6 Public spending

Introduction

6.01 The Government's objective is to reduce public spending as a share of national income over time. The plans for public expenditure set out in this Budget are consistent with that objective.

6.02 The public expenditure survey covers the period from 1995-96 to 1997-98. In each year, the new plans are well below those announced in the last Financial Statement and Budget Report (FSBR). This reflects savings across most programmes, partly because the price level in 1995-96 and thereafter is now expected to be about 2 1/2 per cent lower than assumed last year.

The Control Total

6.03 The Government's plans for public spending are set in terms of the Control Total (previously the New Control Total). This covers over 80 per cent of total spending. It excludes accounting adjustments and the two areas most affected by the economic cycle (cyclical social security and debt interest): these are included in general government expenditure, which is discussed in paragraphs 6.10 to 6.12.

1994-95

6.04 The Control Total for the current year, 1994-95, is currently forecast at £249.6 billion, an underspend of £1.3 billion compared with the plans in the last Budget (after taking account of classification changes). Social security and local authority spending are forecast to be higher than planned, but that is more than covered by the Reserve of £3 1/2 billion set last year. Elsewhere, there are minor changes in departments' expected levels of spending and an allowance for shortfall which reflects the Treasury's view that overall departments will underspend this year.

New plans

6.05 The Control Totals for the next three years are set out in Table 6.1. They contain Reserves of £3 billion in 1995-96, £6 billion in 1996-97 and £9 billion in 1997-98.

[See printed copy for table]

Comparison with last Budget - cash

6.06 As Table 6.1 shows, the new plans are substantially below the figures in the last FSBR. This is the third successive Budget to reduce the spending plans set the year before. Chart 6.1 shows the successive reductions in plans. In cash terms the plans for 1995-96 have been reduced over the last two years by £8.3 billion compared with those originally set in the 1992 Survey.

See printed copy for chart

Comparison with last Budget - real

6.07 Chart 6.2 shows the new plans in real terms - ie adjusted by the GDP deflator to exclude the effects of general inflation. Because inflation in the current year has been lower than expected at the time of the last Budget, the real level of spending in 1994-95 is higher than planned last year. But the plans for the next three years are lower in real terms than those published last year.

Real growth

6.08 Year on year, the Control Total in 1995-96 is expected to be about 0.8 per cent lower in real terms than in 1994-95. The plans then imply real terms increases of 1/2 per cent in 1996-97 and 1 per cent in 1997-98. These figures are also shown in Table 1.5. Average real growth over the three year Survey period is less than 1/4 per cent a year, well below the ceiling of 1 1/2 per cent established by the Government in 1992.

[See printed copy for chart]

Other expenditure measures

6.09 Some measures taken in this Budget directly affect public expenditure outside the Control Total. In particular there are measures which reduce cyclical social security, as described in paragraph 6.73. Taking account of these, the overall Budget changes in public expenditure are set out in Table 6.2.

[See printed copy for table]

General Government expenditure

6.10 A detailed analysis of general government expenditure excluding privatisation proceeds (GGE) is set out in Table 6.3. In total, GGE is expected to be some £28 billion lower over the years 1995-96 to 1997-98 than projected in last year's FSBR. Chart 6.3 shows that the ratio of GGE to GDP is projected to be lower throughout the period than expected in the last Budget.

[See printed copy for table]

Real growth

6.11 Year on year, GGE is expected to grow by 0.1 per cent in real terms between 1994-95 and 1995-96, by 1.1 per cent in 1996-97, and by 0.7 per cent in 1997-98. These figures are also shown in Table 1.5. Average real growth over the three Survey years is 0.6 per cent, well within the projected growth rate of the economy.

6.12 Chart 6.4 shows the breakdown of GGE in 1993-94 by function. Further analysis of GGE for years up to 1994-95, by function and economic category, will be published early next year in the Statistical Supplement.

