2017/18 Main Estimates:
Overview of Government Spending Plans for 2017/18
This document provides help for Members and staff to better understand the SPENDING PLANS OF THE GOVERNMENT, which were voted on by Parliament through the Main Estimates in July 2017.
Briefing on each Department
If you have any questions, comments, feedback on this document’s usefulness SCRUTINY UNIT or otherwise, and any suggestions for inclusion in a future year’s edition, please Strengthening scrutiny through specialist support contact Larry Honeysett in the Scrutiny Unit [email protected] What are the Main Estimates?
Main Estimates are the government’s spending plans for each department for 2017-18, which have been developed from 2015’s Spending Review, which planned spending for the four years 2016-17 to 2019-20 The Spending Review announced the headline spending totals for each Department for each of the next four years, including a few specific commitments. Further detail of the breakdowns of planned spending within the totals for these four years was first published in each Department’s 2015-16 Annual Reports & Accounts
Main Estimates List of all departments explained SPENDING REVIEW October 2015 How do departments get their funding? Spending Review settlement sets DEPARTMENTAL SPENDING TOTALS (DELs) VOTE ON ACCOUNT March 2016 for 2016-17 to 2019-20. Decisions on changes to benefits designed to make FUTURE SAVINGS (AME). Parliament votes each Department an BARNETT CONSEQUENTIALS for next four years calculated for Scotland, Wales advance of funds for the first four months of and Northern Ireland. the year based on last year’s spending totals
THE BUDGET March 2017 “The Divvy Ups”
Further changes to future taxes and spending. The Departmental Ministers consider PRIORITIES, how to Finance Bill enacts tax changes; spending changes are make EFFICIENCY SAVINGS and how to SHARE OUT enacted instead through ESTIMATES (see below). each Department’s budget
MAIN ESTIMATES April 2017 Detail of 2017-18 plans , by spending programme, are published in MAIN ESTIMATES 2017- 18. This included any changes affecting 2017-18 spending announced in the March Budget. Block grant totals for Scotland, Wales and Northern Ireland set. Decisions on spending choices SUPPLEMENTARY are for relevant Parliaments. ESTIMATES February 2018 Departments provide a memorandum explaining the content of the Main Estimate. An incoming government may choose to withdraw and replace individual Estimates before they Later in the year Departments are voted upon (i.e. present “Revised Estimates”) publish SUPPLEMENTARY ESTIMATES, showing proposed changes to in- year budgets. In absence of committees, No ESTIMATES DAY These will be voted upon in CommitteesScrutiny Unit briefed provideson following General Election, DEBATES because of contentbriefing of on Main Estimates Estimates for there is little opportunity General Election March 2018 2016Members,-17 by for Scrutiny information Unit for scrutiny before (this is what you are now (this is what you are now Estimates are authorised reading)reading) Main Estimates expected to be June 2017 approved by the House July 2017
Main Estimates List of all departments explained What is the current role of the House and Select Committees in considering Estimates? The formal process of considering Main Estimates in the House is currently relatively restricted
Only two Main Estimates are selected for debate - and possible downward amendment - on the floor of the House. (in Election years, such as 2017, debates do not normally occur) The subject of the debate is usually based on a select committee report- this can limit the scope of the debate considerably Other Estimates are approved without debate or the possibility of amendment
However, Committees have a “core task” of examining the spending and performance of departments Examples of how they might exercise this:
Calling Ministers or officials to appear Drawing on information in the Writing to departments to discuss spending and priorities Estimates as part of current questioning any issues arising outlined in the Main Estimate Committee inquiries from the Estimate
The House of Commons Scrutiny Unit is there to assist Committees in this work. Scrutiny Unit staff can also provide oral briefing to Committees or committee members on the Estimates or other financial matters on request. Contact Larry Honeysett [email protected] for more information.
Main Estimates List of all departments explained Proposed reforms to the way Government spending plans are authorised: Main recommendations by Procedure committee (Apr 17): Estimates Day Debates CLICK HERE to read Procedure Committee report Estimates day debates in future to be selected by Backbench Business committee (BBCom) and to focus on Estimates, rather than Select committee reports. BBCom to offer compensating days for Select committee report debates
Devolved Spending At least one Estimates debate slot a year to be devoted to devolved spending, or UK spending that affects Barnett consequentials. The calculations that determine Barnett consequentials (block grant to devolved Parliaments) to be better explained
Estimates Documentation The Government should improve Estimates documentation making it easier to understand, and make Estimates data available electronically
Timeline The Government should provide more time between publication and consideration of Estimates, and allow Parliament to consider and have time to authorise spending plans before the new year starts
Main Estimates List of all departments explained Proposed reforms to Government accounts: Main recommendations by PACAC (Apr 17): CLICK HERE to read PACAC report What are the goals of publishing Accounts? Accounts are primarily there to be credible records of the value for money and Parliamentary accountability of Government Departments.
Assessing Value for Money Accounts should tell us how much major Supporting UK Parliament projects, programmes and services cost Accounts should tell us whether the government has met Accounts should provide audited performance commitments to spend or save made by ministers information about major projects, programmes and Accounts should reconcile the eventual spending and services income to the spending and income forecast in the Departments should present the previous five Spending Review as well as the Estimates years of spend in their accounts and a Departments should consult with the relevant select forecast to the end of the spending review committee about the contents of the accounts including about how expenditure should be segmented and what information they would like to see Publication standards Accounts should follow open data standards on publication and should be published in an easy to use format like excel - not PDF! Departments should publish unaudited updates to their plans (Single Departmental Plans) on a quarterly basis
Main Estimates List of all departments explained Departments (click on the link to view slides for each department): Cabinet Office Sources Business, Energy and Industrial Strategy Communities and Local Government Culture, Media and Sport Education Environment, Food and Rural Affairs Exiting the EU Foreign and Commonwealth Office Health Home Office International Development International Trade Ministry of Defence Ministry of Justice Transport Work and Pensions Treasury and HMRC Devolved Administrations: Scotland Wales Northern Ireland
Main Estimates List of all departments explained Cabinet Office
Main Estimates List of all departments explained Cabinet Office: 2017/18 Day-to-day spending by area: (Resource Departmental Expenditure limit, cash terms) The Cabinet Office has lost a significant segment of its activities which accounted for 49% of its budget in the Spending Review settlement for this year Elections (mainly the Office for Civil Society). £4.8m Arms Length Bodies European Parliament £2.9m £2.8m Maintain the integrity of the Union
Ensuring the effective running of the £91.4m £61.9m department
£46.7m Ensuring the delivery of the Total Day-to-day Spending: Government’s programmes £361m and the PM’s priorities
£150.6m Improving the efficiency and responsiveness of government
Main Estimates List of all departments explained CABINET OFFICE Cabinet Office: significant movements of funds (Resource Departmental Expenditure limit, cash terms)
-£3.7m: -£284.4m: Transfer of the Great Transfer of the Office of the Civil Society to DCMS Campaign to DIT (Machinery of government changes) (Machinery of government changes)
+£8.19m: Extra funds from the Treasury for the transfer of Infrastructure UK to merge with the Major -£4.74m: Projects Authority Transfer of the Global Affairs Secretariat to DExEU (Machinery of government changes) +£30m: Transfer from MOD to support the National Security Secretariat, Joint Intelligence Organisation, Cabinet Office briefing rooms
Main Estimates List of all departments explained CABINET OFFICE Cabinet Office managing activities of other departments: This often has a larger financial impact than the Cabinet Office’s own budgets would indicate.
The Crown Commercial Service in 2015-16 managed £2.5bn of spend directly. A further £12.8bn was spent by the public sector on common goods and services using Crown Commercial Service frameworks in 2015-16. NAO Crown Commercial Service January 2017
The Cabinet Office is responsible for the Shared Services Centre Programme. The Cabinet Office in 2015-16 estimated that the centres would contribute to £484m of savings at a cost of £159 million by 2023-4. The National Audit Office argued in their report in May 2016 that the programme “has not achieved the significant anticipated savings and benefits to date”. NAO Shared Services Centres May 2016
The Cabinet Office is in the process of establishing the Government Property Agency out of the Government Property Unit. The Agency is envisaged to launch in September 2017 and by 2020 to own and manage £3bn of government offices across the UK. NAO Progress on the Government’s Estate Strategy April 2017
The Government Digital Service who run gov.uk and verify.gov.uk which establishes people’s identities. GDS also expects to train 3000 civil servants in its digital academy
Main Estimates List of all departments explained CABINET OFFICE The Cabinet Office is involved in setting standards for the rest of government in lots of areas. These include:
Cabinet Office spending controls These were introduced in 2010 and last updated in March 2017. They apply to all central government departments, ALBs, NDPBs, non market bodies controlled by departments and certain public corporations.
Approval from the Cabinet office is required for large levels (the specific limits vary for each category) of: Advertising, marketing and communications spend Commercial spending Digital and technology Consultancy Property and Facilities Management Redundancy and compensation Disclosure to the Cabinet Office is required for: Commercial disputes Recruitment forecasts
The Cabinet Office also sets a number of other standards for the rest of government. These include Counter Fraud Standards
Main Estimates List of all departments explained Business, Energy and Industrial Strategy
Main Estimates List of all departments explained BEIS BEIS Resource (Programme and Admin) Budget: Trends Resource DEL (Departmental Expenditure Limits) Changes from BIS to BEIS budget: (in nominal terms) (restated for previous and future years to take into Machinery of government: account change of departmental functions) removed education and international 3,000 trade budgets; 15% 2,500 added energy and climate change budgets reduction 2,000
1,500 Spending increases/extra funds: millions
£ £ 2,337 1,000 1,983 +£9.2m: extra funds for new nuclear 500 £116m: funds held in reserve for 2017-18 0 and yet to be allocated 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Previous years 2017-18 Main Estimate Planned future budget
Major reductions (2017/18 compared to 2016/17): from £11.1m from £63m -£8.6m: -£270m: -£33m: Oil and Gas spending on the the support provided for Authority spending to £2.5m energy intensive industries Regional Growth Fund to £30m This reflects ending of time limited seismic survey funding from £140m -£45m: the Post office from £12.6m from £353m network subsidy to £95m -£11.9m: -£21m: spending on overall administration renewable energy to £0.8m spending to £332m
Main Estimates List of all departments explained BEIS
BEIS Capital (investment) Budget: Trends
Capital DEL (Departmental Expenditure Limits) (restated for previous and future years to take into (in nominal terms) account change of departmental functions)
3.3% 12,000 reduction
10,000 11,274 10,896
8,000 millions
£ £ 6,000
4,000
2,000
0 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Previous years 2017-18 Main Estimate Planned future budget
Main Estimates List of all departments explained BEIS 2017/18 BEIS Capital (investment) Budget breakdown:
Industrial Strategy Major reductions (2017/18 compared to 2016/17): and Investment: from £985m c.£2,500m -£766m: Green Investment Science and Research: (Down from £3,000m Bank to £219m c.£6,000m in 2016/17) Nuclear from £390m Decommissioning: -£269m: (No major changes c.£2,000m compared to last year) British Business Bank (No major changes to £121m compared to last year)
from £80m -£35m: Post Office +£421m transformation to £45m Additional funding of for research and innovation is from £220m held centrally, and currently -£188m: not included in science and The Regional Growth research budget Fund to £32m This is partially offset by: +£73m for Northern Powerhouse +£38 m for Midlands Engine +£47m for energy innovation and heat
Main Estimates List of all departments explained BEIS Nuclear Decommissioning:
Liability for future decommissioning work at some 17 sites across was estimated as £117bn in cash terms (or £160bn in current day prices) in last year’s DECC annual report.
