1933 The Budget has been the centre of political discliasion this week, Elsewhere wo have commented on the political aspocts of this, but here, “Sor the information of readers, we are including a few notes about the terms, otc., which are used, These are based upon the Treasury Bulletin For Industry, March 1963. Readers will probably find it helpful to have available a copy of a newspaper giving the Financial Statement, when reading this,
For historical reasons — to make it casier for Parliament to Keep a check on public sponding -— most Govermment receipts and payments have, by law, to be included in a single exchequer account. It is tho practico to draw,a line across the middle of this account, and to include, above the line, (a) all expenditure which the Troasury does not have statutory authority to finance by borrowing, and (b) receipts which do not have to be applied specifically to service the National Debt, On the expenditure side, the tulk of the items fall under Su services — the ordinary exponditure of government oivil and defence departments, for which Estimates have to be submitted and voted upon by Parliam ent annually, By the time the Budget is introduced, the Estimates of expenditure will. have been presented to Parliament and published, so that the expected total of expenditure which comes under Supply Services will be known, The remaining «+ payments above the line, Consolidated Fund Services - consist of expenditure which does not have to be voted anmally by Parliament since this type of expen diture has been authorised once and for all, The greater part of this is the interest on the National Debt, tut it also includes payments to the Govern ment of Northern Ireland, the salaries and pensions of judges and other items.
Expenditure shown in the Financial Statement below the line consists + — of expenditure which Parliament has authorised to be financed by borrowing — mostly loans by nationalised industries, public mthorities, overseas go ants, etc. These payments are made out of the Consolidated fund, and do not havbrto be voted annually by Parliament. Receipts below fhe line include repaymor-of loans and interest; the interest element goea towards meeting the total interest which the Government pays on the National Debt, the rest of which appears above the line, It is inaccurate to think of "above" and "below" the line as separ ating all current from capital expenditure. It is true that most of the expenii~ iture below the line is of a capital natureg but some capital expenditureis also charged above the line. Government sacecunte da ant of course, make the rigorous distinction, common in tusiness between current and capital payments, Expenditure of any kind can be charged to revenueg and some capital payments - such as the ~~ eost of Governmont tuildings and certain bwinterest loans - are usually charged above the lina, The character of expenditure below the line has changed a good deal in the last ten years, reflecting major changes in policy. One such change was the decision that the 1955 Budget decreed that local enthoritias should be encouraged to borrow as far as possibke in thea open market, This led to a considerable reduction in advances to local authorities
The question of how mich of the total government expenditure and Govarnment loans is covered by taxation and how much by borrowing is, of course, .* the determining factorg and it is this decision which affects the size of the ao surplus or the deficit above the line and below the line, When there is & surpins, above the line, this surplus has to be dovoted, by law, to the redomption, of debt. But, in practice, it has come to be regarded to be an offset to the inc in debt implied in the net lending programme below the line. An above the line surplus is therefore said to be applied to the reduction of the deficit below the line, Any remaining deficit is sometimes referred to as the overall Budget
dot as
deficit to the net borrowing requirement on ie account, This the size and rato of increase of the Natio bt.