[See printed copy for chart]

[See printed copy for chart]

Fundamental expenditure reviews

6.13 The programme of fundamental expenditure reviews, initiated in February 1993, has continued this year. These reviews have been considering long-term trends in spending, looking at ways in which services could be delivered more economically and effectively, and considering whether there are any areas from which the State should withdraw altogether. The results of these reviews have informed this year's decisions about spending priorities, and have contributed to some of the increases in efficiency reflected in the new plans.

6.14 The aim is to cover all departments of state in the course of the Parliament. The next batch of reviews will include the Department of National Heritage, the Ministry of Agriculture and other agriculture spending, the environmental programmes of the Department of the Environment and the Office of Public Service and Science.

Public sector pay and running costs

6.15 In line with the Chancellor's announcement on 14 September 1994, central government departments are expected to offset, or more than offset, pay and price increases through efficiencies and other economies. Budgetary provision for the rest of the public sector has been set on a comparable basis.

New plans

6.16 Provision for the running costs of civil departments, which was £15.0 billion in 1994-95, has been set at £14.8 billion in 1995-96, £14.7 billion in 1996-97 and £14.6 billion in 1997-98. Compared with previous plans, provision has been reduced by £300 million in 1995-96 and £500 million in 1996-97. The Ministry of Defence is no longer included in these figures, but provision for its operating costs is set on the same basis.

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6.17 As Chart 6.5 illustrates, the latest plans imply that running costs will be held broadly constant in cash terms over the four years from 1993-94 to 1997-98. In real terms, the plans imply a cut in running costs of 10 per cent over this period, as Chart 6.6 shows.

[See printed copy for chart]

End year flexibility

6.18 Departments may now carry forward all underspends on running costs to add to provision in a later year. This allows them to manage their money sensibly from year to year. The underspend carried forward from 1993-94 totals £270 million.

6.19 The plans for running costs include extra resources for the Department of Social Security over the next two years to implement anti-fraud measures, the jobseeker's allowance and the new incapacity benefit. There are reductions in other departments as a result of lower unemployment and privatisations. Radical steps to reduce staff numbers have been announced by a number of departments, including Transport, Defence, Health and Customs and Excise.

Capital spending

6.20 Total public sector capital spending (measured net of receipts from asset sales) is expected to be £22.9 billion in 1994-95, up from £21.7 billion in 1993-94. The increase largely reflects the reprofiling of capital expenditure by local authorities. Details are set out in Table 6.4.

[See printed copy for table]

6.21 In 1995-96 public sector capital spending is expected to be £22.2 billion, implying a significant increase in real terms on the capital spending plans in last year's Budget. A large proportion of this is accounted for by higher spending by local authorities, who are now expected to carry forward significant unspent balances from the temporary relaxation of the rules governing the use of their capital receipts. The figures for 1996-97 and 1997-98 are boosted by projected capital expenditure of around £1 billion financed by the National Lottery, which though not part of the Control Total is included in GGE.

6.22 The level of public sector capital spending beyond 1995-96 is particularly uncertain. After allowing for a conventional stylised allocation from the Reserve, capital spending is expected to remain broadly flat at around £22 billion.

6.23 However, direct spending by the public sector does not tell the whole story on capital spending. It takes no account of the impact of the private finance initiative.

Private finance

6.24 The private finance initiative was launched in 1992 and the Private Finance Panel established under Sir Alastair Morton in November 1993. Significant progress has been achieved in attracting private sector capital into areas previously regarded as public, adding to overall capital spending. Around £500 million will have been invested by the end of 1994-95, and much more will follow.

6.25 For example, taking the four transport projects announced in the 1993 Budget: eleven consortia have now pre-qualified to bid for the first four design, build, finance and operate roads; the competition has been launched for the Docklands Light Railway Lewisham Extension; the Civil Aviation Authority hope very shortly to be going out to competition for the new Scottish Air Traffic Control Centre; and the specification study for the West Coast Main Line refurbishment will be finished by the end of the year. In addition, London Underground have been holding a competition for the provision of a privately financed Northern Line train service; bids are due back in from the four pre-qualified consortia on the Channel Tunnel Rail Link (CTRL) by March 1995; and the CTRL hybrid Bill was introduced in Parliament on 23 November.