Work will take over a hundred years Source: 2015-16 DECC Annual Reports and Accounts, p. 37 Under vote arrangements funding must be sought and provided both for expenditure in year (DEL) and for the future (AME). To avoid double counting , when DEL expenditure is incurred, Past experience over the last few years has there is a credit back to AME. been that costs will continue to rise as it becomes clearer what work is involved. DEL- covers costs which BEIS is expected to manage in year from budgets set by the Treasury in Spending Reviews BEIS has included a provision for an additional £1, 748m future costs in its AME- more difficult to forecast costs, such as recognition of 2017-18 Main Estimate – scores as provision for future nuclear decommissioning work, and future Annually Managed Expenditure (AME) additional estimated costs under Contracts for Difference.
2017-18 DEL budget for nuclear decommissioning work: £1,998m capital £300m resource Source: NDA: Nuclear Provision: the cost of cleaning up Britain’s historic nuclear sites
Main Estimates List of all departments explained BEIS Nuclear Decommissioning: Sites and the percentage of the undiscounted nuclear provision forecast to be spent at each site
The majority of the costs relate to the Sellafield site.
Source: NDA: Nuclear Provision: the cost of cleaning up Britain’s historic nuclear sites
Main Estimates List of all departments explained Communities and Local Government
Main Estimates List of all departments explained DCLG What the 2015 Spending Review told us: Capital budget planned to be 2015-2020 DCLG (Department) £500m higher in 2019-20 Resource* and Capital DEL budgets (in cash terms) compared to 2015/16
4.5 4.0 29% cut to the resource budget, 3.5 including a 20% reduction in the 3.0 2.5 department’s paybill 2.0 £ billions 1.5 1.0 DCLG will continue to oversee delivery 0.5 of devolution deals agreed with city 0.0 regions and other areas. 2015-16 2016-17 2017-18 2018-19 2019-20
Resource Capital *Resource does not include New Homes Bonus funding, which was in the LG DEL at the SR DCLG’s share of government spending on Resource DEL : Resource Spend: • The government will continue to invest in the Troubled Families programme to deliver 2015/16: better outcomes for 400,000 families by 2020 with efficiencies found from central 0.5% 2019/20: budgets. 0.4% • From 2017-18 the government will devolve and reform increased funding for managing temporary accommodation, giving local authorities more control and flexibility. DCLG’s share of government spending on Capital DEL : Capital Spend: 2019/20: • Increased budget will fund housing schemes such as Starter Homes and Help to Buy 2015/16: 7.2% • DCLG will invest in digitising the collection of local taxes to generate efficiencies 7.1%
Main Estimates List of all departments explained DCLG DCLG (Department): How does the spending compare to 2016/17?
Day-to-day Spending: Resource DEL budget (in cash terms)
3,500
3,000 10% increase largely due to funds carried over from 2,500 2,910 previous year. This includes: 2,642 £200m for the Affordable Homes programmes due 2,000 to delays for Troubled Families 1,500 £59m £16m for controlled migration 1,000 £17.5m for homelessness
500
0 2016/17 2017/18
Main Estimates List of all departments explained DCLG DCLG (Department) Main areas of Day-to-day spending in 2017/18: How does it compare to 2016/17?
Day-to-day Spending: Resource DEL (Departmental Expenditure Limits) (in cash terms)
This includes 2,500 extra £150m to expand the right to buy 2,138 pilot 2,000 1,878
1,500 £ millions
1,000
500 214 218 239 148 170 196 173 95 36 37 0 Local Government and Housing and Planning incl Decentralisation and Local Troubled Families Research Data and Trading DCLG Staff building and Public Services incl ALB ALB Growth Funds infrastructure costs
2016/17 2017/18
Main Estimates List of all departments explained DCLG DCLG (Department) Main areas of Investment spending in 2017/18:
Investment Spending: Capital DEL (Departmental Expenditure Limits) (in cash terms)
7000 26% increase, mainly due to extra 6000 funds for affordable housing
5000
4000 £millions 3000 6,512 5,185 2000 Additional funds include: 1000
0 2016/17 2017/18 +£455m for affordable housing to deliver 40,000 low +£240m rent or low cost homeownership homes to deliver houses on surplus public land +£50m to help provide infrastructure to unlock new private house building in areas where there is high demand for housing
Main Estimates List of all departments explained DCLG Local Government funding in 2017/18: How does it compare to 2016/17?
1.7% overall Average 4% increase to 50 increase in funding council tax bills. Includes 45 £552m raised by the 40 social care precept 35 26.1 27.6 30 Council Tax 25
£ billions Retained income from 20 Business Rates 15 12.1 Revenue Support Grant 10 14.7 Additional funding for Local Government: 5 7.2 3.9 0 2016/17 2017/18
+£1,010m for Adult Social Care
+113m
for Business Rate Relief
Main Estimates List of all departments explained DCLG
Council Tax and Adult Social Care precept:
The average council tax for Band D will be £1,591 for 2017-18 which is a 4% increase on the previous year.
147 of the 152 Adult Social Care Authorities used some or all of the 3% precept. £552m will be raised by the precept in 2017-18 compared to £382m in 2016-17
Source: DCLG report
Main Estimates List of all departments explained DCLG DCLG: CHALLENGES Percentage increase in levels of homelessness since 2009 (2010) Child Protection Orders inquiries have increased dramatically over the last ten 120% years. In 2005/6 there were 71,800 Child 102% Protection Orders inquiries, in 2015-16, the 100% CHALLENGE: LGA reported that there were over 80% Rising levels of Households found to be 170,000 inquiries. homelessness homeless by local 60% authority 40% 32% 20% Rough sleepers (since 2010) Extra funding for fire 0% safety measures 2009 2010 2011 2012 2013 2014 2015
Adult Social Care: Growing funding gap within The OBR forecast that Adult Social Care spend will local councils (currently go from 1% of GDP in 2016-17 to 2% of GDP in estimated at £5.8bn) 2066-7. Only 4% of the 131 councils surveyed by LGIU believe that the 3% additional council tax that they can levy will close the adult social care funding gap. Around 230,000 social care workers in England were born outside the country, one in six of the total; of these, around 90,000 were born in the EU
Main Estimates List of all departments explained Culture, Media and Sport
Main Estimates List of all departments explained ResourceCapital and budgetsDEL 2015 What the £ billions Increased make available to of Completion Free museum protected Arts, national museums galleriesand - 2020 DepartmentforCulture,Media andSport 2020 MainEstimates 2015 2015 Spending Review funding funding for explained in cashin terms until2019 entrystays. superfast broadband 95% elite sport of premisesof 2017. by List of departmentsall (in cash terms)cash(in ahead of Rio2016 of ahead - told us: 20. programme to funding now funding of of capital projects £400m Agreed funding for number a of over 2015/16 per per year Share of government spending on spending governmentof Share Share of government spending on spending governmentof Share , fromflat baseline , totalling - 2019/20 Resource DEL £1.6bn 2015/16: 2015/16: 0.92% 0.35% CapitalDEL for DCMS: for 2019/20: 2019/20: 0.60% 0.34% forDCMS: DCMS DCMS What new information is there? How does spending compare to 2016/17?
Day-to-day Spending: Resource DEL budget (in cash terms) Largest changes: 1,800 1,600 1,400 1,633 1,578 Transfer of responsibility for 1,200 3% +£283m Civil Society from Cabinet Office 1,000 reduction Under ‘Other’ spending category 800
600 £millions 400 -£44m Reduction in budget for 200 National Citizens Service Under ‘Other’ spending category 0 2016/17 2017/18
Areas of Day-to-day spending: 600 514 515 510 Spending is largely flat 481 across the categories 500 400 337 349
300 2016/17 200 137 132 142 97 2017/18 100 4 BBC and Lottery 0 funding is separate from -22 -100 these totals, in Annually Olympics Museums Arts and Heritage Sports Broadcasting and Other Managed Expenditure Galleries and Media Libraries
Main Estimates List of all departments explained DCMS What new information is there? How does spending compare to 2016/17?
Investment Spending: Capital DEL budget (in cash terms)
500 Increase largely due to: 400 449 +£14m: re-classification of R&D costs from resource to capital 300 354 +32m: carry-over from previous year for Blythe House and BDUK +£25m: 5G Digital Infrastructure Investment (first tranche of 200 31% increase overall ~£700m for digital communications as part of the National 100 Productivity Investment Fund) £ millions 0 2016/17 2017/18
Spending Review commitment that funding for’ arts, national museums and galleries’ would be 300 protected in cash terms until 2019-20 clearly 246 250 does not extend to investment spending
200
150 121 106 100 80 78 86 Investment spending on Museums, £ millions Galleries and Libraries , and Arts and 50 38 37 Heritage has varied a lot throughout 0 last 5 years. Museums Galleries and Arts and Heritage Sports Broadcasting and Media Libraries 2016/17 2017/18
Main Estimates List of all departments explained Education
Main Estimates List of all departments explained DFE What the 2015 Spending Review told us: Resource and Capital DEL budgets (in cash terms)
Capital spending on schools broadly
£ billions maintained in cash terms, fall in real terms
Share of government spending on Resource DEL for DfE: 2019/20: Government commitments: 2015/16: 17.39% 17.01% Protect the overall school budget in real terms Protect per pupil spending in cash terms on: dedicated schools grant (up to 16) Share of government spending pupil premium on Capital DEL for DfE: national base rate for 16-19 year olds
• Plan to phase out the additional funding schools receive through 2015/16: Education Services Grant, saving £600m 10.53% 2019/20: 8.84%
Main Estimates List of all departments explained DFE What new information is there?
