26 April 1996

BSE cash wont rule out tax cut

COMPENSATION for the beef industry should not affect the governments public expenditure plans, claims Kenneth Clarke, Chancellor of the Exchequer.

And he rejected claims from Labour MP Ann Clwyd (Cynon Valley) that BSE compensation would rule out the governments ability to offer tax cuts.

Mr Clarke told MPs that he would take account of any financial and economic consequences of BSE when he put together the next Budget in November.

Government had a reserve to cover unforeseen contingencies, like BSE compensation, and the Chancellor said he expected to be able to meet the costs of any measures needed to cope with the BSE crisis without breaking his public expenditure plans.

&#8226 Lord Lucas MAFFs spokesman in the Lords confirmed 80% of the funds for governments new BSE control rules will come from the UK.

In a beef industry debate, Lord Stoddart of Swindon asked the minister to confirm that the agree- ment by the European Commission to pay 70% of the compensation cost was an illusion. That was because 75% of the sum would be deducted from the British rebate with the other 25% coming from the remaining EU budget to which Britain contributed a net £3.5bn a year. "Will he also confirm that that means it is the British taxpayers who will pay 85% of the total bill, not just the 30% which minister would have us believe?"

Lord Lucas confirmed that "80% of the funds are in fact coming from us". &#42