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RESERVE FUND ABOLITION COULD SLICE£10BN FROM PUBLIC EXPENDITURE

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The Cabinet will reconvene today to resolve a dispute with social services secretary Peter Lilly over cuts in the£...
The Cabinet will reconvene today to resolve a dispute with social services secretary Peter Lilly over cuts in the £9bn housing benefit bill and extra money for the disabled, reports The Times (p1).

Yesterday, a special Cabinet meeting agreed to slice £4-£5bn from next year's public spending ceiling of £263bn, the paper reports.

Meanwhile, The Daily Telegraph reports (p28) that treasury officials have told chancellor Kenneth Clarke the control total for public expenditure can be cut by around £10bn if the contingency reserve is abolished.

The reserve, set at £7bn for the next fiscal year, has been drawn on in recent years by government departments that have overspent.

But the paper reports that the reserve had outlived its usefulness and may be scrapped altogether as for the second year running it has not been drawn on.
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