Day-to-day Spending: Resource DEL (Departmental Expenditure Limits) (in cash terms) Extra £11,000m were added in last year’s supplementary Estimate to cover increased estimated student loan impairments. 80,000 Extra funds in 2017/18 Day-to-day budget 70,000 11,000 The remaining Day-to- (compared to 2016/17): 60,000 day spending has gone 50,000 up by 2.5% For the Education and Skills funding 40,000 £465.7m agency, as a result of the apprenticeship levy. The adult education budget has been £ millions 30,000 63,232 64,850 protected in cash terms 20,000
10,000 For the National College for Teaching and £64.8m Leadership’s Innovation fund (TLIF) and for an 0 increase in teacher recruitment for the EBacc 2016/17 2017/18
Budgets restated to take in new Higher and further education functions For 12 opportunity areas to support local partnerships £11.8m formed with early years providers, schools, colleges, universities, businesses, charities and local authorities Blackpool, Derby, Norwich, For international Oldham, Scarborough, and Admin costs are down by 1.2% £8m programmes (transfer from Bigger savings are required in future West Somerset, Bradford, BEIS, not new money) Doncaster, Fenland & East years (further 7% over two years) Cambridgeshire, Hastings, Ipswich and Stoke-on-Trent Areas selected based on social mobility Commission report’s social mobility index
Main Estimates List of all departments explained DFE Will now increase Core schools budgets, 2014/15 – 2019/20: £ billion Will now increase to 42.4 to 43.5 50 0.9 0.4 40
30
20 39.9 41 42 42.6 36.3 37
10
0 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Budget Savings from elsewhere in the education budget
Sources: 2014-15 to 16-17: DFE Main Estimates 2017-18 memorandum, Annex E 2016-17 to 2019-20: Secretary of State’s statement to the House on 17 July 2017 Extra money for 2018-19 and 2019-20 schools budgets announced on 17 July 2017 comes from within DFE’s overall Resource DEL, i.e. there is no new Per pupil funding maintained in real terms until 2019-20 money from Treasury Spending per pupil will be minimum of £4,800 per Savings of at least £200m to come from DFE’s secondary school pupil by 2019-20. Average per pupil rate central programmes (5-16 year olds) was £4,612 in 2015-16 There will be a 0.5% per pupil per year increase for every school from 2017-18 to 2019-20
Main Estimates List of all departments explained DFE
Cumulative cost pressures on schools remain
The DfE estimates cumulative cost pressures on schools of 3.4% in 2016-17, rising to 8.7% by 2019-20
Source: NAO: Financial Sustainability of Schools, p. 15
Main Estimates List of all departments explained DFE What new information is there? Investment Spending: Capital DEL (Departmental Expenditure Limits) Savings expected for future years: (in cash terms) Savings of £420m in capital spending (£315m of that will come from healthy pupils capital funding); 7,000 Savings of £280m in free schools programme (up to 6,000 13% 2019-20). This includes delivering 30 of 140 new reduction 5,975 schools through local authorities 5,000 5,183 Source: Secretary of State’s announcements made in July 2017 4,000
3,000 £ millions
2,000
1,000
0 2016/17 2017/18 Major reductions (2017/18 compared to 2016/17):
-£325m: +£17.4m: Spending on the Basic Need for Further education funding for additional school 2017-18 Capital costs for Aggregator capital (National places (This funding is allocated by -£223m: Vehicle Ltd (a company which provides College projects) formula based on the number of spending on the Priority Private finance for the Priority Schools new school places required.) Schools Building Building programme) have not yet been included. DFE expects to add Programme (the first these in its supplementary estimate. +£34.7m: phase nears completion) for Student Loan This amounted to £339m last year Company new policies
Main Estimates List of all departments explained DFE Overall effectiveness judgments, 2012-2016 Primary Schools:
80%
60%
40% 29% 19% 16% 20% 14% 9% 2% 2% 2% 1% 1% Performance of both 0% primary and secondary 2012 2013 2014 2015 2016 schools has been Outstanding Good Requires improvement Inadequate improving Secondary Schools:
60%
40% 30% 24% 23% 21% 20% 16% 3% 5% 6% 5% 5% 0% 2012 2013 2014 2015 2016
Outstanding Good Requires improvement Inadequate
Percentages in the charts are rounded and may not add to 100
Main Estimates List of all departments explained Growing number of pupils:
State-Funded Primary Schools 4.69 million
3.22 million
State-Funded Secondary Schools
There are 110,000 more pupils in the school system in June 2017 than in January 2016
Independent Schools 0.58 million Special Schools 0.11 million
Main Estimates List of all departments explained DFE Average spending per pupil, £:
5,000 Note these are average funding 4,500 only - there is big variation between 4,000 different schools and areas 3,500 3,000 2,500 2014-15 2,000 2015-16 1,500 2016/17 1,000 16/17: 500 N/A 0 Early years budget 5-16 budget Pupil premium free Pupil premium free Pupil premium Pupil premium 16-19 budget school meals school meals service children local authority care primary secondary children National Funding Formula: The Government originally said that no school would lose There are large differences between the amounts that different more than 1.5% per pupil in any one year, or more than 3% schools receive per pupil. These are largely historic, based on needs many across the years. Increases would also be capped. (3% per years ago. National Funding is updated for increased numbers of school pupil 18-19 and 2.5% per pupil in 19-20), in cash terms. pupils, but otherwise on a cost plus basis. In July 2017 the Government went further and promised Local authorities have their own local formulae for distributing the Per pupil funding would be maintained in real terms until money they receive (inc. for academies) 2019-20 Spending per pupil would be minimum of £4,800 per secondary school pupil by 2019-20. The 2015-17 government consulted on a new national funding formula. This was planned to be implemented starting 2018-19 (at local authority There would be a 0.5% per pupil per year increase for level) and for 2019-20 at school level. every school from 2017-18 to 2019-20 Implementation of new formula at schools level deferred (For further information, read the HoC Library Note) until 2020-21
Main Estimates List of all departments explained Environment, Food and Rural Affairs
Main Estimates List of all departments explained Resource Resource Spending: Capital
£ billions What and Areas of OutstandingAreas of Naturaland Beauty Protectionoverof defenceFlood maintenance funding be protectedto £ £130m 2.3bn the ‘Betterhomes’ protect300,000over schemes 1,500 and Capital and DEL budgets to be investedtobe in investment in MainEstimates 2015 2015 Spending explained £350m DEFRA’s estatesscience flood defences flood of funding of funding for Review List of departmentsall (in cash terms)cash(in told over six oversix year National Parks, forests us: by 2021 over period, over time Capital Capital budget remains flat period: spending to reduce resource efficiency savings Share of government spending on spending governmentof Share Share of government spending on spending governmentof Share Resource DEL 2015/16: 0.48% 2015/16: 1.14% CapitalDEL for DEFRA: for 2019/20: 0.43% 2019/20: forDEFRA: 1% DEFRA DEFRA What new information is there? How does spending compare to 2016/17? Day-to-day Spending: Resource DEL (Departmental Expenditure Limits) (in cash terms)
2,000 1.3% reduction (25m): 1,898 1,873 £34.5m reduction in admin 1,500 £9.5m increase in programme spending
£millions 1,000 Day-to-day spending budget is £60m higher than planned at 2015 Spending Review 500 This is largely due to: +£40m for flood maintenance 0 2016/17 2017/18 +£15m transfer from DfiD for additional Official Development Investment Spending: Capital DEL (Departmental Expenditure Limits) Assistance (in cash terms)
800
600 671 685 2.1% increase (£14m) due to additional flood 400 management funding 200 Due to uncertainty over the resource/capital £ millions £ requirements of the Environment Agency (EA) for 0 2016/17 2017/18 flood prevention, DEFRA holds budget as Resource at the beginning of the year. However, it can be transferred into Capital budget later on.
Main Estimates List of all departments explained DEFRA Areas of spending: Day-today spending: Resource DEL budget expenditure (in cash terms)
An internal re-structuring has caused Increase due to transfer of corporate large movements in (from Better service budgets from other spending Regulation and Waste programmes) categories to ‘core Defra’. 700 and out (Natural environment and EU 642 and International Trade programmes) 600 568 Has the effect of reducing spending in 482 501 500 other categories 400 358 339 300 260 211 207 £ millions £ 202 200
100
0 Support and Environment and Animal and plant Flood protection Other develop farming biodiversity diseases (Departmental Operating costs) 2016/17 2017/18 Investment: Capital DEL budget expenditure (in cash terms) 2016-17 investment budget is higher because there was a transfer from resource budget for EA, and allocation of 500 472 443 flood defence funding following 2015-16 400 winter floods
300
200 134
£millions 94 86 100 73 Increase due to 16 7 15 14 investment in the 0 science estate and IT Support and Environment and Animal and plant Flood Protection Other infrastructure develop farming biodiversity diseases (Departmental Operating costs) 2016/17 2017/18
Main Estimates List of all departments explained DEFRA Flooding: background Key findings and recommendations from EFRA Committee Inquiry into Future Flood Prevention (October 2016):
Flood risk management structures are fragmented and ineffective: ‘catchment scale’ approaches, which use a range of natural flood management measures across a river catchment area, are under-encouraged
Proposal of a new governance model, which includes a new National Floods Commissioner for England to promote adoption of catchment measures on a wider scale
Flood risk communication should be simplified
Resilience to flooding must be improved, with greater liability for unsatisfactory developers.
The Report also indicated current planned maintenance spending will be inadequate in the medium-term….
Main Estimates List of all departments explained DEFRA Flooding: funding structure
2016/17 Central Government funding for Flood and Coastal Erosion Risk Management (FCERM): £735.6m Source: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/549093/Funding_for_Flood_and_Coastal_Erosion_in_England_Sep_2016.pdf
In addition to Central Government funds, the Environment Agency raises funding through:
Local sources such as levies on local authorities.
Other non-government sources such as drainage charges and levies paid to internal drainage boards.
The Environment Agency Long-term Investment Scenarios suggests that around £900m a year would be required by the 2020-40s to achieve optimum investment plans.
