§ Mr. KynochTo ask the Secretary of State for Scotland if he will make a statement about the provision he has made in his public expenditure plans for the costs of local government reform.
§ Mr. LangIn determining the level of Government-supported expenditure (GSE) for 1994–95, which I announced on 30 November, I have included £5 million to cover costs which I expect local authorities will incur next year in preparing for local government reform. A separate grant aided expenditure (GAE) assessment will be created for this amount, which I intend will be distributed to all mainland authorities according to a standard formula. Each authority will receive a flat rate sum of £35,000 and the balance of the million will be distributed amongst authorities on a per capita basis.
The precise level of the extra costs which will face authorities as a consequence of reform in 1995–96 and 1996–97 remains uncertain, and will depend on decisions taken by the new authorities. I do not expect the net costs to exceed £30 to £35 million in either year. In determining the planned level of GSE for these years I have assumed that the existing local authorities will incur local government reform costs of £25 million in 1995–96 and £55 million in 1996–97, and that in the latter year there will also be savings of £40 million. The proposed new authorities would therefore incur net reform costs of £15 million in 1996–97. In subsequent years there would be significant net savings. I shall of course continue to consult the Convention of Scottish Local Authorities each year before determining the local government finance settlement.
Entirely outside the settlement I am providing a total of £1.5 million over the three years to cover the costs of the Staff Commission which I intend to establish to assist the reform process, and a further £23 million in 1995–96 to cover the estimated costs of the proposed new authorities during their shadow period.
I believe that these plans make realistic provision for the transitional costs of local government reform, and demonstrate that allegations that the cost of reform will fall entirely on the council tax are completely without foundation.