Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 480-482)


13 DECEMBER 2006

  Q480  Chairman: Just a last couple of questions. The planning assumption in the Pre-Budget Report is that public sector current expenditure will grow by 1.9% in 2009-10 and 2010-12. That is below economic growth and significantly below previous rates of growth of public expenditure since 2000. What impact will the expected increases in net migration levels have on both total public expenditure and public expenditure per head?

  Mr Brown: That is rising real terms growth in public expenditure but, as I said earlier in answer to a question, this is an assumption; it is not a decision. These things are all to be looked at during the course of the spending review and in the run-up to any announcements. As far as the pressures on public spending are concerned, clearly you have to look at all pressures on public spending and that is why we are conducting what is called a zero-based review. We are looking at what the costs of meeting our commitments to particular services are in the context of the population of the country, the changing demographic trends, the rising number of elderly people, the need to prepare for the global economy. All these things are part of this very extensive and complex review.

  Q481  Chairman: My last question is on emissions trading schemes. Under the EU ETS, while UK power companies may have been allocated 4.6 million tonnes of carbon less than their projected needs they have met this shortfall not by cutting emissions but by buying up surplus, and comparatively cheap, allowances. If the EU ETS fails what back-up does the UK Government have in place?

  Mr Brown: I think what is happening is that people are learning the lessons of experience in the EU ETS and that will be applied to the next round. We have already made different dispositions for the next round than for the previous round.

  Q482  Chairman: Chancellor, can I thank you and your colleagues for your attendance this morning.

  Mr Brown: Thank you very much, Chairman. Best wishes for Christmas. I hope you will finish your report by then.

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