Main Estimates List of all departments explained DEFRA
Flooding: planned spending Future resource budgets only currently contain agreed flood defence maintenance Expenditure on Flood and Coastal Erosion Risk Management, funding; further increases in resource budgets Resource and Capital (real terms) will be confirmed annually – partly reflecting the approach of topping-up after 900 unpredictable flood events 800 700 600 500 £ millions 400 300 200 100 0 2005/06 2007/08 2009/10 2011/12 2013/14 2015/16 2017/18 2019/20
Capital Resource Average total spend per Parliament (RHS) Capital spending plans reflect the Additional funding planned since the 2015 Spending Review: six-year funding commitment of £200m additional capital investment following 2015/16 £2.3bn from 2015 Spending winter floods Review, following Defra’s 2014 £700m (£140m for maintenance) for flood defence and Investment Plan. resilience, in the March 2016 Budget
In addition, DCLG is getting £27.2m from the Treasury for ‘coastal Sources: http://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-7514 Communities’ (potentially for flood defence and/or maintenance) https://www.gov.uk/government/publications/reducing-the-risks-of-flooding-and-coastal-erosion-an-investment-plan-2014
Main Estimates List of all departments explained Exiting the EU
Main Estimates List of all departments explained DEXEU DExEU: planned spending Day-to-day Spending: Resource DEL (Departmental Expenditure Limits) (in nominal terms)
120
100 101.0 100.0 80 95.2
£ millions £ 60 Planned future budget
40 Previous years 2016/17 Spending Current budget provision 20 £48.9m started mid- way in the financial 0 year (department was 2016/17 2017/18 2018/19 2019/20 set up in July)
Investment Spending: Capital DEL (Departmental Expenditure Limits) (in nominal terms) 3
2 Planned future budget 1.5 Previous years
£ millions £ 1 Current budget
0.1 0.1 0.1 0 2016/17 2017/18 2018/19 2019/20
Main Estimates List of all departments explained DEXEU DExEU supports the Prime Minister to deliver the Government’s objective of exiting the EU, including: Main Priorities of DExEU: • the negotiation of the UK’s future relationship with the EU Ensuring the government is able to take initial decisions on UK’s withdrawal on the basis of the best possible advice Strengthening capability across government in preparation for the work ahead Reaching out to stakeholders in order Key Responsibilities to understand and capture their views Establishing the department and setting it up to succeed
Working very closely with the UK’s Leading and co-ordinating devolved administrations, Parliament, cross-government work to and a wide range of other interested seize the opportunities and ensure a smooth process of exit parties on what the approach to those on the best possible terms negotiations should be
The policy work to support the UK’s Conducting the negotiations in negotiations to leave the EU and to support of the Prime Minister including establish the future relationship supporting bilateral discussions on between the EU and the UK EU exit with other European countries
Main Estimates List of all departments explained Foreign and Commonwealth Office
Main Estimates List of all departments explained FCO Spending trends:
RESOURCE DEL BUDGET (Day-to-day spending), cash terms: Spending Review 2015 noted that the FCO budget would be protected in real terms 2,500 4.7% increase in real terms from 2015-16 to 2017-18
2,000 2,138 CAPITAL DEL BUDGET (Investment), cash terms: 1,971 2,067 1,500
£millions 1,000
500 150 0 100 139 134 2015/16 2016/17 2017/18 50
£millions 62 0 2015/16 2016/17 2017/18
Net spending reduced by higher level of income from capital assets (e.g., buildings)
Main Estimates List of all departments explained FCO Reconciliation between Main Estimate 2017/18 and Spending Review settlement:
RESOURCE DEL BUDGET (Day-to-day spending):
£2,138m £1,169m £808m £220m £10.4m £68.5m £1.5m £2.9m 2017/18 FCO Resource Treasury’s non- Autumn Transfer of Transfer from Transfer Net transfers budget cash reduction Statement European DFID for from DFID to/from other Departments 2016 uplift for Directorate to Spending Review CSSF (Conflict, This includes: Trade Officers Dept for This includes: Settlement Security and £96m for ODA Exiting EU £14.2m from other Stability Fund ) £72m for BBC (Machinery of world service departments for FCO £436m for conflict Government) £28m for platform prevention Scholarships £5m to Cabinet Office £372m for £23m for British for Commonwealth peacekeeping Council Heads of Government 2.5m to MoD for Falkland's demining
Main Estimates List of all departments explained FCO Reconciliation between Main Estimate 2017/18 and Spending Review settlement:
CAPITAL DEL BUDGET (Investment):
£134.4m £3.4m £98m £33m 2017/18 FCO Capital budget Uplift for Transfer from BEIS for Spending Review receipts banked Science and Settlement in 2016-17 Innovation network
FCO uses receipts from capital (mostly building) disposals to increase its capital budget
Main Estimates List of all departments explained FCO Conflict, Stability and Security Fund (CSSF)
Conflict, Stability and The CSSF came into being on 1 April 2015 and replaced the Security Fund Conflict Pool. Governed by the National Security Council It brought together existing conflict resources (the Conflict Pool and the Initially held in Peacekeeping Budget) along with DFID’s budget. defence, diplomatic, development, security and intelligence capabilities. Throughout the financial year, the CSSF funds are transferred to other Scope: departments (though DFID will Conflict reduction retain some funds for itself) Development assistance Tackling threats to UK interests. Other departments Funding the UK’s contributions e.g. DEFRA etc. to multilateral peacekeeping MOD FCO budgets and related commitments.
National Crime HMRC Agency Home Office
Main Estimates List of all departments explained Health
Main Estimates List of all departments explained HEALTH What the 2015 Spending Review told us: 2014-2021 Department of Health Total departmental budget (in 2017/18 real terms) 12.5% cut to budgets outside NHS England from 2015/16 to 2020/21 , 140 including public health, health education and Care Quality Commission 120 14 16 100
80 12% increase to the NHS budget from 2015/16 to 2020/21 60 114 billion 102 40£
20 DH’s share of total government 0 spending on Resource DEL : 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2019/20: NHS TDEL Rest of DH 2015/16: 37.8% 35.4%
NHS’s share of total DH budget: DH’s share of total government spending on Capital DEL : 2014/15: 86.4% 2015/16: 2020/21: 89% 11.0% 2019/20: 9.6% Main Estimates List of all departments explained HEALTH What new information is there? Capital (investment) spending, in real terms 2017/18 Capital budget is larger compared to previous years. However, in the last three years, the Department has transferred significant amounts from its capital budget later on in the year to support its resource budget.
7 In 2016-17, DH transferred £1.2bn (20%) from capital to resource to mitigate 6 pressures on the providers (like hospitals). 5
4
3 £ billions £ 2
1
0 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21
“the Department of Health will receive more than £20bn of capital investment over the spending review period” Chancellor of the Exchequer to the Health Select Committee 8 November 2016
Main Estimates List of all departments explained HEALTH How much is the Department expecting providers to spend in 2017/18? How does it compare? Resource DEL expenditure by all NHS trusts and NHS Foundation Trusts (in nominal terms)
80
70 NHS Improvement worked with poorly 60 performing providers to try and reduce their deficits through Financial Improvement plans. 50
40 Some providers sold property and improved billion
£ £ 30 their collection of income from other 20 parts of the health service. 10 0 Provider Deficits: 2014/15 2015/16 2016/17 2017/18
2015/16 Deficit: £2,500m
2016/17 Deficit has exceeded the target largely because acute 2016/17 Deficit: trust deficits were £285m greater £791m 2016/17 Target: than planned £580m
Main Estimates List of all departments explained HEALTH
Health spending: IFS analysis The IFS argues that health spending needs to rise 1.2% to keep pace with age adjusted population change.
Historically spending has grown by 4% a year.
Based on the demographic trends and current policies, the OBR estimates that health spending will be 5.3% of GDP higher in 2065-66 than it is currently.
Source: IFS: Spending on Public Services
Neither party has provided an analysis of how it would fund increase in Health spending or reduce its long term growth.
Main Estimates List of all departments explained HEALTH Ageing population: Pressures Rise in long-term conditions: Over the next 20 years: Estimated increase in the number of people with long-term conditions:
39% increase in 65+ population 18m 15m
2014 2025
Source: Health Select Committee Managing the 106% increase in 85+ population care of people with long term conditions p. 3
Workforce pressures:
2015: 10% paramedic vacancy rate 2017: 19% decrease in applications to nursing and midwifery courses Source: King’s Fund Demography Staff shortages: 2016 NHS staff survey: Demands on Hospitals: 46% of staff think that there is not enough staff at this organisation for me to do my job properly’ Increase in ambulance calls and NHS 111 transfers: In 87 trusts, more than 50% of staff think there is not enough staff. 10.7m South East Coast Ambulance Service NHS Foundation Trust: 82% of staff think there is not enough staff. 7.9m 11% of NHS doctors received their primary 2009/10 2015/16 medical qualification in EEA countries No corresponding budget rise for ambulance trusts 17% of specialists received their primary Source: NAO report on NHS Ambulance Services medical qualificationBREXIT in an EEA countries Main Estimates List of all departments explained Home Office
Main Estimates List of all departments explained HOME OFFICE What the 2015 Spending Review told us: 2015-2020 Home Office Resource and Capital DEL budgets (in cash terms) • Overall police funding protected in real terms over the next four years. • The Government claims this means an “extra £900m” for the police, although there are suggestions that this may include additional locally raised income through council tax. • The overall Home Office resource budget
£ billions increases by around £300m, and then stays flat
Share of government spending on Resource DEL for HO: National Crime Agency’s funding protected (£200m of capital 2015/16: investment). 3.27% 2019/20: £500m extra (over Spending Review period?) for counter 3.23% terrorism budget. Share of government spending on £1bn for next generation 4G communications network for Capital DEL for HO: emergency services. 2015/16: Border immigration and citizenship resources to be halved 0.92% 2019/20: through efficiencies, and investment in technology. 0.80%
Main Estimates List of all departments explained HOME OFFICE What new information is there? How does spending compare to 2016/17? Day-to-day Spending: Resource DEL budget (in cash terms)
12,000
10,000 10,573 10,510 8,000 6,000 0.6% 4,000 reduction
2,000 £millions 0 Areas of Day-to-day spending: 2016/17 2017/18
‘Other’ includes income from UK Visas and Immigration, and from HM 10,000 Passport Office. Overall income is Spending on crime and policing and fire has 8,515 increased by 1.8% compared to last year. However, 8,366 increasing, despite income from 8,000 this year’s budget is actually lower than planned Passport Office declining (due to lower volume of passports), in 2015 Spending Review despite transfer of 6,000 suggesting visa income is increasing Fire and Resilience function from DCLG last year. 4,000
2,000 856 825 922 963 832 696
£millions 121 94 0 -525 -2,000 -582 Crime and Office for UK Border Arms length Enablers Other policing security and Agency/Border bodies (net) Slight reduction in 2017/18 counter Force spending despite planned terrorism increases to ring-fenced 2016/17 2017/18 Counter Terrorism
Main Estimates List of all departments explained HOME OFFICE What new information is there? How does spending compare to 2016/17?
Investment Spending: Capital DEL budget (in cash terms)
600
500 516 482 400 7.1% 300 £millions increase 200 There is higher capital spending in all major spending 100 categories, except Enablers (central services and policy 0 work), which is falling by £130m. 2016/17 2017/18 Last year Enablers had the greatest increase in capital spending ‘to support improvements in capabilities and efficiencies across the HO operations’ – suggests this improvement regime has finished.
200 183 180 160 152 140 122 120 105 91 100 82 90 74 80 60 51 40 22 15 20 11 0 Crime and Office for UK Border Arms length Enablers Other policing security and Agency/Border bodies (net) counter Force terrorism
2016/17 2017/18
Main Estimates List of all departments explained HOME OFFICE Challenges: Increased risk of terrorism in light of recent attacks in the UK
Spending on the police decreased by 17% from 2009/10 to 2015/16.