6.26 Over 50 projects have been completed or approved which will bring in over £100 million of capital to the NHS.

6.27 Tenders have been received for the first two privately financed prisons, providing 1,400 places in Merseyside and South Wales. Contracts will be awarded by April 1995 with the prisons planned to open by 1997-98. Invitations to tender for the first secure training centre for juvenile offenders will be issued shortly.

6.28 Around £1 billion of information technology projects are currently going down or considering the private finance route. For example three bidders have been shortlisted to provide a replacement for the National Insurance Recording System, with preliminary bids to be received by the end of the year; and prequalification is under way for the project to automate post office counters.

6.29 Overall the Government expects to let contracts under the private finance initiative next year leading to around £5 billion of capital investment.

6.30 As well as building on initial successes, the private finance initiative is developing into new areas. For example, London Underground will be considering how to extend private finance into other areas of its business. Key candidates include power supplies and communications. Highland Regional Council have launched competitions for privately financed sewerage treatment works at Fort William and Inverness. This is the start of a programme of private finance projects in the water and sewerage sector in Scotland and Northern Ireland potentially worth over £1 billion. The Department of Social Security will shortly be inviting private finance proposals for the redevelopment of its site at Longbenton in Newcastle. The Ministry of Agriculture, Fisheries and Food are considering using private finance for the provision of new office facilities at Crewe and Northallerton. The Home Office will be procuring two further prisons under the private finance initiative, and the Scottish Office are currently looking at the case for a privately financed prison in Scotland. The London Docklands Development Corporation has invited tenders to form a joint venture company with them to provide infrastructure for environmentally responsible and competitive energy supplies in the Royal Docks. In education, universities already get approaching one third of their income from private sources.

The new plans: summary

6.31 Savings have been found on most programmes to reflect lower inflation, tight control of administrative costs and increased efficiency. Resources have also been switched between programmes to reflect priorities. In particular, savings are expected from a major effort to combat social security fraud, and reforms of housing benefit and income support for mortgage interest. On the other hand, the plans provide for a larger real increase in health spending than planned last Budget, and also protect the Government's achievements on law and order and education. The science budget and the aid programme have benefited from additions to last year's plans.

6.32 Table 6.5 analyses the Control Total by department showing changes from previous plans. Central government support for local authorities and the financing requirements of nationalised industries have been attributed to the appropriate departments.

6.33 Spending by each department since 1989-90 is set out in Annex A, Table 6A.3 (cash terms) and Table 6A.4 (real terms).

[See printed copy for table]

Departmental detail

6.34 The following paragraphs briefly describe the new plans for each department. They should be read alongside the tables: they do not repeat the information provided there. The departmental reports to be published during February and March 1995 will give more details.

Defence

6.35 As envisaged in last year's Budget, defence spending will continue to fall in real terms over the coming years. The Defence Costs Study (DCS) was successful in identifying substantial savings in the support area, while preserving the front line. The new plans accommodate the costs of military redundancies flowing from the DCS, and the enhancements to the front line announced by the Secretary of State for Defence in July.

Foreign and Commonwealth Office

6.36 The new plans reflect the importance that the Government attaches to diplomacy following the end of the Cold War, and to the Department's overseas political and commercial effort. Compared with the plans in last year's Budget, the real value of provision is 2 per cent higher in 1995-96, and 1 1/2 percent higher in 1996-97.

Overseas development

6.37 The UK has the sixth largest aid programme in the world and extra resources have been added to previous plans. The real value of provision is 2 1/2 per cent higher in 1995-96 and almost 5 per cent higher in 1996-97 than planned in last year's Budget.

