusive. See ‘Public Sector Finances’, Barclays Review May 1986, pp. 49–52.Google Scholar
  9. 9.
    HM Treasury, PEWP 1982 Cmnd. 8494-I, paras, 20–23, pp. 6–7; Economic Progress Report, No. 143, March 1982, p. 9 and no. 151, November 1982, p. 3; FS & BR, March 1984, p. 8; and The Next Ten Years: Public Expenditure and Taxation into the 1990s March 1984, part III.Google Scholar
  10. 10.
    R. W. R. Price, ‘Public Expenditure: Policy and Control’, National Institute Economic Review, November 1979.Google Scholar
  11. 11.
    Ibid. p. 71.Google Scholar
  12. 12.
    Central Statistical Office, United Kingdom National Accounts, Sources and Methods (London: HMSO, 1985), Chapter 5, p. 39 ff gives an outline of the methodology.Google Scholar
  13. 13.
    Presumably the difference is explained by unusually high public sector pay awards. These would have expanded cash spending compared with a smaller relative effect on the input-based data used to construct the constant price series in the GGFC deflator’s denominator.Google Scholar
  14. 14.
    See HM Treasury, PEWP 1986, Cmnd 9702-II, p. 126.Google Scholar
  15. 15.
    R. Robinson, Restructuring the Welfare State; who uses: (1) DOE, Housing and Construction Statistics; (2) DES Handbook of Education Unit Costs 1982/83 (3) The all-items RPI and (4) Data released to the House of Commons Social Services Committee.Google Scholar
  16. 16.
    HM Treasury, The Next Ten Years.Google Scholar
  17. 17.
    PEWP 1987, Cmnd. 56-I, Table 1.10, p. 19.Google Scholar
  18. 18.
    See Annex 1 for a definition. Broadly, central and local government spending including gross debt interest, plus a few national accounts adjustments.Google Scholar
  19. 19.
    FSBR 1986, HC273, para 1.04, p. 5.Google Scholar

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© Grahame Walshe 1987

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  • Grahame Walshe

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