Continued reduction in number of Police Officers (as of March 31 of each year)
Source of figures: IFG Performance Tracker
Main Estimates List of all departments explained International Development
Main Estimates List of all departments explained DFID
Reconciliation between Main Estimate 2017/18 Transfers from capital to resource are and Spending Review settlement: not normally allowed by Treasury. DFID said that the Treasury agreed to this to “ensure the Departments RESOURCE DEL BUDGET (Day-to-day spending): delivers against the UK Aid Strategy… whilst achieving value for money”
£80m £7,604m £9,336m £1,727m £482m £407m 2017/18 DFID Resource budget Transfers to other Reduction in the Transfer from R&D reclassification: Spending Review Departments, UK’s total ODA* Capital to technical accounting Settlement including: allocation Resource adjustment - all R&D is now classified as -£217.2m to FCO capital -£114.1m to Dept of Health -£138.7m to Home Office -£320m to BEIS 2015 Spending Review -£915.4m to the Conflict, Settlement increases DFID’s Stability and Security Fund budget by 21% from 2015-16 (CSSF) which is then to 2019-20 in real terms to transferred to other ensure UK meets UN aid target departments (0.7% of GNI to be spent on ODA) Note: Most of these transfers were forecast in the Spending Review
*Overseas Development Aid (ODA) is an indicator of international aid flow provided by official agencies. Practically all DFID expenditure counts as ODA. However a proportion of other departments’ expenditure namely FCO also counts as ODA.
Main Estimates List of all departments explained DFID Reconciliation between Main Estimate 2017/18 and Spending Review settlement:
CAPITAL DEL BUDGET (Investment):
£2,889m £17m £3,248m £267m £482m £407m 2017/18 DFID Capital budget Transfers Transfer to AME budget: Transfer from R&D reclassification Spending Review to other capital injection in Capital to (technical accounting Settlement Departments Commonwealth Resource adjustment – all R&D Development is now classified as Corporation group – capital) company which invests in private companies in developing countries
DFID transferred £89.4m from capital to resource in 2016/17 as well. This could indicate DFID’s investment budget is being depleted to boost its day to day spending
Main Estimates List of all departments explained DFID Conflict, Stability and Security Fund (CSSF)
Conflict, Stability and The CSSF came into being on 1 April 2015 and replaced the Security Fund Conflict Pool. Governed by the National Security Council It brought together existing conflict resources (the Conflict Pool and the Initially held in Peacekeeping Budget) along with DFID’s budget. defence, diplomatic, development, security and intelligence capabilities. Throughout the financial year, the CSSF funds are transferred to other Scope: departments (though DFID will Conflict reduction retain some funds for itself) Development assistance Tackling threats to UK interests. Other departments Funding the UK’s contributions e.g. DEFRA etc. to multilateral peacekeeping MOD FCO budgets and related commitments.
National Crime HMRC Agency Home Office
Main Estimates List of all departments explained DFID DfID and UN TARGET of The International (Official 0.7% Spend of GNI (Gross National Income) on ODA 2013: Development Assistance Target) UK meets this target Act 2015 enshrines in law UK’s commitment to spend 0.7% of GNI on ODA annually .
Treasury’s requirement:
To only just MEET the Target
Increased risk of Treasury tinkering with the Department’s budget as OECD total forecasts changes.
DfID’s share of ODA spending fell from 89.5% in 2011 to 80.5% in 2015
CHALLENGE for DfID:
Adjusting spending in year according to forecasts of output growth and Meeting the 0.7% has meant, … that in recent years DFID has gone through other departments’ ODA spending "various contortions, with spending being speeded up or slowed down to ensure that UK meets the target. to fit the target in question. This disrupts programmes and diverts management attention away from more useful activity.” Predecessor International Development Committee
Main Estimates List of all departments explained International Trade
Main Estimates List of all departments explained INTERNATIONAL TRADE DIT: planned spending
Day-to-day and Investment Spending: Resource and Capital DEL (Departmental Expenditure Limits) (in nominal terms)
400 9.9 6.7 350 3 3 300 250 200 351.4 364.2 £ millions £ 150 304.6 302.9 100 50 0 2016-17 2017-18 2018-19 2019-20
Day-to-day Spending Investment Spending
DIT has not yet produced a Single Departmental Plan but is developing one currently
Main Estimates List of all departments explained INTERNATIONAL TRADE ONS: UK trade by country, 2015 Exports, £ billions Imports, £ billions 0 50 100 150 200 250 300 350 0 50 100 150 200 250 300
Germany Germany Netherlands Netherlands France France Spain Spain Italy Italy Ireland Ireland Belgium Belgium Poland Poland Sweden Sweden Czech Republic Czech Republic Denmark Denmark Rest of Europe Rest of Europe EU EU Norway Norway Switzerland Switzerland EFTA (includes Iceland) EFTA (includes Iceland) USA USA China China Japan Japan India India Turkey Turkey Hong Kong Hong Kong Canada Canada Russia Russia Australia Singapore Australia Saudi Arabia Singapore South Korea Saudi Arabia Rest of the world South Korea Total World Excluding EU Rest of the world Total World Excluding EU EU Non-EU EU Non-EU Main Estimates List of all departments explained Defence
Main Estimates List of all departments explained MOD What the 2015 Spending Review told us: 2015-2020 Ministry of Defence Resource and Capital DEL budgets (in cash terms)
Increases in both capital and resource
spending £billions
Share of government spending on Resource DEL for MoD:
2015/16: 2019/20: 8.63% 9.13%
Share of government spending on Capital DEL for MoD:
2015/16: 2019/20: 16.25% 16.27%
Main Estimates List of all departments explained MOD What new information is there? How does spending compare to 2016/17? Day-to-day Spending: Resource DEL (Departmental Expenditure Limits) (in cash terms)
40 4.8% 35 37.8 decrease 36.0 30 25 £billions 20 15 10 5 This reduction is largely due to reduction in spending on operations [AND WHAT ELSE?]. 0 2016/17 2017/18 Operations will likely have further Day-today budget spending requests later in financial year.
Investment: Capital DEL (Departmental Expenditure Limits) (in cash terms)
10 2.6% 8 decrease 6 8.8 8.5 4
£billions 2 0 2016/17 2017/18
Main Estimates List of all departments explained MOD Conflict, Stability and Security Fund (CSSF)
Conflict, Stability and The CSSF came into being on 1 April 2015 and replaced the Security Fund Conflict Pool. Governed by the National Security Council It brought together existing conflict resources (the Conflict Pool and the Initially held in Peacekeeping Budget) along with DFID’s budget. defence, diplomatic, development, security and intelligence capabilities. Throughout the financial year, the CSSF funds are transferred to other Scope: departments (though DFID will Conflict reduction retain some funds for itself) Development assistance Tackling threats to UK interests. Other departments Funding the UK’s contributions e.g. DEFRA etc. to multilateral peacekeeping MOD FCO budgets and related commitments.
National Crime HMRC Agency Home Office
Main Estimates List of all departments explained MOD Areas of spending: Day-to-day spending: Resource DEL budget expenditure (in cash terms)
25
20.7 20.8 38% increase in civilian personnel 2016/17 20 expenditure despite government’s 2017/18 plans to reduce civilian personnel to 15 41,000 during 2016-2020. This includes a £125m billions
£ 9.5 reduction in R&D (66%) 10 9.0
5.4 5 Investment: 2.8 1.3 1.8 Capital DEL budget expenditure (in cash terms) 0.9 1.0 0.4 0.3 0 Service Civilian Equipment and Administration Operations Other Personnel Personnel Infrastructure Costs Costs This increase is largely due to a £340m increase in R&D (21%) 15% reduction in spending on “Single Use 5 4.7 Military Equipment” (equipment that can 4.0 only be used for military purposes) 4 2.7 3 2.4 1.8 2 1.5
billions 1 £ 2016/17 0 2017/18 Single Use Military Other Capital Other Equipment
Main Estimates List of all departments explained MOD
Cost of Operations and Peacekeeping: Largest area of spending: Counter- 500 474 Daesh operations 450
400
350 MoD does not indicate 300 246 what the money from
£millions 250 CSSF will be spent on 200
150 89 100 70 54 64.6 50 25 25
0 Afghanistan Wider Gulf Counter Daesh Conflict, Stability and Security Fund (CSSF)
2016/17 2017/18
Main Estimates List of all departments explained MOD Do the Armed Forces have the resources they need? The reduction in troop numbers has Number of troops over the period 2010-15 contributed to the growing deficit of required numbers of armed forces
The new Strategic Defence and Security Review covering new threats of ISIS and increased Russian actions in Ukraine UK military spend as a percentage of GDP
The UK Military spend as proportion of GDP has reduced over time, and continues to move closer to the NATO commitment to spend 2% of GDP on Defence. Items previously not included such as pensions for retired MoD civilians are now counted as military spend.
Main Estimates List of all departments explained Justice
Main Estimates List of all departments explained MOJ What the 2015 Spending Review told us: 2015-2020 Ministry of Justice Resource and Capital DEL budgets (in cash terms)
Reductions to both resource and capital spending. £ billions
Share of government spending on Resource DEL for MoJ: Resource Spend: 2015/16: Efficiency savings possible because of capital 1.97% 2019/20: 1.71% investment in prisons and courts Administration budget to be cut by 50%, 20% more Share of government spending on than any other Department Capital DEL for MoJ: Capital Spend: £1.3bn to building nine new prisons 2015/16: 0.92% 2019/20: £700m to digitise the courts system 0.80%
Main Estimates List of all departments explained MOJ What new information is there? How does spending compare to 2016/17? Net funding for day to day services: Resource DEL budget (in cash terms) Largest change: 4% 8,000 reduction 7,000 7,470 Transfer of responsibility for 6,000 7,173 +£131m Offender Learning from BEIS 5,000 4,000
3,000 £millions 2,000 Areas of Day-to-day spending: 1,000 This includes £125m for 0 prison safety and staff 2016/17 2017/18 recruitment 5% increase from Gross spending is up, funded by higher 5,000.0 the Courts Reform levels of income from charges (-£587m). 3,891 Programme This is the first year in which the full 4,000.0 3,737 income is expected to be collected. Last year, implementation of probate fee 3,000.0 changes was delayed. 2,000.0 1,615 1,693 1,6311,628
1,000.0 422 209 223 375 2016/17 budget included a one-off spend on: 0.0 -97 £136m for delayed implementation of -1,000.0 -683 probate fees Central Funds Prison and HM Courts and Legal Aid and Youth Justice Other £36m for costs arising in O’Brien Probation Tribunals Services Board judgement for payments owed to judges 2016/17 2017/18
Main Estimates List of all departments explained MOJ What new information is there? How does spending compare to 2016/17?
Investment Spending: Capital DEL budget (in cash terms)
800 700 742 Increase largely due to: 600 +£204m: carry-over from previous year 500 Planned extra spending on prison 400 459 and court reform 300 62%
200 increase
£millions 100
0 2016/17 2017/18 Areas of Investment spending:
400 Additional funding for Additional funding for the Prisons 360 the Prison Reform Estates Transformation programme 350 programme 300 250 Additional funding for 200 192 the Courts Reform 200 162 142 programme 150 103
£millions 100
50 11 12 4 3 7 7 0 Corporate Prison and HM Courts and Legal Services Youth Justice Other Services and Probation Tribunals and Legal Aid Board Central Funds 2016/17 2017/18
Main Estimates List of all departments explained MOJ Challenges:
Spending on prisons decreased in real terms by 21% between 2009/10 and 2015/16.
