2017/18 main estimates - uk parliament€¦ · what are the main estimates? main estimates are the...

2017/18 Main Estimates:

Overview of Government Spending Plans

for 2017/18

SCRUTINY UNIT

Strengthening scrutiny through specialist support

If you have any questions, comments, feedback on this document’s usefulness or otherwise, and any suggestions for inclusion in a future year’s edition, please contact Larry Honeysett in the Scrutiny Unit [email protected]

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

mailto:[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 explained

List of all departments

Spending Review settlement sets DEPARTMENTAL SPENDING TOTALS (DELs) for 2016-17 to 2019-20.

Decisions on changes to benefits designed to make FUTURE SAVINGS (AME). BARNETT CONSEQUENTIALS for next four years calculated for Scotland, Wales

and Northern Ireland.

Further changes to future taxes and spending. The Finance Bill enacts tax changes; spending changes are enacted instead through ESTIMATES (see below).

Parliament votes each Department an advance of funds for the first four months of the year based on last year’s spending totals

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 are for relevant Parliaments.

Departments provide a memorandum explaining the content of the Main Estimate. An incoming government may choose to withdraw and replace individual Estimates before they

are voted upon (i.e. present “Revised Estimates”)

How do departments get their funding?

In absence of committees, following General Election, there is little opportunity

for scrutiny before Estimates are authorised

No ESTIMATES DAY DEBATES because of

General Election

SPENDING REVIEW

VOTE ON ACCOUNT

THE BUDGET

MAIN ESTIMATES

Later in the year Departments publish SUPPLEMENTARY ESTIMATES, showing proposed changes to in- year budgets.

These will be voted upon in March 2018

SUPPLEMENTARY ESTIMATES

Main Estimates expected to be approved by the House

Committees briefed on content of Main Estimates 2016-17 by Scrutiny Unit(this is what you are now

reading)

October 2015

March 2016

April 2017

March 2017

June 2017 July 2017

February 2018

Departmental Ministers consider PRIORITIES, how to make EFFICIENCY SAVINGS and how to SHARE OUT each Department’s budget

“The Divvy Ups”

Scrutiny Unit provides briefing on Estimates for

Members, for information(this is what you are now

reading)



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

What is the current role of the House and Select Committees in considering Estimates?

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 [email protected] for more information.

Calling Ministers or officials to appear to discuss spending and priorities

outlined in the Main Estimate

Drawing on information in the Estimates as part of current

Committee inquiries

Writing to departments questioning any issues arising

from the Estimate

Examples of how they might exercise this:



mailto:[email protected]

Proposed reforms to the way Government spending plans are authorised:Main recommendations by Procedure committee (Apr 17):

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

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

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 Day Debates

Devolved Spending

The Government should improve Estimates documentation making it easier to understand, and make Estimates data available electronically

Estimates Documentation

Timeline

CLICK HERE to read Procedure Committee report



https://www.publications.parliament.uk/pa/cm201617/cmselect/cmproced/190/19002.htm

Proposed reforms to Government accounts:Main recommendations by PACAC (Apr 17):

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

Accounts are primarily there to be credible records of the value for money and Parliamentary accountability of Government Departments.

Accounts should tell us how much major projects, programmes and services cost

Accounts should provide audited performance information about major projects, programmes and services

Departments should present the previous five years of spend in their accounts and a forecast to the end of the spending review

What are the goals of publishing Accounts?

Assessing Value for Money

Accounts should tell us whether the government has met commitments to spend or save made by ministers

Accounts should reconcile the eventual spending and income to the spending and income forecast in the Spending Review as well as the Estimates

Departments should consult with the relevant select committee about the contents of the accounts including about

how expenditure should be segmented and what information they would like to see

Supporting UK Parliament

Publication standards

CLICK HERE to read PACAC report



https://www.publications.parliament.uk/pa/cm201617/cmselect/cmpubadm/95/9502.htm

Departments (click on the link to view slides for each department):

Cabinet Office

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

Sources



Cabinet Office



Maintain the integrity of the Union

Ensuring the delivery of the Government’s programmes

and the PM’s priorities

Improving the efficiency and

responsiveness of government

Ensuring the effective running of the

department

European Parliament

ElectionsArms Length Bodies

Cabinet Office: 2017/18 Day-to-day spending by area:(Resource Departmental Expenditure limit, cash terms)

£150.6m

£61.9m£91.4m

£46.7m

£4.8m

£2.8m

£2.9m

Total Day-to-day Spending:

£361m

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(mainly the Office for Civil Society).