Agriculture, Fisheries and Food

6.38 The new plans for agriculture reflect an increase in the estimated cost of agricultural support in the UK under the Common Agricultural Policy, largely due to a lower than expected "green pound", which determines the rate at which CAP support prices set in ECU are converted into national currency. These additions are offset by savings on domestic spending, mainly reductions in running costs and capital grants.

Trade and Industry - programme spending

6.39 Provision for DTI programmes will be higher in real terms in 1995-96 and 1996-97 than the plans in last year's Budget. DTI programmes are being developed and strengthened in the light of the Competitiveness White Paper. Priority is being given to the development of Business Links and services delivered through them including support for exports, innovation and good management practice. Improvements in delivery of DTI services and value for money will be secured by greater involvement of the private sector.

Trade and Industry - nationalised industries

6.40 Provision is made for the external financing limits (EFLs) of Nuclear Electric, the Post Office and British Shipbuilders, and for meeting the cost of residual liabilities in the coal industry after privatisation. The plans for Nuclear Electric include the costs of a restructuring package in 1995-96 and 1996-97, which is expected to contribute to a significant increase in efficiency in 1997-98. Provision for the Post Office is held at the levels set in the last Budget. The plans for coal will allow offers to be made to buy out concessionary coal entitlements in 1997-98.

Export Credits Guarantee Department

6.41 The department, through its Fixed Rate Export Finance programme, provides medium- to long-term fixed interest rate support at interest rates set by the OECD. Increases in plans reflect ECGD's exposure to movements in interest and exchange rates. To a limited extent they are offset by OECD agreement to cut interest rate subsidies and technical adjustments to the terms on offer.

Employment

6.42 The new Employment Department plans focus on helping unemployed people to get jobs in the context of the new jobseeker's allowance. There are net savings in both programme and running costs reflecting efficiency improvements and lower unemployment.

6.43 As part of the package described in the box on pages 124-125, a number of innovative schemes will be introduced or extended, including incentives to employers to recruit the long-term unemployed, work experience opportunities and targeted help with jobsearch.

6.44 There will be a major reform of the Training for Work programme aimed at increasing the number of trainees who move into jobs. The plans also provide for Modern Apprenticeships and the new training measures announced in the Competitiveness White Paper.

Transport

6.45 The new plans for transport reflect the decision to reduce national roads expenditure compared with previous plans. Central government support for spending on local roads and transport will also be reduced. But substantial spending to maintain and improve trunk roads and motorways in England will continue: with over £5 billion planned for the next three years. Over the next three years it is also expected that substantial private finance will be introduced, with the first four contracts for private sector firms to design, build, finance and operate trunk roads due to be negotiated by the middle of next year. This will help to minimise the impact of the reduction in provision on the trunk road programme.

Transport - Nationalised Industries

6.46 The department's programmes also include the financing of railways, together with the external financing limits of London Transport and the Civil Aviation Authority (CAA). Total funding for the core activities of the railways (British Rail, Railtrack, Union Railways and European Passenger Services) remains unchanged from previous plans in 1995-96. Other changes in financial provision for railways over the next three financial years reflect the effects of privatisation.

6.47 Investment in London Transport should be around £1 billion in 1995-96, including considerable support for the Jubilee Line Extension and the Crossrail project, as well as a substantial order under the private finance initiative for the provision of a new Northern Line train service. CAA plans have been reduced over the period since there is further potential to attract private finance for their investment.

DOE - Housing, Environment and PSA Services

6.48 The new plans incorporate a reduction in the Housing Corporation capital provision, which will now be at a level of around £1.35 billion a year. There are substantial estimating savings on housing benefit for local authority tenants, reflecting the lower inflation forecast and a reduction in the number of tenants expected to need assistance. The reduced Housing Revenue Account subsidy provision also reflects changes in housing benefit policy and the consequential savings from an increasing effort by DSS and local authorities to combat benefit fraud. Local authority credit approvals for housing renovation have been reduced. An extra £30 million is being provided over three years for the Home Energy Efficiency scheme.