…While the prison population remained relatively static over the past six years:
Source of captions and figures: IFG Performance Tracker
Main Estimates List of all departments explained MOJ
Challenges (continued):
As a result, There are now a quarter fewer prison officers than in 2010, responsible for similar numbers of prisoners
…And violence in prisons is rising sharply – assaults on staff have increased by around 70% since 2009.
Source of captions and figures: IFG Performance Tracker Main Estimates List of all departments explained Transport
Main Estimates List of all departments explained DFT What the 2015 Spending Review told us: Resource and Capital DEL budgets (in cash terms)
14 12 New measures for rail passengers: 10 • compensation when trains are over 15 minutes late • improving Wi-Fi and mobile connectivity on trains 8 • freezing rail fares in real terms (RPI) for the course 6
£ billions of this Parliament 4
2
0 2015-16 2016-17 2017-18 2018-19 2019-20 Resource Capital Share of government spending on Resource DEL for DfT: 2015/16: 0.83% 2019/20: Resource Savings: 0.55% • Reducing the subsidy paid to rail franchises • Phasing out the TfL Resource grant, saving £700m in 2019-20 Share of government spending on Capital Spend: Capital DEL for DfT: £46.7 billion capital investment by DfT over the next 5 years (2016- 2019/20: 17 to 2020-21) on High Speed 2 (HS2), roads and local 2015/16: 22.89% transport, in addition to Network Rail’s investment programme. 13.96%
Main Estimates List of all departments explained DFT 2017/18 Main Estimates: Day-to-day Spending: Resource DEL (Departmental Expenditure Limits) (in cash terms) 4 Increase largely due to increase in funding for Highways England 3 3.3 3.2 5%
£billions 2 increase
1 Day-to-day spending by area:
0 2016/17 2017/18 Funding for operating and maintaining the railway network, including staff and equipment costs (part of Annually Managed Expenditure (AME) budget 9
7 11% increase compared to last Includes extra £2 m Reduction due to transfer year, in line with Road for Midlands 5 of responsibility to GLA Investment Strategy Railway hub
3 2016/17
2017/18 1
-1
£billions -3 Highways England Local authority GLA transport Bus subsidies and Other railways Support for Network Rail transport grants concessionary Passenger Rail fares Services
Main Estimates List of all departments explained DFT 2017/18 Main Estimates: +£190 million relating to +£658 million for High Investment Spending: Capital DEL (Departmental Expenditure Limits) Speed 2 reflecting the (in cash terms) moving spending from subsequent years into new phase of the 7 2017-18 project’s development 6 6.4 +£1m for the M62 +£77.9m for flood 5 5.5 17% defences: £billions increase This becomes £65m in 4 £50m for roads 2018/19 and £95m in £27.9m for rail 3 2019/20
2 +£375m extra for National Productivity Investment Fund:
1 Strategic studies Smart ticketing development 0 £5m 2016/17 2017/18 Future £25m transport
£40m Local roads -£936m: and transport Transfer to DCLG for the Local networks Growth Fund and Local Sustainable Strategic Transport Funds roads and … (transfer of some of the funding and £95m responsibility for local roads) £210m
Main Estimates List of all departments explained DFT Investment spending by area: Funding for: Renewals: major capital works such as replacement of structures and equipment; Enhancements: infrastructure upgrade schemes (e.g. enabling higher speeds, electrification, allowing heavier loads). This is part of Annually Managed Expenditure (AME) budget
7
6
5 £1.7bn increase in investment spend for HS2 consequent on 4 the project starting
£billions 3 2016/17 2017/18 2
1
0 Highways England Local authority HS2 Other railways Funding of other National Sustainable travel Network Rail transport ALBs (net) Productivity Investment Fund
September 2016: the Government stated that to date it had spent £1.4bn on HS2. June 2016: the National Audit Office said that phase 1 is to cost £27.4bn over its lifetime. November 2015: the Government placed the cost of the entire project at £55.7bn in 2015 prices. Source: House of Commons Library HS2
Main Estimates List of all departments explained DFT Expansion of the Heathrow Runway:
In October 2016 the Conservative Government announced that it would support a planning application by Heathrow for a third runway and a sixth terminal, to the north west of the existing site. This is in line with the recommendation of the Airports Commission, which reported in July 2015.
The Government published for consultation in February 2017 a draft National Policy Statement (NPS) for airports. The draft NPS is subject to parliamentary scrutiny and will require approval by both Houses of Parliament. Once the NPS is approved Heathrow may proceed with a planning application, in the form of a Development Consent Order (DCO).
There are longstanding concerns about the environmental impact of expansion: How the increase in traffic will affect air quality around the airport; Whether more flights will cause difficulties for the Government’s climate change obligations; How noise will impact those living near the airport and under the flight paths
More generally, there is ongoing debate about: The robustness of the financial and economic case; Whether the taxpayer will be expected to fund surface access improvements; Whether expansion could or should better serve domestic markets.
The Airport’s Commission estimated the cost of
Heathrow at £17.6bn in 2014 prices. Source: House of Commons Library: Heathrow
Main Estimates List of all departments explained Work and Pensions
Main Estimates List of all departments explained DWP DWP: What the 2015 Spending Review told us: Annually Managed Expenditure (in cash terms) Forecast Spending (OBR) 120 Many admin functions were Resource and Capital DEL (in cash terms) 100 106 reclassified as programme 80 77.27 Spending on pensions forecast to continue rising 60 £ billions 40
20
0 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 Working age and other Pensions and pension credit People with disabilities and illness Big savings required in admin of DWP of 22%, including For 2017/18 (compared to 2016/17): 34% on technology and 20% in size of DWP Estate Disability and carer benefits spending is forecast to rise by 3.6%. This is due to the uprating of benefits by 1%, a higher proportion of high value awards, and a rise in carer’s Share of government spending on allowance caseloads. Resource DEL for DWP: 2015/16: Spending on pensioners is forecast to rise by 1.6%. This is made up of the 2.5% increase 2019/20: to pensions (triple lock), offset by reductions in spending as the state pension age rises, 1.84% particularly affecting spending on pension credit. 1.64% Universal Credit and predecessor benefits: DWP’s spending on these is forecast to rise Share of government spending on by 2.4% overall but this is entirely accounted for by DWP taking on the tax credit caseload Resource AME for DWP: 2015/16: from HMRC as tax credits are replaced by Universal Credit. Without this spending moving 2019/20: from HMRC to DWP, DWP’s spending on these benefits would be down. 53% 48.3% Main Estimates List of all departments explained DWP What new information is there? How does spending compare to 2016/17?
Total forecast pensions and benefits spending to rise by £3.6bn (2.07%) compared to 2016/17.
£2.5bn annual uprating of benefits, of which: £1.9bn is annual uprating of state pension £0.6bn is other uprating
Remaining £1.1bn includes additional spending by DWP as a result of taking on some former HMRC benefits (Universal Credit absorbs working tax credits and child tax credits previously paid by HMRC)
Why is welfare spending changing? (2016/17 to 2021/22)
March 2017 OBR Economic and fiscal outlook, p. 140 Main Estimates List of all departments explained DWP Changes in benefits:
Benefits Cap From November 2016 New overall benefits cap: 30 The main exemptions : With children: those working and get working tax credit Previous cap:£26,000 those of pension age getting pension credit 25 those receiving Disability Living allowance or Personal independence payments £23,000 Without children: £20,000 In London 20 Previous cap: £18,200 Outside London £15,400 15 In London £13,400 Outside London 10
From April 2017 Other Changes New benefits claims limited to two children Child tax credit, Housing Benefit (child addition) and Universal Credit will normally be limited to the first two children in future. This applies only to new births from April 2017. Existing claimants may continue to claim for more than two children where they were born before April 2017. Bereavement support payment replaces the previous bereavement benefits: These now comprise of a lump sum and up to 18 support payments. Previously some will have been entitled to payments for longer Those receiving Employment Support allowance (and in the work related activity group) will in future receive the same as those receiving Jobseeker’s allowance (i.e. less) Universal Credit housing element for young people under 22 is abolished.
Main Estimates List of all departments explained DWP Click here for more information on 2017 benefits uprating Changes in benefits: (HOC Library briefing paper) Universal Credit Universal Credit continues to be rolled out UC replaces six previous benefits: Income support Job Seeker’s allowance (income related) Employment and support allowance (income related) Housing benefit Working tax credit (previously paid by HMRC) Child tax credit (previously paid by HMRC) New claimants of Universal Credit may get less than they would have done under the previous tax credit arrangements.
Government has announced the rollout schedule of UC until September 2018. Full rollout not now expected until 2022, five years later than originally planned.
Upratings for 2017-18 Up by 2.5% (triple lock: earnings, price Up by 1% (CPI inflation index at inflation or 2.5% whichever is greater): September 2016): State pension Most benefits frozen for four years, Attendance Allowance including: Personal Independence Payment Child Benefit Disability Living Allowance Up by 2.4% (linked to Jobseekers’ Allowance Carer’s Allowance earnings, May to July 2016): Employment and Support Allowance Bereavement Allowance Pension credit Income Support Housing Benefit under women’s state pension age Maternity Allowance Local Housing Allowance rates Statutory Maternity/Paternity etc Pay Child Tax Credit Statutory Sick Pay Working Tax Credit Universal Credit
Main Estimates List of all departments explained DWP
Cash limited spending, including costs of employment programmes and running DWP:
Resource and Capital DEL Budgets (Departmental Expenditure Limits) (in cash terms): An increase in capital spending in 2017/18 (mainly to deliver technology reforms), However, overall technology spend to fall 7 0.31 0.38 by 29% by 2019-20 6
5
4 3 6.07 6.23
£ millions £ 2
1
0 2016/17 2017/18
Resource Capital Overall resource DEL spending rises by 1.8%, before falling in subsequent years. DWP has said it will reduce administration spending by 22% over the Spending Review period.
Main Estimates List of all departments explained DWP Ageing population: DWP: CHALLENGES
Over the next 20 years: Rising levels of child poverty 39% increase in 65+ population Growth in number of pensioners
Percentage of children below low income (relative measure of income, before housing costs) 106% increase in 85+ population
Source: King’s Fund Demography
Managing future reductions in DWP workforce without Source: DWP: Households Below Average Income: An reducing capability analysis of the UK income distribution: 1994/95-2015/16
Main Estimates List of all departments explained Treasury and HMRC
Main Estimates List of all departments explained HMT AND HMRC HM Treasury: How does spending compare to 2016/17? Day-to-day Spending: Resource DEL (Departmental Expenditure Limits) (in cash terms)
200 183 150 169 7% reduction due to reduction in spending on admin
100 £millions
50
0 2016/17 2017/18 Running costs of Treasury, Debt Management Office, OBR and other Treasury associated bodies
Investment Spending: Capital DEL (Departmental Expenditure Limits) (in cash terms) Large increase because of 200 admin increase. Also there is 187 £80m for Asian Infrastructure 150 Investment Bank.
