"New Labour's Public Expenditure Plans" (Hansard, 17 December 1996)

§ Mr. Derek Foster
To ask the Chancellor of the Exchequer what interpretations or assumptions were made in costing the spending commitments described as having been made by the Labour party in the document, "New Labour's Public Expenditure Plans"; and if the same interpretations and assumptions were adopted by each Government Department. [6338]

§ Mr. Waldegrave
The interpretations and assumptions identified by Ministers, assisted by their special advisers, are set out for each costing. These interpretations and assumptions were used by all Government Departments. In addition, general guidance was provided as set out in my separate written answer of today. Final responsibility for the judgments made in the document "New Labour's Public Expenditure Plans" rests with Treasury Ministers.
FOREIGN OFFICE
1. Increase Overseas Aid The cost of restoring the Overseas Aid budget to the same percentage of GDP as in 1979.
2. Reverse cuts in the World Service and British Council The cost of restoring funding to the BBC World Service and the British Council to the level in 1995–96 in real terms.
3. Rejoin UNESCO The cost of rejoining UNESCO.
MINISTRY OF AGRICULTURE FISHERIES AND FOOD
4. Introduce an early retirement scheme for farmers The cost of the United Kingdom taking up the CAP early retirement scheme, assuming a 25 per cent take up amongst eligible farmers.
5. Increase the number of state vets The cost of employing the same number of veterinary staff as in 1979.
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6. Create more Environmentally Sensitive Areas The cost of a 10 per cent. increase in the current provision for ESAs.
DEPARTMENT OF TRADE AND INDUSTRY
7. Establish Regional Development Agencies in England
The cost of: 8 English regional development agencies each with an annual administrative cost equivalent to that of the Welsh Development Agency. The RSA budget to be increased overall so that England receives as generous a sum in relation to its proportion of total UK unemployment as the average of the Scottish and Welsh take.
8. Establish a Business Development Bank The cost of a Business Development Bank on the same basis as the proposal from the Union of Independent Companies in 1993.
9. Introduce New Technology Trusts Assume that the "trusts" provide more subsidy for R&D—about £15 million—less the costs of the existing Innovation Counsellors included in Business Links.
10. Introduce a Venture Capital Guarantee Scheme The cost of a 10 per cent. increase in the Loan Guarantee Scheme.
88. Implement the Parental Leave Directive The cost to the public sector of implementing the parental leave directive.
DEPARTMENT OF TRANSPORT
11. Restore public ownership of the railways The cost of a complete takeover of Railtrack by the Government assuming a 30 per cent. premium over the market price and external financing requirements to service debt and take account of forward investment plans.
12. Provide new investment in railway safety
The cost of:

1. Installation, operation and maintenance of Automatic Train Protection

2. Replacing 25 per cent. of carriages.

13. Build more high speed rail links The cost of modernising the Great Western line (which runs from London to Cardiff) based on the CBI's estimate for electrification in their report "Winning Ways", 18 July 1996. The cost of modernising the London to Norwich line and the Bristol to Penzance lines based on the cost per mile of modernising the East Coast Main Line at 1996–97 prices.
14. Reduce bus and rail fares in London
The cost of: A 10 per cent. reduction in LT fares. A 10 per cent. reduction in NSE fares.
15. Provide more investment in buses The cost of an increase of 10 per cent. in Government support for local bus services.
16. Reduce freight track access charges The cost of a 20 per cent. reduction in freight track access charges on the assumption that Railtrack has been renationalised.
17. Invest in a network of freight terminals The cost of doubling the existing 5 Channel Tunnel freight terminals.
DEPARTMENT OF THE ENVIRONMENT
18. Increase spending on house building The increase in public spending if the stock of set aside receipts are released over five years and no set aside applies to new receipts.
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19. Return business rates to local control That in each year from 1997–98 to 2001–02, councils will choose to increase net revenue spending by 1 per cent. more than it would otherwise have been increased. That the increase will be financed by additional increases in council tax and business rates, and that the percentage increase in each will be the same. That the reserve powers to cap which Labour propose to retain would only bite on the dozen or so highest spenders, and so would only minimally affect overall spending.
20. End Council Tax capping That in each year from 1997–98 to 2001–02, councils will choose to increase net revenue spending by 1 per cent. more than it would otherwise have been increased. That the increase will be financed by additional increases in council tax and business rates, and that the percentage increase in each will be the same. That the reserve powers to cap which Labour propose to retain would only bite on the dozen or so highest spenders, and so would only minimally affect overall spending.
21. Set up mortgage rescue scheme The cost of providing extra grant to housing associations to enable them to buy up the property of people facing repossession. However, assume that only half choose to take advantage of the scheme.
22. End CCT in local government The loss of expected future savings made from Compulsory Competitive tendering in local government.
23. Establish English Regional Assemblies The cost of nine regional chambers with 50 members on average allowances of £2,500 and 50 support staff with average staff costs of £40,000 (including premises costs).
24. Establish a London authority
The cost of a strategic authority with:

1. 64 councillors.

2. A referendum.

3. Elections every 4 years.

HOME OFFICE
25. Establish a network of women's refuges The cost of a network of women's refuges based on the following assumptions:

1. Refuge services cost £12,000 to £13,000 per family per annum (Women's Aid Federation report published in 1994).

2. One off Capital costs per refuge between £34,000 to £52,000 (London Housing Unit Report).

3. An extra 2,000 family bedspaces estimated on the basis of a recommendation by the Home Affairs Select Committee.

26. End the privatisation of prisons
The cost of:

1. Returning the four private sector prisons to the public sector.

2. Ending the contracting out of education.

3. Ending the contracting out of IT.

4. Ending the contracting out of seven court escort areas.

5. Returning the DCMF prisons to the public sector.

6. Ending market testing in the Home Office.

89. Provide referendums on voting reform and a Scottish Parliament
The cost of:

(A) a UK wide referendum; and

(B) a referendum in Scotland.

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LEGAL DEPARTMENTS
27. Improve access to Legal Aid The cost of reinstating the changes in eligibility since 1992.
28. Reform the Crown Prosecution Service The additional costs associated with providing staff for each of the 43 police areas.
29. Establish a community legal service The additional cost of employing the equivalent of 1½ salaried lawyers in each of the Citizens' Advice Bureaux, assuming some savings in the legal aid budget.
30. Change the design of court buildings The cost of refurbishing Crown Courts and the larger magistrates courts, which have not already provided separate waiting facilities for witnesses and victims.
31. Introduce fast track sentencing for persistent young offenders The cost of fast track sentencing for persistent young offenders.
DEPARTMENT FOR EDUCATION AND EMPLOYMENT
32. Introduce sabbaticals for teachers The cost of teachers with 10 years' service taking one sabbatical of one third of a year and the cost of teachers with 15 years or more service taking one sabbatical of a full year.
33. Introduce a new student loans scheme The additional cost of extending student loans to cover the maintenance grant and to include fees and maintenance of part-time Higher Education students, assuming that the number of students entering Higher Education is not affected and that loan take up also remains unchanged (at 75 per cent.).
34. Double the number of students in higher education The fifth year cost of a programme to steadily increase student numbers that would, after 20 years, have doubled the (percentage) participation rate among young people in full-time higher education.
35. Expand post-16 education The additional cost of all 16 and 17 year olds who are currently not in any education staying on in full-time education in secondary schools.
36. Create a nursery place for every 3 year old The cost of providing a nursery place for every 3 year old assuming that the voucher mechanism is used, that the value of the voucher is the same as for four year olds and the funding can be clawed back from local authorities in the same way as for 4-year olds.
37. Provide access to a lap top computer for every child The cost of supplying one new lap top computer for 1 in 3 primary pupils over 8 years old and 1 in 3 secondary pupils if the computers cost about £1,000 each.
38. Increase capital spending on schools The cost of increasing capital spending by £3.2 billion over 10 years by allowing schools to borrow the money from the banks, without taking account of interest rates.
39. Cable up every school-the cost of computer equipment and training

1. The cost of providing multimedia computers and Internet links to all schools assuming that BT pay the line, connection and on-line costs.