6.49 Within the Single Regeneration Budget, created last year, more than £800 million is being made available for new regeneration projects. This will provide extra resources for the first bidding round and for the launch of a second bidding round with funding beginning in 1996-97.

Home Office

6.50 Law and order continues to be a key Government priority. The new plans include sufficient provision to sustain police numbers, taking account of the savings to come from the Sheehy reforms. The plans also make provision for 4,000 extra prison places, and allow for increased expenditure on security and safety measures. Additional resources have also been found to increase the effectiveness of immigration control, and to deal with increased asylum applications.

Legal departments

6.51 Provision for these departments is slightly lower in real terms than the plans in the last Budget. These savings come from increased efficiency, savings in lower priority areas of programmes, and continuing tight control of legal aid spending. Legal services including legal aid were subject to a fundamental expenditure review this year. Any major changes flowing from this will be subject to public consultation, likely to be in the New Year.

Education

6.52 Total education spending by central government in England (including support for local authorities) will rise in real terms, to almost £11 billion in 1995-96. The new plans will allow almost one in three young people to enter higher education and maintain in real terms the support available for students from loans and maintenance grants. The new plans provide for continued expansion of student numbers in further education and further growth in the number of grant-maintained schools.

National Heritage

6.53 The plans for the Department of National Heritage allow extra money in 1995-96 for the new British Library and the celebrations for VE and VJ Day. The plans for later years reflect lower inflation and scope for efficiency savings in future. The Department will be undertaking a fundamental expenditure review to be completed in 1995.

6.54 The National Lottery will bring in considerable extra money for spending on a wide range of sporting and cultural projects (perhaps giving them as much as £1 billion every year once it is well established) in addition to the Government's existing spending. Spending of lottery money counts as general government expenditure, but is outside the Control Total.

Health

6.55 The priority the Government attaches to spending on the NHS is illustrated by spending plans that continue to increase significantly in real terms year by year, more than fulfilling its manifesto commitment. Planned spending on the NHS in England in 1995-96 is £32.0 billion, £1.3 billion higher than the 1994-95 plans and representing real growth of 1 per cent. This increase comes on top of real growth in 1994-95 plans over 1993-94 outturn of 3.8 per cent.

6.56 At the same time, the NHS will benefit from an improvement in efficiency in 1995-96 of at least 3 per cent, equivalent to an additional £600 million in 1995-96 for patient care. Initiatives to scale back bureaucracy will save approaching £200 million a year by 1997-98, which will be ploughed back into the NHS in full. This combination of extra resources and improved efficiency, with pay rises being financed through efficiency growth, will increase the number of patients treated in 1995-96 by around 4 per cent. Private finance will also add significantly to the total resources devoted to the NHS in 1995-96.

Social Security

6.57 The new social security plans incorporate revised estimates of the number of claimants and provide for the uprating of benefits over the coming years. The assumptions used for benefit upratings, and for unemployment are set out in Annex A to Chapter 3. In addition, the plans include the extra help in pensions and income related benefits following the introduction of VAT on domestic fuel and power.

6.58 The new plans also reflect the reform of benefits for the unemployed, to create the new jobseeker's allowance, for which legislation will be enacted in the 1994-95 Parliamentary session. They include savings from a proposed reform of housing benefit, so as to give tenants and landlords incentives to economise on rents, to limit housing benefit payments on empty property, and increases in the contributions made by non dependant members of households in assessing housing benefit. Some of the costs of the work incentives measures (see box above) also fall on social security within the Control Total.

6.59 The plans also take account of the administrative costs of an intensified effort to combat benefit fraud: some of the savings are scored within the Control Total, although the bulk are reflected in lower estimates of cyclical social security - see paragraphs 6.72 and 6.73 below.

Scotland, Wales and Northern Ireland

6.60 Changes in these programmes reflect in the main the effect of changes in comparable programmes in England. Each Secretary of State has wide discretion about the distribution of expenditure within his programme; detailed plans will be announced shortly.

