§ Mr. LathamTo ask the Chancellor of the Exchequer what would be the cost to public funds in the current financial year and with retrospective effort to 6 April of transferring the total cost of teachers' salaries from local government to the Exchequer but leaving the current level of grant to local authorities unchanged; and what addition that would require to(a) income tax and (b) value added tax if the extra cost were divided equally between them.
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§ Mr. Norman Lamont[holding answer 23 May 1990]: If local authorities spent in line with the education component of total standard spending in England and Wales, and total current expenditure in Scotland, the total cost of teachers' salaries would be around £9½ billion. If there were no change to revenue support grant and the cost of teachers' salaries were divided equally between local authorities and the Exchequer, this would imply additional central Government expenditure of around £4¼ billion. This is equivalent to an increase of around 3p in the basic rate of income tax or an increase of around two percentage points in the VAT rate.