HC Deb 27 June 1996 vol 280 cc235-6W
Mr. Matthew Banks

To ask the Chancellor of the Exchequer what is the latest estimate of the cost of the measures taken to deal with the BSE crisis so far. [35122]

Mr. Kenneth Clarke

The latest estimates, updating those given by my right hon. Friend the Chief Secretary to the hon. Member of Northampton, North (Mr. Marlow) on 26 April at columns 321–22, are shown in the table:

Estimated cost of measures in the UK taken in response to BSE
(£ million)
1996–97 1997–98 1998–99 Total cost over three years
Net cost borne by the UK 848 516 623 1,987
Net contribution from the EU 189 232 62 483
Total cost 1,037 748 685 2,470

This reflects an increase over the previous estimate of £40 million to the total cost over the three years from £2,430 million.

The table includes the following measures:

  1. (a) the compensation and destruction arrangements for cattle over 30 months of age which cannot now enter the food chain.
  2. (b) the calf slaughter premium;
  3. (c) the package of aid for the renderers and the abattoir and cutting industries announced on 3 April and 16 April respectively;
  4. (d) the feed recall scheme;
  5. (e) additional running costs for the agriculture departments.

The figures for the net contribution from the EU take account of both the UK's contribution to additional EU spending and the effect of additional receipts on the UK abatement.

The figures do not include either the costs of increased beef intervention or the costs of the accelerated cattle slaughter programme, for which precise estimates are not yet available.

Mr. Malcolm Bruce

To ask the Chancellor of the Exchequer what is his estimate of the effect on the public sector borrowing requirement in(a) 1996–97 and (b) 1997–98 of the BSE crisis in United Kingdom farming, including the associated compensation measures; and if he will make a statement. [34752]

Mr. Clarke

The direct costs of BSE measures in 1996–97 will be met either from existing departmental programmes or from the contingency reserve. Spending plans for 1997–98 also contain an unallocated reserve for meeting unforeseen commitments; BSE costs in 1997–98 will be met from this reserve. Because the reserve is part of the public expenditure control total for each financial year, there is no reason to change the published forecasts of public sector borrowing in 1996–97 or 1997–98 as a consequence of BSE measures.

The estimated aggregate impact of BSE measures on gross domestic product is small, although there will be a significant impact on certain sectors of the economy. So there are not likely to be any significant indirect effects on the PSBR.