2. The additional cost of 2½ days training per teacher.

3. Assume that in secondary schools there would need to be one multimedia PC for every 10 pupils which would need to be networked throughout the school. In addition there would be one room with 30 PCs in each school. One in ten of the new computers would be connected to a good quality printer and to the Internet via an ISDN line. Each primary school would have one multimedia PC in each classroom with an extra three in each school, e.g. for the library. One computer in each school would be linked to the Internet.

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40. Introduce a literacy guarantee at age 7 The cost of reintroducing the Reading Recovery Programme and extending it nationally.
41. Reduce class sizes for 5, 6 and 7 year olds

1. The cost of reducing class sizes to 30 or under for 5, 6 and 7 year olds.

2. Take a mid-point estimate of the range of possible costs.

42. Provide better teacher training The cost of one day's extra training and supply cover per year for each teacher in maintained schools.
43. Establish intensive literacy summer schools

1. 300,000 pupils attend a 3 weeks summer school each year.

2. Pupils are taught in groups of 10 for 3 hours each day.

3. The cost of overheads is calculated in the same way as the ratio of overheads to teachers' salaries in LEA spending on schools.

4. Teachers can be recruited at the standard term-time supply rates.

44. Take steps to tackle youth employment

1. Each unemployed person receives on average £60 per week in benefits.

2. Each person offered a placement accepts it and completes a full six months.

3. 5 per cent. of participants leave the count and incur no further costs, 60 per cent. of those remaining receive wage subsidies, 20 per cent. enter training, 10 per cent. enter a placement with the voluntary sector and 10 per cent. with the Environmental task force.

4. It costs £2,000 to provide a placement in the voluntary or environmental task force—in line with the former Community Action Programme—and to fund a place in education/training.

45. Introduce a £75/week incentive for the long term unemployed The cost of a £75 a week incentive which lasts 26 weeks for those unemployed over two years assuming no increase in the number of people getting work.
48. Re-establish the Community Action Programme The cost of re-establishing the Community Action programme at its 1995–96 level.
49. Provide extra support to redundant workers The cost of giving everyone who becomes redundant and joins the claimant count a place on Job Search Plus, as a replacement to the existing Job Search Plus scheme.
50. Provide better careers advice The cost of 2 per cent. of the employed population having a full interview with a trained careers officer and a booklet.
51. Establish a University for Industry The cost of an initial intake of 30,000 students based on the costs of the Open University.
52. Make the Re-Employment service available to non-working women The cost of providing access to the Employment Service on a voluntary basis to non-working women who are not registered unemployed.
53. provide job advocates for the long term unemployed The cost of extending the current "1–2–1" scheme to all people over 25 who complete one year in unemployment.
DEPARTMENT FOR NATIONAL HERITAGE
54. Introduce a national network of Millennium Volunteers The cost of giving 100,000 young people each year a place as a Millennium Volunteer on the same basis as the Environmental Task Force, being paid the equivalent of benefit (£60/week) plus £20. Also assume that it costs an extra £2,000 to provide each place, in line with the costs of the former Community Action Programme.
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55. Abolish admission charges to national museums The cost of ending admission charges to museums and galleries funded by the Department of National Heritage.
56. Abolish the internal market in the NHS The cost of abolishing the internal market in the NHS assuming that the average annual efficiency gain returned to the level before the reforms.
57. Withdraw PEI from the NHS The cost of replacing private sector spending on Department of Health capital projects with public sector spending.
58. Introduce GP commissioning The net cost of introducing GP commissioning and abolishing GP fundholding.
59. Increase spending on community care The cost of £135 million extra spending on community care in 1993 upraled to 1996–97 prices.
60. Reintroduce a regional health structure The cost of reintroducing the old Regional Health Authorities.
62. End CCT in the NHS The loss of savings from compulsory competitive tendering in the NHS.
63. Phase out private provision from the NHS The loss of net income generated by pay beds.
DEPARTMENT OF SOCIAL SECURITY
64. Reduce the benefit tapers
The cost of 1. (A) a reduction in the Family Credit taper from 70 per cent. to 40 per cent. (B) a reduction in the Housing Benefit taper from 65 per cent. to 40 per cent.
and 2. (A) a reduction in the Family Credit taper from 70 per cent. to 30 per cent (B) a reduction in the Housing Benefit taper from 65 per cent. to 30 per cent.
65. Introduce a Pension Entitlement/Minimum Guaranteed Income for Pensioners 1. The cost of a 100 per cent. take up of Income Support and the abolition of all capital rules, except those in Housing Benefit and Council Tax Benefit, with a 100 per cent. taper.
and 2. A Minimum Guaranteed Income for pensioners set at £80/week with a 100 per cent. taper.
66. Abolish the "16 hour rule"