100 HM Treasury also has both resource and capital Annually Managed Expenditure (AME) that are 50
£millions subject to significant fluctuations. 5 0 This is because AME reflects movements in Bank 2016/17 2017/18 of England funds and Government holdings of banks (Northern Rock/Bradford & Bingley) 2016/17 2017/18 (acquired during the financial crisis 2007-08)
Main Estimates List of all departments explained HMT AND HMRC HMRC: How does spending compare to 2017/18? Day-to-day Spending: Resource DEL (Departmental Expenditure Limits) (in cash terms)
5,000
4,000 3,861 3,946 3,000 2% increase in HMRC running costs £millions 2,000
1,000
0 2016/17 2017/18 HMRC spending on tax credits is reducing, and DWP spending increasing as Universal Credit is rolled out Investment Spending: Capital DEL (Departmental Expenditure Limits) (in cash terms) Resource Annually Managed Expenditure 28% reduction: investment (largely consists of benefits and tax credits) budget is subject to fluctuations as capital 400 50,000 projects start and stop 300 341 40,000 43,183 42,388
200 247 30,000
£millions 20,000 £millions 100
10,000 0 Largest components: 2016/17 2017/18 £27,721m – personal tax credit 0 £11,579m – child benefit 2016/17 2017/18
Main Estimates List of all departments explained HMT AND HMRC Running costs of HMRC: How does spending compare to 2016/17? Resource DEL (Departmental Expenditure Limits) (in cash terms) Running costs of HMRC and National Insurance Fund 4.5 Resource DEL is £78m higher 4.0 than SR settlement due to: 3.5 3.88 8% cash increase extra £30m from 2016 Budget 3.0 3.61 from last year for digital transformation 2.5 2.0 £49m from adjustment for
£billions 1.5 depreciation 1.0 -£0.8m transfers to other 0.5 departments 0.0 2016/17 2017/18
Capital DEL (Departmental Expenditure Limits) (in cash terms) (MILLIONS not BILLIONS) 3% cash
300 increase from last year 250 Capital DEL is £1.4m lower than SR 200 234 242 settlement due to: 150 extra £0.3m from 2016 Budget 100 -£1.7m transfers to other £millions 50 departments
0 2016/17 2017/18
Main Estimates List of all departments explained HMT AND HMRC
HMRC: Trends in Running Costs and capital, 2011/12-2019/20. Future projections indicate Resource and Capital DEL budget expenditure (in real terms) that there will be an increase in the budget in 2016-17 followed by steady falls 4,500 thereafter throughout 4,000 Spending Review period 3,500
3,000
2,500
2,000 £millions 1,500
1,000
500
0 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 Resource DEL Capital DEL
HMRC has committed to deliver further annual, sustainable cost savings of £717m a year by the end of 2019-20, amounting to a total of £1.9bn in cumulative savings over this period. Of these, £203m are planned to be delivered in 2016-17.
Main Estimates List of all departments explained HMT AND HMRC Resource AME: Spending on Benefits and Tax credits. Overall: 3.5% cash reduction Spending in 2017/18 compared to 2016/17 (in cash terms) from last year from £44.54bn in 35 2015-16 to £42.97bn in 2016-17. 29.45 30 2% 28.52 25 reduction 3% Reduction in personal tax reduction 20 credit is as a result of: 15 11.90 11.65 13% 2015-16 Falling unemployment
£billions reduction 10 NEW 2016-17 A rise in average earnings 5 3.11 2.70 0.02 0.07 0.08 Operational changes targeting 0 debt, error and fraud. Child Benefit Personal tax Tax free Tax reliefs & Other credit childcare allowances Trends in 2010/11 – 2017/18 (in real terms) 2016-17 forecasts are 34,000 based on OBR estimates. Personal tax credit 29,000
24,000
19,000 Child Benefit
£millions 14,000 Downward trend in child 9,000 benefit and tax credit in real terms over the course of 4,000 Tax reliefs and allowances the last Spending Review and into the new one Other -1,000 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 Main Estimates List of all departments explained Scotland
Main Estimates List of all departments explained SCOTLAND Scotland’s Block Grant in 2016/17 and 2017/18 (Main Estimate): (in cash terms) 2017-18 is first year of full devolution of income tax under Scotland Act 2016. In 2016-17 there was only partial devolution 30 of income tax related to Scotland Act 2012. Therefore, payover of income tax was smaller. 25 4.9 11.8
20 21.6
15 AME (Annually Managed Expenditure) £ billions £ 15.4 is demand-led spending outside spending limits (student loans, NHS 10 pensions, teachers’ pensions, NHS impairments) 5 5.1 3.3 3.4 3.8 0 Resource Capital AME
2016/17 2017/18 Scottish Rate of Income Tax Payover
Main Estimates List of all departments explained SCOTLAND Getting from Spending Review settlement to Main Estimate (block grant):
RESOURCE DEL BUDGET (day-to-day spending):
£27,356m £341m £12,450m £122m £6m £15,374m
Barnett Block grant Fiscal framework Other Consequentials adjustment for baseline additions movements Scotland’s 2017/18 Spending Review* devolved taxes Day-to-day spending settlement
This includes: This includes This includes + £140.9m from Business Income tax, -£41.6m R&D transfer from Rates Stamp duty tax resource to capital (accounting + £99.1m from social care and Landfill tax adjustment) +£34.2m Machinery of Barnett consequentials arise from Government transfers UK Government measures listed above.
However, the Scottish Government can spend the additional funds on other Additional £1bn Funds going to Northern Ireland as part functions. of the agreement between the Conservative Party and DUP in June 2017 will not lead to any additional funds to Wales or Scotland through Barnett Consequentials *includes depreciation and student loan charge
Main Estimates List of all departments explained SCOTLAND
Getting from Spending Review settlement to Main Estimate (block grant):
CAPITAL DEL BUDGET (Investment spending):
£41.6m £3,389m £3,191m £143.6m £13m City deals Barnett R&D transfer from Consequentials: Resource to Capital Spending Review Budget 2016 (change in accounting settlement policy) Scotland’s 2017/18 Investment Budget £11.6m for Aberdeen This includes: £1.4m for Inverness £44.6m from affordable housing grants £23.5m from accelerated build-out £10.7m from social transformation
Barnett consequentials arise from UK Government measures listed above.
However, the Scottish Government can spend the additional funds on other functions.
Main Estimates List of all departments explained Getting from Main Estimate (block grant) to Cash grant (money paid to Scottish Government): Various adjustments are made to DEL and AME budgets to get down to cash grant. Main adjustments are to remove non-cash elements of budget( £5.2bn) and National Insurance Fund 35.0 Payments towards Scottish NHS (£1.7bn).
30.0 Total AME in Pay-over of Scottish Rate block grant of Income Tax. This is 25.0 now paid in addition to 11.8 cash grant (£17bn) 5.1 20.0 Total DEL in block grant: £15.4bn resource 15.0
+ £billions £3.4bn capital 10.0 18.8 17.0
5.0
0.0 Scotland's Budget Cash paid to Scottish Government DEL adjusted downwards from Spending Review Total DEL Settlement for block grant AME adjustment of Scottish Rate Cash Grant Pay-over of Scottish Rate of Income Tax of Income Tax (£11.8bn)
Main Estimates List of all departments explained SCOTLAND Trends in Scotland’s Block Grant in 2010/11-2019/20: (Resource Departmental Expenditure Limit (DEL) in real terms) 2017-18 is first year of full devolution of income tax under Scotland Act 2016. In 2016-17 there was only partial devolution of income tax related to Scotland Act 2012. 35 Therefore, payover of SRIT was smaller.
30
25
20
15
10
5
0 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18
Resource budget Scottish Rate of Income Tax transfer
Main Estimates List of all departments explained SCOTLAND Devolution of Powers: TIMELINE
Holyrood
April 2015 April 2016 April 2017 April 2018 April 2019
VAT assignment (The receipts Stamp Duty tax Income Tax Full devolution of Income Tax Air Passenger Scotland Reserve comes into Duty raised in Scotland by the first 10 and Landfill tax (partial percentage points of the devolution) place/ extension of Scottish borrowing powers standard rate of Value Added Tax Welfare: Scottish (VAT) will be assigned to the Government to be given Scottish Government’s budget 2012 Scotland Act legislative powers over a series benefits in 2017/18, but not over delivery of some of them until April 2020
2016 Scotland Act ADDITIONAL POWERS DEVOLVED: POWERS ADDITIONAL
Main Estimates List of all departments explained SCOTLAND Scottish Income Tax : In 2017/18, the 2016 Scotland Act in relation to income tax comes into effect. For the first time the Scottish Parliament has the power to set all income tax rates and bands (except the personal allowance, which remains reserved) that will apply to income for tax year 2017/18. Read the IFS summary here
Scottish higher rate tax payers pay more tax: Differences between income tax schedules in Scotland and the rest of the UK 2017/18: Higher rate threshold Scotland:21.6 £43,000 Higher rate threshold rest of UK: £45,000
Block grant adjustment for Scottish Rate of income tax: Reduction by £11.750bn This is how much Scotland’s block grant is reduced by because Scotland now receives additional revenue from its own taxes Block grant reduction is determined by rates of income tax in the rest of UK
Pay-over of Scottish income tax: Transfer of £11.829bn to Scottish Government The HMRC collects income tax in Scotland on behalf of Scottish Government. Then this tax is transferred from HMRC back to Scotland Pay-over of Scottish income tax is determined by rates of income tax in Scotland
Pay-over of Scottish income tax > Block grant reduction £11.829bn £11.750bn
Therefore Scottish Gov decision raises taxes for itself
Main Estimates List of all departments explained SCOTLAND
The Barnett Formula Change (rise or fall) in Resource DEL budget determined by UK government
Extra funding available Population share to the governments of Share of change related to Share of change related to (compared to England or DEVOLVED FUNCTIONS Scotland, Wales and functions RESERVED TO England and Wales) Northern Ireland (e.g., health) UK GOVERNMENT (may also be a (e.g., defence) spending cut) Scotland’s population compared to England’s: 2010 Spending Review: 10.03% 2015 Spending Review: 9.85% This reduction in population share will mean slightly smaller increases and decreases in funding for Scotland from the Barnett Formula than would have resulted if These funds can be spent on the share had remained as before. ANY DEVOLVED FUNCTION
Example: Extra Increase of £100m in 75% relates to NO CHANGE TO THE UK Departments’ functions which are 9.85% £7.388m BLOCK GRANT Resource DEL budget. devolved; 25% are UK (Scotland’s population to Scottish provided to Scotland, reserved functions. compared to England) government Wales and Northern Block grant adjustments: in addition block grant adjustments can be made: reductions where taxes are Ireland devolved or additions where welfare is devolved. Main Estimates List of all departments explained Wales
Main Estimates List of all departments explained WALES Wales’ Block Grant in 2016/17 and 2017/18 (Main Estimate): (in cash terms)
16.0
14.0
12.0
10.0
8.0 Block grant to Wales Govt £'billions 13.9 14.0 (resource and capital) 6.0 remains largely unchanged from last year 4.0
2.0
1.6 1.6 - Resource Capital 2016-17 2017-18 Note: Cash grant is £14.3bn for 2017-18 . This is calculated by adding Resource and Capital and making adjustments including adding AME (Annually Managed expenditure) – mostly student loans and removing non- cash items.
