THE GROWTH OF GOVERNMENT EXPENDITURE IN THE UNITED KINGDOM SINCE 1790

AuthorJ. Veverka
Date01 February 1963
DOIhttp://doi.org/10.1111/j.1467-9485.1963.tb00918.x
Published date01 February 1963
THE GROWTH
OF
GOVERNMENT EXPENDITURE
IN THE UNITED KINGDOM SINCE
1790
J.
VEVERKA
1.
INTRODUCTION
THE
control and appraisal of government expenditure is closely related
to its size and structure. The size indicates the extent
of
the task,
while the structure shows the categories
of
expenditure involved. The
'
big
'
government
of
today is the outcome
of
a
long historical
pro-
cess, which we shall summarise in this paper. We shall try to link the
changes in both the size and structure
of
the public sector with other
historical developments
:
two developments will be specially discussed,
changes in total wealth as indicated by estimates
of
Gross National
Product and changes in population.
Such
a
historical survey
of
the growth of the public sector, covering
broadly two centuries, might be expected to include
a
discussion
of
past experience in controlling public expenditure. The question
of
control
of
public expenditure not only loomed large in the development
of
public finance, but was one
of
the major political issues at least
until the First World War. The institutional aspect
of
the control
of
public expenditure has been the subject
of
many detailed studies,'
and a short discussion could hardly add anything new. There is,
however, another aspect to the problem, which has not been fully
explored, namely the actual effects of control on the growth
of
government expenditure. The most important motive behind control
has been historically the desire to reduce,
or
to minimise, the growth of
the public sector. This motive was
so
strong in the nineteenth century
that in the eyes
of
posterity the demand
for
control has tended
to
be
identified with a straightforward rejection
of
public expenditure.' The
actual growth of the public sector, which started well back in the
nineteenth century, does not, however, support the view that its growth
was materially reduced by control. On the contrary, without
a
system
of
control culminating in Gladstonian reforms, a subsequent growth of
the public sector would scarcely have been possible. One way towards
1
S.
H.
Beer,
Treasury
Control:
the co-ordination
of
finnncinl and econo-
tnic policy
in
Gr.
Britain
(second edition
19.57).
and
Paul
Einzig.
The Control
of
the
Purse
(1959).
2
Hugh
Dalton,
Principles
of
Public Finance
(21st
impression,
1954),
p.
vii.
111
112
J.
VEVERKA
solving the paradox of growing expenditure despite a hostile public
attitude to such growth would be to widen the nineteenth century
concept of expenditure control to include, as well as the minimisation
of expenditure, the minimisation
of
costs of providing a given amount
of services. The scope of this paper does not permit this discussion
to be carried any further. Yet, one significant point has emerged from
the author’s studies of this period, namely that successful control may
lead to
a
larger rather than to a smaller public sector.
The estimates, which cover selected years between 1790 and 1961,
are based on two recent studies, dealing with the growth of the public
sector in the United Kingdom. Peacock and Wiseman have reviewed
the period since
1890,3
and the period
1790-1900
has been the subject
of
a
forthcoming study4 by the author. The estimates have been
brought up to date on the basis of the 1962 edition
of
the National
Income and Expenditure Blue Book.
The estimates of total government expenditure thus obtained are
first compared with changes in total output and population. Aggregate
expenditure is then broken down into individual categories. The mass
of public spending is far from homogeneous, and there is
a
very strong
evidence that the income elasticity of individual categories of public
expenditure differs very widely.5 Although interest has been mainly
centred, in analogy to the individual consumption function, on the
relationship between aggregate government expenditure and total
output,
a
more realistic conclusion, in
our
view, could be derived from
considering the relationship between individual components of govern-
ment expenditure and economic growth.
Finally, we discuss the meaning of the control of government
expenditure. This may cover anything between purely political control,
implied in the postulate of
no taxation without representation
’,
to
cost-benefit analysis. The two aspects
of
control, the question of who
takes the decisions, and that of whether the most efficient activity has
been chosen, are not intrinsically connected, although historically they
have been. Whatever control has meant in different historical situa-
tions, the whole mass of government expenditure has not been subject
to the same degree of
control
and we shall therefore have to relate
control policies to the structure of expenditure.
A.
T.
Peacock and
J.
Wiseman,
The
Growfli
of
Puhlic E.rpenditure
ijr
the
United Kingdom,
National Bureau
of
Economic Research,
1961.
J.
Veverka,
The
Growth
of
Government Expenditure
in
the United
Kiria-
darn
in
the
19th
Century,
forthcoming.
See
the discussion in the forthcoming article by
S.
Andic
and
J.
Veverka;
‘The
Growth
of
Government Expenditure in Germany since
the
Unification.
to
be
published shortly
in
Finanznrchiv.

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