1. The cost of making any student other than those undertaking full-time courses in higher education eligible for JSA.

2. Take a mid-point estimate of the range of costs.

67. Allow local benefit decisions

1. The cost of paying 500,000 unemployed claimants a year their income from JSA 6 months in advance.

2. In 20 per cent. of cases, this money has to be repaid again since it is lost by the recipient.

68. Abolish the Jobseeker's Allowance The cost of abolition of the JSA.
69. Introduce a maintenance disregard against Income Support The cost of a £20 maintenance disregard against Income Support.
70. Allow an Income Support carry over Assume that anyone unemployed for 6 months or more and in receipt of means-tested JSA will receive payments at the same rate for four weeks after taking a job.
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71. Provide work help for lone parents
The cost of:

(a) giving Lone parents on Family Credit free school meals.

(b) giving Lone parents on Family Credit a £10 per week disregard for work related expenses.

72. Increase the take up of Family Credit An increase in the take up of Family Credit to 96 per cent.
73. Introduce a JET scheme The cost of a JET scheme for lone parents similar to the Australian JET scheme.
74. Encourage those on benefit to do voluntary work The cost of 1 in 12 unemployed people doing voluntary work assuming that they stay on benefit for four weeks longer than they would otherwise have done.
75. Introduce a Disabled Rights Bill The cost of a Disability Rights Commission plus the cost to:

(A) reduce from 20 to 5 the number of employees used to define those small employers exempt from the DDA's employment rights.

(B) extend the DDA to cover those wrongly perceived to have a substantial disability.

76. Allow unemployed people to borrow against future earnings

1. The cost of giving 50 per cent. of people on JSA for over a year a £300 loan.

2. In 20 per cent. of those cases the money is not repaid. In the remaining 80 per cent. of cases, the money is repaid over an average 2 year period.