Chancellor's departments

6.61 The expenditure of the Chancellor's departments is very largely accounted for by the Inland Revenue and Customs and Excise, and is taken up mainly by running costs. Fundamental expenditure reviews have been undertaken by these two departments and also theTreasury this year. Some of the resulting efficiency savings are reflected in these new spending plans.

Office of Public Service and Science

6.62 Extra resources have been provided for basic and strategic scientific research so that it will be maintained in real terms in 1995-96 at this year's record level.

Science and technology

6.63 Total central government spending on science and technology in 1995-96 will be about £6.1 billion, broadly in line with previous plans.

European Community

6.64 Compared with the previous forecast, net payments are higher in 1994-95, but slightly lower thereafter. The uneven profile arises because contributions are paid on the basis of agreed estimates of contributions likely to be due, which are subsequently adjusted in the light of later information. The main reason for the higher forecast of net payments in 1994-95 is that the amount of contributions which was brought forward within the 1994 European Union budgetary year to reflect the timing of reimbursements of CAP expenditure to Member States was much lower than anticipated.

6.65 In the later years, the forecast continues to reflect the decisions taken at the Edinburgh European Council in December 1992, and the United Kingdom's growth relative to other Member States.

Local authorities

6.66 Local authority spending is financed by support provided by central government and from local authorities' own resources. Table 6.6 summarises the projections of local authority spending, showing the new plans for central government support and projected local authority self-financed expenditure.

6.67 The level of local authority spending is determined by individual authorities, taking account of support provided by central government, finance available from their own resources and their decisions on local taxation. The Government intends to use its powers to cap local authority budgets, should that prove necessary.

6.68 For 1995-96, Total Standard Spending (TSS) in England - ie the amount which the Government thinks it is appropriate for local authorities to spend on revenue expenditure - has been set at £43.5 billion, after transfers. For 1996-97 and 1997-98, TSS has been set at £44.1 billion and £44.6 billion respectively. These figures include provision for care in the community. Adjusting for functional change, the increase next year over 1994-95 is 0.9 per cent excluding community care, and 2.2 per cent including it.

6.69 Central support for local authorities' revenue expenditure in 1995-96, Aggregate External Finance (AEF), has been set at £42.4 billion for Great Britain as a whole.

6.70 Gross capital expenditure by local authorities in 1995-96 is expected to be £8 3/4 billion, somewhat lower than the levels in 1993-94 and 1994-95, which were boosted by the temporary relaxation of the capital receipts rules announced in the 1992 Autumn Statement. Capital receipts in 1995-96 are projected to be around £3 1/4 billion, giving net capital spending of around £5 3/4 billion.

Other public expenditure

6.71 In addition to expenditure within the Control Total, GGE also includes cyclical social security, privatisation proceeds, and debt interest.

Cyclical social security

6.72 Cyclical social security is defined as unemployment benefit and income support paid to people of working age. The forecast for cyclical social security show substantial reductions compared with those in the last Budget reflecting the improved prospects for inflation and unemployment (the detail of the assumptions underlying the plans are set out in Annex A of Chapter 3.

6.73 There are also measures which reduce cyclical social security by £0.4 billion in 1995-96 and £0.7 billion in 1996-97 and by £0.9 billion in 1997-98. The bulk of this is the savings expected to flow from the anti-fraud initiative referred to in paragraph 6.59 above, and the savings in Income Support following the Government's decision to place limits on the amount of assistance made available for mortgage interest payments. These figures also include some of the costs of the work incentives measures described in the box on pages 124-125.

Accounting adjustments

6.74 The accounting adjustments include various other items within general government expenditure but outside the Control Total. The increase between 1994-95 and 1996-97 mainly reflects expenditure of the proceeds of the National Lottery and the effects of early retirements on civil and armed forces superannuation payments.

