Ivor Callely
Question:36 Mr. Callely asked the Minister for Finance the variance between the original Government spending targets set for the years 1995 and 1996 and the actual results. [11714/97]
Written Answers. - Public Expenditure.
Ivor Callely
Question:39 Mr. Callely asked the Minister for Finance his views on the commitment in A Government of Renewal in relation to current supply spending to be constrained to a maximum of 6 per cent in 1995 and an average annual rate of 2 per cent in real terms over the next two years. [11718/97]
I intend to take Questions Nos. 36 and 39 together.
The Government's policy programme, A Government of Renewal, includes the following statement in relation to public spending:
Over the period of this Programme it is intended that the growth of current supply services spending will be constrained to a maximum of 6 per cent, in nominal terms in 1995, and to an average annual rate of 2 per cent in real terms over the following two years of the Programme.
The actual growth in gross current spending over the period of the programme compared with the target growth is as follows: in 1995 the target was for a 6 per cent nominal increase and the outturn was an increase of 5.6 per cent; in 1996 the target was for an increase of 2 per cent in real terms and the outturn was an increase of 4.4 per cent in real terms; in 1997 the target was for an increase of 2 per cent in real terms and the budget estimate provides for an increase of 4.7 per cent.
The increases in spending in 1995 and 1996 were due mainly to exceptional and unavoidable factors such as the payment of equal treatment liabilities of £140 million in 1995 and the EU disallowances or beef fines and BSE related costs in 1996. In 1997, increases in pay and social welfare account for 75 per cent approximately of the total increase in gross current spending. Full details of the increase in spending in 1997 are given in the Revised Estimates for Public Services published on 26 March.
Taking 1996 and 1997 together, the increase in gross current spending in real terms will exceed the target of an annual, average rate of 2 per cent for those years. However, the 2 per cent spending target must be seen in the context of the overall commitment in the Government's programme to keep Government borrowing prudently below 3 per cent of GNP. The overall level of Government borrowing is by far the most important budgetary target set in the Government programme. The Government has made certain that the increases in spending have not resulted in an increase in borrowing above its target levels. The record shows that the Government has succeeded by a comfortable margin in meeting its borrowing target. In this year's budget the general Government deficit is estimated at 1.5 per cent of GDP; in 1996, the general Government deficit was 1 per cent of GDP. This budgetary performance stands comparison with any of our EU partners.