Public Expenditure: Policy and Control

This article explains that a major factor in the 1979 public expenditure cuts is the long run tendency for public expen diture to increase in relative cost. It traces the origins of this to the inadequate measurement of public service output and describes the historical trends in the 'relative price effect'. The article argues for a better measure of output and cost in the government sector so that the development of services can be planned more coherently, without recourse to programme cuts. It shows that cash limits do not fully solve the problem, and that the recent cuts will have no immediate effect on the share of government spending in GDP.