Privatisation proceeds

6.75 Privatisation proceeds are projected to be £3 billion in 1995-96, £3 billion in 1996-97 and £2 billion in 1997-98.

Debt interest

6.76 General government gross debt interest is projected to rise from £19.7 billion in 1993-94 to £26.6 billion in 1997-98. Gross debt interest payments declined from 5 1/4 per cent of GDP in 1981-82 to just over 3 per cent in 1993-94. Debt interest payments are projected to rise to 3 1/2 per cent in 1995-96 and 1996-97, then fall back to 3 1/4 per cent in 1997-98. Table 6A.6 in Annex A shows the total for gross and net general government debt interest.

[See printed copy for table]

Help for exporters
There will be a general review of the premiums paid by exporters for medium- or long-term ECGD cover which will lead to reductions, on average, of around 10 per cent. In addition, for a number of important developing markets, the cover provided in 1996-97 will be rolled forward and increased by £300 million, taking the total in 1997-98 to £3.5 billion. This cover does not count as public expenditure, nor against the PSBR, but could add to the PSBR in future if ECGD had to meet substantial claims.
Work incentives
The Budget includes a  package of new measures costing £680 million  in 1996-97, of which £375 million is public expenditure, to help unemployed people back to work and reduce the cost to employers of taking on the unemployed.
Four measures to encourage employers to take on the unemployed
  • Employers' national insurance contributions will be cut by 0.6 per cent for people earning less than £205 a week from April 1995.
  •  Employers who hire someone who has been been out of work for two years or more will be able to get a full NIC rebate for that person for up to one year, starting in April 1996.
  • The Work Trials scheme is being expanded. This enables employers to give people who have been out of work for over six months a three week trial in a job before deciding whether to take them on permanently. During the trial the unemployed continue to receive their benefits, so the scheme is free to employers. Work Trials will offer 150,000 places over the next three years.
  • Further Workstart pilot schemes will be developed, giving incentives to employers to recruit the long term unemployed, and helping about 5,000 people. The details of the pilots are being finalised.
Four measures to ease the transition from unemployment to work
  • People who have been out of work for at least six months will be able to get their housing benefit and council tax benefit paid at their full existing rates for the first four weeks after they take a job, from April 1996. The aim will be to ensure that, within the four weeks, people will be told how much continuing help they will get with their rent and council tax, and that this will be paid promptly.
  • Family credit will be paid more quickly. The aim is to ensure that by April 1996, 95 per cent of new claims from employees will be dealt with within five working days of the Department of Social Security receiving the claim.
  •  People who lose benefit because they do some work while on income support or the new jobseeker's allowance will qualify for a lump sum of up to £1,000 when they leave those benefits to start work of 16 hours or more. This Back-to-Work Bonus will be tax-free.
  •  There will be more help with initial work expenses for people who have been out of work for at least two years, through the Jobfinder's Grant, which is being extended nationally. Around 25,000 grants will be available each year, worth an average £200 each.
Two measures to help people who want full-time work
  •  Anyone eligible for family credit who works 30 hours or more will get a full timer's premium of an extra £10 a week from July 1995. Changes to housing benefit and council tax benefit will be made to ensure that people who also qualify for these benefits gain by the full £10.
  •     
There will be further Jobmatch pilots with up to 3,000 places to help the long-term unemployed build up full-time hours and wages by combining a number of part-time jobs.
Three measures to keep the unemployed in touch with the labour market
  • 1-2-1 interviews and Workwise courses, providing intensive help in how to look for work, will be extended nationally for 18 to 24 year olds unemployed for over a year who refuse other offers of help.
  • Community Action will provide work experience and increase help in how to look for work for people who have been unemployed for a year or more. About 40,000 people will benefit each year.
Trying out new ways to help the unemployed without children
  • A new in-work benefit for childless couples and single people, based on family credit, will be piloted for three years from October 1996, to see how effective it will be.
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Reviewed 1 October 1996