CASH PLANNING
| DOI | http://doi.org/10.1111/j.1467-9299.1983.tb00503.x |
| Published date | 01 March 1983 |
| Date | 01 March 1983 |
NOTES
AND
SURVEYS
CASH
PLANNING
Public expenditure plans were formulated in cash terms for the first time in the
1981 spending review, the results of which were published in the March 1982
White Paper (Treasury 1982a). According to the Government, the new system
represents a more intelligible and more rational basis for planning expenditure
than the constant Survey price method which preceded it. But it is clear that a
primary motivation was to impose a further restraint on public expenditure
grdwth, to extend the principle and practice of cash limits, which have been
so
effective in controlling expenditure within the financial year, to the formulation of
medium-term plans. The purpose of this paper is not to defend the old Survey
price system, which was far from perfect, but to highlight the inadequacies of the
new system which, it is argued, militates against rational planning as it has been
set up and is almost certain to lead to growing strains between spending
authorities and the Treasury, whatever might have happened this year. The
principal cause for concern is not that plans should be expressed in cash but that
decisions should be taken on this basis without apparently adequate information
on what the cash is likely to provide in terms of public services
or
on its financing
implications.
The
Rationale
for
Cash Planning
At first sight cash planning has a certain compelling logic about it, particularly in
relation
to
the old Survey price system:
-Ministers discuss the cash that will actually be spent, and therefore what will
have to be financed by taxation or borrowing, instead of talking about ‘funny
money’.
-
Expenditure figures can be related more readily to the revenue projections,
so
that finance can determine expenditure and not expenditure finance.
-
Changes in public sector costs are brought into the discussion, whereas
volume plans were regarded by spending managers as entitlements carried
forward from year to year regardless of what was happening to costs.
-
The decisions in the annual survey
(PESC),
as they relate to the year ahead,
can be translated directly into the cash limits and estimates presented to
Parliament, without revaluation from one price basis to another. (Treasury,
1981)
Public Administration
Vol.
61
Spring 1983
(85-90)
0
1983
Royal
lnstitute
of
Public Administration
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