Cabinet Office: significant movements of funds(Resource Departmental Expenditure limit, cash terms)

-£4.74m: Transfer of the Global Affairs

Secretariat to DExEU(Machinery of government changes)

-£284.4m: Transfer of the Office of the Civil Society to DCMS

(Machinery of government changes)

+£8.19m: Extra funds from the Treasury for the transfer of Infrastructure UK

to merge with the Major Projects Authority

+£30m: Transfer from MOD to support the National Security Secretariat, Joint

Intelligence Organisation, Cabinet Office briefing rooms

-£3.7m: Transfer of the Great

Campaign to DIT(Machinery of government

changes)

CABINET OFFICE



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

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

CABINET OFFICE



https://www.nao.org.uk/wp-content/uploads/2016/12/Crown-Commercial-Service.pdf

https://www.nao.org.uk/report/shared-service-centres/

https://www.nao.org.uk/wp-content/uploads/2017/04/Progress-on-the-government-estate-strategy.pdf

The Cabinet Office also sets a number of other standards for the rest

of government. These include Counter Fraud Standards

The Cabinet Office is involved in setting standards for the rest of government in

lots of areas. These include:

Cabinet Office spending controlsThese 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

CABINET OFFICE



Business, Energy and

Industrial Strategy



2,3371,983

0

500

1,000

1,500

2,000

2,500

3,000

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

-£33m: spending on the

Regional Growth Fund

from £63m

to £30m

£ m

illio

ns

BEIS Resource (Programme and Admin) Budget: Trends

15%reduction

Resource DEL (Departmental Expenditure Limits)(in nominal terms) (restated for previous and future years to take into

account change of departmental functions)

Changes from BIS to BEIS budget:Machinery of government: removed education and international

trade budgets; added energy and climate change budgets

Major reductions (2017/18 compared to 2016/17):

+£9.2m: extra funds for new nuclear

£116m: funds held in reserve for 2017-18

and yet to be allocated

-£270m: the support provided for

energy intensive industries

-£45m: the Post office

network subsidy

from £140m

to £95m -£11.9m: spending on

renewable energy

from £12.6m

to £0.8m

-£8.6m: Oil and Gas

Authority spending

from £11.1m

to £2.5mThis reflects ending of time limited seismic survey funding

-£21m: overall administration

spending

from £353m

to £332m

Spending increases/extra funds:

BEIS



BEIS Capital (investment) Budget: Trends

11,27410,896

0

2,000

4,000

6,000

8,000

10,000

12,000

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

£ m

illio

ns

3.3%reduction

Capital DEL (Departmental Expenditure Limits)(in nominal terms)

(restated for previous and future years to take into account change of departmental functions)

BEIS



This is partially offset by:

+£73m for Northern Powerhouse

+£38 m for Midlands Engine

+£47m for energy innovation and heat

2017/18 BEIS Capital (investment) Budget breakdown:

Science and Research:

c.£6,000m

Industrial Strategy and Investment:

c.£2,500m

Nuclear Decommissioning:

c.£2,000m(No major changes compared to last year) (No major changes

compared to last year)

(Down from £3,000m in 2016/17)


-£35m: Post Office

transformation

from £80m

to £45m

-£766m: Green Investment

Bank

from £985m

to £219m

-£269m: British Business Bank

from £390m

to £121m

-£188m: The Regional Growth

Fund

from £220m

to £32m

+£421mAdditional funding of for

research and innovation is held centrally, and currently not included in science and

research budget

BEIS




Source: NDA: Nuclear Provision: the cost of cleaning up Britain’s historic nuclear sites

Source: 2015-16 DECC Annual Reports and Accounts, p. 37

Past experience over the last few years has

been that costs will continue to rise as it becomes clearer what work is involved.

BEIS has included a provision for an

additional £1, 748m future costs in its 2017-18 Main Estimate – scores as Annually Managed Expenditure (AME)

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

2017-18 DEL budget for nuclear decommissioning work: £1,998m capital £300m resource

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,

there is a credit back to AME.

DEL- covers costs which BEIS is expected to manage in year

from budgets set by the Treasury in Spending Reviews

AME- more difficult to forecast costs, such as recognition of

provision for future nuclear decommissioning work, and future

additional estimated costs under Contracts for Difference.

BEIS



https://www.gov.uk/government/publications/nuclear-provision-explaining-the-cost-of-cleaning-up-britains-nuclear-legacy/nuclear-provision-explaining-the-cost-of-cleaning-up-britains-nuclear-legacy#latest-estimate

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/537390/2015-16_DECC_Annual_Report_and_Accounts.pdf


Sites and the percentage of the undiscounted nuclear provision forecast to be spent at each site

Source: NDA: Nuclear Provision: the cost of cleaning up Britain’s historic nuclear sites

The majority of the costs relate to the

Sellafield site.