Main Estimates List of all departments explained WALES Getting from Spending Review settlement to Main Estimate (block grant): RESOURCE DEL BUDGET (day-to-day spending):
£109.7m £71.3m £13,783m £9.7m £41.6m £14,001m Barnett Barnett Barnett Transfers from Consequentials: Consequentials: Consequentials: other Departments Spending Review* Budget 2016 Autumn 2016 Spring Budget 2017 Wales’ 2017/18 settlement Day-to-day spending This includes: + £81.4m from Business This includes: This includes: Rates + £8.5m from + £57.2m from + £9.7m from Academies Right to Buy social care + £5.3m from School sports Transfers from Home Office: premium £10.1m for police funding £7.2m health migrant levy
Barnett consequentials arise from UK Government measures listed above.
However, the Welsh Government can spend the additional funds on other functions. Additional £1bn Funds going to Northern Ireland as part of the agreement between the Conservative Party and DUP in June 2017 will not lead to any additional funds to Wales or Scotland through Barnett Consequentials *includes depreciation and student loan charge
Main Estimates List of all departments explained WALES Getting from Spending Review settlement to Main Estimate (block grant):
CAPITAL DEL BUDGET (Investment spending):
£1,522m £2m £68m £12m £1,604m
Barnett Barnett Barnett Consequentials: Spending Review Consequentials: Consequentials: Autumn 2016 Spring Budget 2017 settlement Budget 2016 Wales’ Capital DEL
This includes: This includes: £5.7m from health £11.9m from local roads capital £25.8m from affordable £6.2m from social housing grants transformation
Barnett consequentials arise from UK Government measures listed above.
However, the Welsh Government can spend the additional funds on other functions.
Main Estimates List of all departments explained WALES
Trends in Wales’ Block Grant in 2011/12-2019/20: 2015 Spending Review forecast a slight reduction in real terms in Wales’ Resource budget between Resource and Capital Departmental Expenditure Limit (DEL) 2015/16 and 2019/20. There is now an increase in real in real terms terms mainly due to increased allocations for UK government 16 departments awarded in Autumn Statements and budgets leading to 14 greater allocation to Wales 12 through the Barnett formula
10
8 £billions 6
4
2
0 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Resource budget 2015 SR planned resource Capital budget 2015 SR planned capital
Note: Figures prior to 2015/16 are not strictly comparable because various functions were devolved to Wales over the time period.
Main Estimates List of all departments explained WALES Devolution of Powers: TIMELINE
2018/19 2019/20
Stamp Duty land A new needs-based factor will Welsh Rates of tax and Landfill tax be included in the Barnett Formula Income Tax to determine changes to Welsh 2015 Wales Act 2015 Wales Act Government block grant funding. A transitional factor of 105% will be set for the moment, increasing to 115% in the future.
Increase in borrowing powers: ADDITIONAL POWERS DEVOLVED: POWERS ADDITIONAL The Welsh Government’s overall capital borrowing cap will be increased to £1bn. From April 2019, the Welsh Government’s annual capital borrowing limit will be increased to £150m.
Main Estimates List of all departments explained WALES 2018-19: a new needs-based factor will be included in the Barnett Formula to determine changes to Welsh Government block grant funding. A transitional factor of 105% will be set for the moment, increasing to The Barnett Formula 115% in the future. Change (rise or fall) in Resource DEL budget determined by UK government
Extra funding available Population share to the governments of Share of change related to Share of change related to (compared to England) DEVOLVED FUNCTIONS Scotland, Wales and functions RESERVED TO Northern Ireland (e.g., health) UK GOVERNMENT (may also be a (e.g., defence) spending cut) Wales compared to England: 2010 Spending Review: 5.79% 2015 Spending Review: 5.69% This reduction in population share will mean slightly smaller increases and decreases in funding These funds can be spent on for Wales from the Barnett Formula than would ANY DEVOLVED FUNCTION have resulted if the share had remained as before.
Example: CHANGE EXAMPLE NO CHANGE TO THE Extra Increase of £100m in 75% relates to BLOCK GRANT functions which are 5.69% £4.268m provided to Scotland, UK Departments’ devolved; 25% are UK to Welsh Wales and Northern Resource DEL budget. (Wales’s population reserved functions. government Ireland compared to England) Main Estimates List of all departments explained Northern Ireland
Main Estimates List of all departments explained NORTHERN IRELAND Northern Ireland’s Block Grant in 2016/17 and 2017/18 (Main Estimate): (in cash terms) Billions Block grant to Northern Ireland 12 Executive remains relatively unchanged from 2016-17 to 2017-18 10 10.6 10.5
8 Note: Cash grant is £15.7bn for 2017-18 . This is calculated by adding Resource and 6 Capital and making adjustments including
£ billions £ adding AME (Annually Managed expenditure) 4 – mostly public sector pensions and welfare and removing non-cash items. 2
1.0 1.2 0 Budget for Northern Ireland Office (in cash terms) NI Government Resource NI Government Capital (Figures in millions not billions) 2016/17 2017/18
35 31.6 Northern Ireland Devolution of 30 powers: 22.3 Corporation tax powers will be 25 devolved by April 2018, leading to 20 a reduction of the rate for 15 Northern Ireland Corporation tax 10
to 12.5% millions £ 5 (Stormont House Agreement) 0.6 0.5 0 Resource DEL Capital DEL
2016/17 2017/18
Main Estimates List of all departments explained NORTHERN IRELAND Getting from Spending Review settlement to Main Estimate (block grant):
Day-to-day spending (RESOURCE DEL budget):
£10,413m £115.4m £4.7m £10,524m Other Barnett movements Consequentials Northern Ireland’s Spending Review 2017/18 Day-to-day settlement This includes: spending + £4.2m from HO for This includes: Immigration Health Surcharge + £47.3m from Business Rates - £11.7m R&D transfer from (Budget 2016) resource to capital (technical + £33.3m from Social Care accounting adjustment) The Immigration Health Surcharge was (Budget 2017) introduced by the Home Office on 2015. Non-EEA residents coming to the UK for Barnett consequentials arise from UK Government more than six months have to pay money towards the National Health measures listed above. Service (healthcare in the UK).
However, the Northern Irish Executive can The Surcharge is collected by the Home Office and after deducting a small spend the additional funds on other functions. amount for collection costs, is transferred to the Department of Health and the three devolved administrations.
Main Estimates List of all departments explained NORTHERN IRELAND
Getting from Spending Review settlement to Main Estimate (block grant):
Investment spending (CAPITAL DEL BUDGET):
£1,209m £1,137m £48.4m £13m £11.7m
Barnett Funds carried R&D transfer from forward from Spending Review Consequentials Resource to Capital previous year (change in accounting Northern Ireland’s settlement policy) 2017/18 Investment Budget
This includes: £15.0m from affordable housing grants (Autumn Statement 2016) £7.9m from accelerated build-out (Autumn Statement 2016) Barnett consequentials arise from UK Government measures listed above.
However, the Northern Irish Executive can spend the additional funds on other functions.
Main Estimates List of all departments explained NORTHERN IRELAND What will the £1bn of future additional funds support? (Additional funding agreed between the Conservative party and the DUP) NOTE: Additional £1bn Funds going to Northern Ireland as part of the (£200m for 2 years) agreement between the Conservative Party and DUP in (£50m for 2 years) June 2017 are not part of this Main Estimate, and will not lead to any additional funds to Wales Pressures in health Infrastructure development or Scotland through Barnett and education Consequentials
(£10m for 5 years) (£75m for 2 years) (£100m for 2 years)
Support for mental health
Broadband Health Service development Transformation
(£20m for 5 years)
Target pockets of severe deprivation
Main Estimates List of all departments explained NORTHERN IRELAND
Trends in Northern Ireland’s Block Grant in 2010/11-2019/20:
Additional funding from the agreement Resource and Capital Departmental Expenditure Limit (DEL) between the Conservative Party and DUP in real terms in June 2017 will be added to these totals in the due course
12
10
8
6 £ billions £
4
2
0 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Resource budget 2015 SR planned resource Capital budget 2015 SR planned capital
Main Estimates List of all departments explained NORTHERN IRELAND
The Barnett Formula Change (rise or fall) in Resource DEL budget determined by UK government
Extra funding available Population share to the governments of Share of change related to Share of change related to (compared to England or DEVOLVED FUNCTIONS Scotland, Wales and functions RESERVED TO England and Wales or Northern Ireland (e.g., health) UK GOVERNMENT Great Britain) (may also be a (e.g., defence) spending cut) Northern Ireland compared to England: 2010 Spending Review: 3.45% 2015 Spending Review: 3.39% This reduction in population share will mean slightly smaller increases and decreases in funding for Northern These funds can be spent on Ireland from the Barnett Formula than would have ANY DEVOLVED FUNCTION resulted if the share had remained as before.
Example: Extra NO CHANGE TO THE 75% relates to BLOCK GRANT Increase of £100m in UK Departments’ functions which are 3.39% £2.543m provided to Scotland, Resource DEL budget. devolved; 25% are UK (Northern Ireland’s to Northern Irish Wales and Northern population compared reserved functions. government Ireland to England) Main Estimates List of all departments explained Categories of spending: 1. DEL (Departmental Expenditure Limits) ‐ the fixed spending limits set for each government department in Spending Reviews, covering discretionary spending. 2. AME (Annually Managed Expenditure) ‐ types of demand-led spending outside these spending limits, which is reforecast each year by the OBR. Large liabilities – in reality payable over many years ‐ can sometimes be recognised in one year, but payable over many. AME can be difficult to control
1. Resource ‐ current spending on running costs of providing services and maintaining assets 2. Capital ‐ investment spending on creating, purchasing and disposing of assets. Capital spending can fluctuate more than resource. Specific funding may be provided for specific big projects
“Cash”, or nominal terms: budgets are set in cash terms, which do not take into account inflation. Real terms: figures take into account expected or known inflation. Where cash reductions are shown between years, reductions in spending power, in real terms, are always greater; cash increases are lower. The spending categories used are based on groups of programmes or “subheads” used by the Government in its Main Estimates and previous Annual Reports and Accounts.
Main Estimates List of all departments explained