77. Introduce budgeting loans for the low paid

1. The cost of extending the Social Fund to Family Credit recipients.

2. Assume that 30 per cent. of households on Family Credit use the fund each year.

78. Introduce Income Support protection The cost of providing an automatic re-entitlement to Income Support at the claimant's previous rate if the job ends within six months.
79. Introduce an income disregard for the wives of unemployed men The cost of allowing any couple, in which one member of the couple declares themselves to be unemployed, to disregard an extra £5 in earnings in addition to the existing £10 disregard.
80. Increase the disregard in the JSA The cost of doubling the disregard in JSA to £10 a week.
APPENDIX 1. Introduce a flexible decade of retirement The cost of a full basic pension payable from the age of 60 assuming that the same percentage of eligible people claim the pension from the new state pension age as currently do so.
SCOTTISH OFFICE
81. Increase tree cover The cost of extending tree cover by 50 per cent. by 2010.
82. Establish a Scottish Parliament The cost of the level of provision planned by the then Government in the run up to 1979, taking account of the Scottish Constitutional Convention proposals published in 1995.
83. End the sale of Forestry Commission land The loss of expected receipts from the sale of Forestry Commission land.
TREASURY
85. Introduce a National Minimum Wage The estimated gross increase in the public sector pay bill assuming a Minimum Wage set at £4.00 per hour with a 50 per cent. restoration of differentials across the entire earnings distribution, using the 1995 New Earnings Survey.
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87. Increase funding on Trans European Networks The cost of the European Commission's recent proposal to increase spending on TENs. In the case of the following costings Treasury Ministers accepted Labour's own estimate of the costs:

46. Broaden the take up of Investors in People

47. Introduce Learn as you Earn Smartcards

61. Cut waiting lists

In the case of No. 84, "Establish a Welsh Assembly", the estimate was made by the Secretary of State for Wales. In the case of No. 86, "Establish a European Recovery Fund", Treasury Ministers took the figure of about £11 billion, the approximate UK share of a proposal for a European Recovery Fund which was supported by Labour MEPs in the European Parliament, and scaled this back to produce a costing of £250 million a year over five years.

§ Mr. Foster
To ask the Chancellor of the Exchequer what guidance was given to civil servants in respect of assembling the factual material to facilitate the costings of the public expenditure commitments described as having been made by the Labour party in terms of territorial. bases, price level and first or four-year commitment, including possible overlaps and other similar costings. [6339]

§ Mr. Waldegrave
The costings were conducted in accordance with the guidance on costing Opposition policy which was published as a memorandum submitted by the Cabinet Secretary to the Treasury and Civil Service Select Committee in March 1990, reproduced in "Guidance on Guidance: An index of Useful Documents" issued in February 1996 and available in the Library of the House. In addition, Ministers provided the following general framework to civil servants in respect of assembling the factual material.
GUIDANCE ON COSTINGS
Introduction This note explains the basis on which proposals should be costed. It is important that all proposals are costed on a consistent basis. 2. There may be some proposals for which a costing consistent with this guidance would be inappropriate. In such cases, please contact the Special Adviser to the Chief Secretary to agree an alternative basis.
Which year? 3. Policy proposals which involve an ongoing annual cost should be costed in year 5, in 1996–97 prices. 4. Where year 5 gives a misleading impression of the cost—because the cost builds up rapidly after that, or is much higher before year 5, that should be indicated separately.
One-off costs 5. All costs are annual costs. Where proposals involve a one-off cost—such as the purchase of shares in a privatised industry—it should be marked clearly as a one-off cost in 1996–97 prices. That cost will be assumed to be spread over the 5 years of the Parliament (that is, a fifth of the one-off cost will be added to the annual cost in year 5).
Changes from plans 6. The costs should be expressed in terms of changes from current policies assuming that none of the other proposals to be costed are implemented. They should be defined as additions to GGE (broadly, central and local government spending including support for public corporations). The costs need not distinguish spending inside and outside the Control Total.
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Revenue effects 7. Only the effects on General Government Expenditure should be included. If there are additional offsetting effects on revenues or on public corporations' borrowing, these should he identified separately, but not included in the costings.
Offsetting changes in expenditure 8. If a proposal would automatically and intrinsically lead to an offsetting reduction to spending elsewhere—such as benefit savings from putting unemployed people into a training programme—the proposal should be shown net of any changes to other spending programmes.
Phased costs 9. If a proposal is to "phase in" a policy then it should be assumed that this will be phased in over 5 years. 10. Policies which would be implemented only "as far and as fast as resources allow" should not be phased in, but calculated as if they were implemented immediately.
Behavioural effects 11. Behavioural effects should not he included unless they are intrinsic to the proposal. For example, the cost of allowing local authorities to spend capital receipts should not assume that capital disposals will increase. However, the cost of lifting capping would include an assumption that some local authorities would increase spending above their existing capping limits.
Prices 12. All costings should be shown in 1996–97 prices. 13. If it is necessary to assume a price level to calculate the costing, it should be assumed that prices will grow by 2 per cent. a year from 1997–98. 14. If other macroeconomic assumptions are required, they should be consistent with the 1996–97 FSBR. If assumptions are required that are not included in the FSBR, they should be agreed with the Chief Secretary's Special Adviser.
EU-related costs 15. Any proposal involving expenditure from the European Union budget should take account of the effect on the overall level of the EU Budget, the UK contribution and the abatement. Please discuss any costings involving European Union expenditure with the Chief Secretary's Special Adviser.
Territorial consequentials 16. The costings should include any consequentials in Scotland, Wales and Northern Ireland of policy changes in England. In the case of Social Security costings, there is a separate page to add in the costs of pledges for Northern Ireland. If you need assistance calculating these, please contact the Chief Secretary's Special Adviser.

