Volume 10: Economic Impact and International Trade
2. Impact on the public sector
Introduction

2.1 This chapter sets out total government expenditure on activities relating to BSE from 1986 to 1996. Public expenditure arose in three main areas: research on BSE and related diseases, compensation payments and departmental running costs. We consider each of these areas in turn. The expenditure was incurred by a number of different Government Departments, although the main weight of public expenditure fell on MAFF and its Agencies. Figure 2.1 shows expenditure by UK Government Departments and Research Councils, the EU and the Wellcome Trust in funding research on BSE and related diseases. ¹ Figure 2.2 and 2.3 show the UK government bodies involved in compensation payments, and those incurring BSE-related running and other costs.

Figure 2.1: Funding for TSE research, 1986-96 cash prices

Figure 2.2: Funding for BSE compensation schemes, 1986-96 cash prices

Figure 2.3: Public sector BSE-related running and other cost, 1986-96, cash prices

2.2 In addition to this public expenditure on BSE-related activities, BSE may have indirectly created additional costs for the public sector through the loss of taxation revenue and increased social security payments.

2.3 Lost taxation revenue is the tax revenue that is not raised because businesses are not as profitable as they otherwise might have been had BSE never emerged. Calculating such lost revenue is a highly complex and speculative venture, particularly in the light of pre-existing market trends, currency fluctuations and myriad other economic events in the period under examination. The Inquiry has not attempted such a calculation but recognises that lost tax revenues do represent another dimension of the economic impact on the public sector.

2.4 There may also have been increased costs associated with social security payments if economic difficulties caused by BSE led to a loss of employment, and to a subsequent increase in unemployment and unemployment benefit payments. This is also a complex calculation to make as it requires very detailed knowledge of the changes in employment associated with BSE and the subsequent labour market destinations of the people affected. The Inquiry has not attempted such a calculation, but it does recognise that this is a further area of potential increased costs.