Crisis in the mines: Jobs budget could bear brunt of cost

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THE BUDGET for the Department of Employment is likely to be squeezed by the additional burden of pit closures.

Gillian Shephard, the Secretary of State for Employment, will then face the task of juggling resources to ensure that Training and Enterprise Councils (Tecs), responsible for retraining, get the money they need.

'She is concerned that the cost of some of the pounds 1bn closure package will fall on her budget,' a ministerial source said yesterday. Downing Street was unable to confirm that new money would be made available to Mrs Shephard.

She expressed sympathy for the plight of the jobless yesterday and pledged resources to help.

'Of course this is extremely distressing and discouraging for everybody involved,' she told BBC Television. 'That is why I am so keen to make them aware that all the resources of the Employment Service and of Training and Enterprise Councils are at their disposal, to help them back into work, to help them retrain and reskill.'

If there were more unemployed people to deal with, 'then I shall have to have the resources to deal with them', she insisted.

Whitehall sources were keen to emphasise yesterday that the Secretary of State was determined to ensure that no one would 'go without' and that Tecs would get the money they needed. Tecs would have 'greater flexibility' to switch money around, it was said, indicating the juggling process, or cuts, that might be in prospect.

Some of the pounds 1bn bill for redundancies and regional assistance announced by Michael Heseltine, the President of the Board of Trade, on Tuesday, is likely to be met out of the current financial year's reserves.

Even so, relentlessly rising unemployment, boosted by job losses in the pits and dependent businesses, will impose a long- term burden on the employment department's purse.

Discussions on next year's public spending round may not produce solutions for hard-pressed ministers such as Mrs Shephard, as others such as Mr Heseltine and Kenneth Clarke, the Home Secretary, are pressing for revenue expenditure to be cut to preserve capital schemes.

Dr Keith Hampson, a member of the Trade and Industry Select Committee and one of the few backbench Tories not calling for interest rate cuts to boost the economy and jobs, said that only the capital spending programme would promote growth and investment by business, while creating confidence in the City - as long as the Government was seen to be bearing down on current account spending (such as pay).