HC Deb 13 December 1994 vol 251 cc596-7W
Mr. Kynoch

To ask the Secretary of State for Scotland if he will announce the provision that he has made in his public expenditure plans for Government-supported expenditure and aggregate external finance in 1996–97 and 1997–98.

Mr. Lang

My plans for Government supported expenditure—GSE—and aggregate external financeAEF— for 1996–97 and 1997–98 and the actual figures for 1995–96 which I announced on Budget day are shown in the following table. The plans for 1996–97 and 1997–98 will, in the normal way, be subject to review in future public expenditure surveys.

1995–96 £ million 1996–97 £ million 1997–98 £ million
GSE 6,116.9 6,211 6,201
AEF 5,306.0 5,336 5,300

Community Care

The above amounts of GSE and AEF are inclusive of the following sums which are being transferred to local authorities in respect of their care in the community and the independent living fund responsibilities.

1995–96 £ million 1996–97 £ million 1997–98 £ million
172.1 211.6 245.0

Local Government Reorganisation

In determining my plans for GSE and AEF for the two forward years, I have assumed that the new councils will incur local government reorganisation related costs of £70 million in 1996–97 and £20 million in 1997–98. The 1996–97 figure is £15 million greater than I assumed in my 1993 public expenditure plans. Twelve months ago I estimated that redundancy costs of £15 million would be incurred in 1995–96. I have now transferred this provision to 1996–97. In all, I am assuming that redundancy costs totalling £43 million will be incurred as a result of reorganisation. I am making provision for £40 million of these costs to be met in 1996–97 and £3 million in 1997–98. I expect other reorganisation related costs to amount to £30 million in 1996–97 and £17 million in 1997–98.

The new local government structure will be cheaper to operate than the existing one and I estimate that savings of £40 million per annum will be achieved from 1997–98. I recognise, however, that this full level of annual saving may not be achievable in the first year of the new structure, given that councils are likely to require time to shed the surplus staff which they inherit from the existing authorities. My plans therefore assume a saving of £30 million in 1996–97.

Overall, therefore, my plans assume reorganisation related net costs of £40 million in 1996–97 and net savings of £20 million in 1997–98.