§ Mr. Foster
To ask the Chancellor of the Exchequer what was(a) the cost to his Department and (b) the overall cost of the exercise to cost the spending commitments described as having been made by the Labour party in the document "New Labour's Public Expenditure Plans", published on 20 November. [6336]

§ Mr. Waldegrave
It is not the normal working practice to keep a record of the time spent in providing factual information to Ministers and it is not therefore possible to offer a reliable estimate of the costs involved.

§ Mr. Foster
To ask the Chancellor of the Exchequer what scrutiny over the exercise to cost what were termed Labour party public expenditure commitments was carried out by the Treasury; and what criteria were used when checking consistency with other available estimates of the costs. [6340]

§ Mr. Waldegrave
The exercise was carried out in accordance with the published guidance on the procedure for costing policies of opposition parties. Treasury502W Ministers, assisted by their special advisers, in conjunction with Ministers and special advisers from other Departments, were responsible for identifying the text of commitments together with any further interpretations or assumptions necessary to allow the commitments to be costed. Treasury officials, in conjunction with officials from other Departments, were responsible for providing factual material. Final responsibility for the judgments made in the document "New Labour's Public Expenditure Plans" rests with Treasury Ministers.

§ Mr. Foster
To ask the Chancellor of the Exchequer if(a) Ministers, (b) their special advisers and (c) civil servants, identified the text of spending commitments described as having been made by the Labour party in the document "New Labour's Public Expenditure Plans", published on 20 November. [6337]

§ Mr. Waldegrave
In accordance with the guidance, Ministers and their special advisers identified the text of commitments. To the best of my knowledge, civil servants other than special advisers did not identify the text of the commitments.

§ Mr. Foster
To ask the Chancellor of the Exchequer to what extent the factual material provided by civil servants for preparation of the document "New Labour's Public Expenditure Plans" was altered by Ministers or special advisers; and what guidance was given about reconciling differences in costings. [6341]

§ Mr. Waldegrave
The costings published in "New Labour's Public Expenditure Plans" are consistent with the factual material provided by civil servants on the basis of assumptions made by Ministers.
In one case—the cost of establishing the Welsh Assembly—the estimate was made by the Secretary of State for Wales. In two cases—the cost of reducing benefit tapers and the introduction of a maintenance disregard against income support—the figures were calculated in cash terms rather than in real terms. Consequently these figures should have been slightly lower than quoted in the document. The figure for benefit tapers should have been £1.8 billion rather than £2.0 billion and the figure for the maintenance disregard against income support should have been £180 million rather than £200 million. In another case, namely the cost of an increase in funding on trans-European networks, the figure was calculated in ecus rather than in pounds. The annual cost should therefore have been £20 million rather than £27 million.