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Government Expenditure

Volume 178: debated on Friday 12 October 1990

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To ask the Chancellor of the Exchequer what is his latest forecast for the share of gross domestic product to be taken by central Government expenditure.

The forecast for the unadjusted ratio of general Government expenditure, excluding privatisation proceeds, to gross domestic product published in the "Financial Statement and Budget Report" is 39¾ per cent. The central Government component of that was 29¼ per cent. of gross domestic product.

Will my right hon. Friend confirm that a substantial proportion of the gross domestic product taken by central Government is spent by local authorities, and that that spending has recently risen dramatically? Will he further confirm that it is an outrageous and unacceptable burden on ordinary people, which must not be allowed to continue?

My hon. Friend is right. Local authorities in England this year increased their current spending by 13¼ per cent. That is quite unjustified. My right hon. Friend the Secretary of State for the Environment has made it clear that the Government intend to make vigorous use of their community charge capping powers if that continues.

My hon. Friend will be aware that we have introduced a new local authority capital finance regime, which we believe will help to deal with the problem of overspending on capital. My hon. Friend was right to say that it is a serious problem.

To meet that expenditure, what percentage of revenue does the Minister expect to come from oil revenues? As there has been a dramatic rise in the price per barrel—it is touching $40—can we expect an increase in revenue that might, perhaps, touch £5 billion?

The hon. Gentleman takes a special interest in energy matters, so he will be aware that the revenue from North sea oil is a small proportion of total tax revenue. I speak from memory, but I think that it is about 2 or 3 per cent. The level of oil revenue would be affected if there were to be a sharp rise in the oil price, but it would not have a significant effect on total tax revenue.