BEIS



https://www.gov.uk/government/publications/nuclear-provision-explaining-the-cost-of-cleaning-up-britains-nuclear-legacy/nuclear-provision-explaining-the-cost-of-cleaning-up-britains-nuclear-legacy#latest-estimate

Communities and

Local Government



0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2015-16 2016-17 2017-18 2018-19 2019-20

£ b

illio

ns

Resource CapitalDCLG’s share of government spending on Resource DEL :

2015/16:

7.1%

DCLG’s share of governmentspending on Capital DEL :

2015/16:

0.5% 2019/20:

0.4%

2019/20:

7.2%

Capital budget planned to be

£500m higher in 2019-20 compared to 2015/16

Resource Spend:• The government will continue to invest in the Troubled Families programme to deliver

better outcomes for 400,000 families by 2020 with efficiencies found from centralbudgets.

• From 2017-18 the government will devolve and reform increased funding for managing

temporary accommodation, giving local authorities more control and flexibility.

Capital Spend:• Increased budget will fund housing schemes such as Starter Homes and Help to Buy

• DCLG will invest in digitising the collection of local taxes to generate efficiencies

DCLG will continue to oversee delivery

of devolution deals agreed with city

regions and other areas.

2015-2020 DCLG (Department) Resource* and Capital DEL budgets (in cash terms)

What the 2015 Spending Review told us:

29% cut to the resource budget,

including a 20% reduction in the department’s paybill

*Resource does not include New Homes Bonus funding, which was in the LG DEL at the SR

DCLG



DCLG (Department): How does the spending compare to 2016/17?

2,6422,910

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2016/17 2017/18

Day-to-day Spending: Resource DEL budget (in cash terms)

10% increase largely due to funds carried over from previous year. This includes:

£200m for the Affordable Homes programmes dueto delays

£59m for Troubled Families

£16m for controlled migration

£17.5m for homelessness

DCLG



214

1,878

148 17036

19695

2,138

218 239

37173

0

500

1,000

1,500

2,000

2,500

Local Government andPublic Services incl ALB

Housing and Planning inclALB

Decentralisation and LocalGrowth

Troubled Families Research Data and TradingFunds

DCLG Staff building andinfrastructure costs

2016/17 2017/18

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)

£ m

illio

ns

This includes extra £150m to expand the right to buypilot

DCLG



DCLG (Department) Main areas of Investment spending in 2017/18:

5,1856,512

0

1000

2000

3000

4000

5000

6000

7000

2016/17 2017/18

£ m

illio

ns

Investment Spending: Capital DEL (Departmental Expenditure Limits) (in cash terms)

Additional funds include:

+£455mfor affordable

housing+£240m

+£50m

to deliver 40,000 low rent or low cost homeownership homes

to help provide infrastructure to unlock new private house building in areas where there is high demand for housing

to deliver houses on surplus public land

26% increase, mainly due to extra

funds for affordable housing

DCLG



7.23.9

12.114.7

26.1 27.6

0

5

10

15

20

25

30

35

40

45

50

2016/17 2017/18

Council Tax

Retained income fromBusiness Rates

Revenue Support Grant

Local Government funding in 2017/18: How does it compare to 2016/17?

Average 4% increase to council tax bills. Includes

£552m raised by the social care precept

1.7% overall

increase in funding

£ b

illio

ns

Additional funding for Local Government:

+£1,010mfor Adult Social Care

+113m

for Business Rate Relief

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.

Source: DCLG report

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

DCLG



https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/603781/Council_tax_levels_set_by_local_authorities_in_England_2017-18.pdf

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

Extra funding for fire safety measures

Percentage increase in levels of homelessness since 2009 (2010) Child Protection Orders inquiries have increased dramatically over the last ten years. In 2005/6 there were 71,800 Child

Protection Orders inquiries, in 2015-16, the

LGA reported that there were over 170,000 inquiries.

32%

102%

0%

20%

40%

60%

80%

100%

120%

2009 2010 2011 2012 2013 2014 2015

Households found to behomeless by localauthority

Rough sleepers (since2010)

CHALLENGE: Rising levels of homelessness

Growing funding gap within local councils (currently

estimated at £5.8bn)

DCLG: CHALLENGES

Adult Social Care: The OBR forecast that Adult Social Care spend will

go from 1% of GDP in 2016-17 to 2% of GDP in 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.

DCLG



Culture, Media and Sport



£ b

illio

ns

2015-2020 Department for Culture, Media and SportResource and Capital DEL budgets (in cash terms)

Share of government spending onResource DEL for DCMS:

Share of government spending onCapital DEL for DCMS:

2015/16:

0.35%2019/20:

0.34%

Agreed funding for a number of

capital projects , from flat baseline

of £400m per year, totalling £1.6bn over 2015/16-2019/20

Arts, national museums and galleries funding nowprotected in cash terms until 2019-20.

Free museum entry stays. Completion of superfast broadband programme to

make available to 95% of premises by 2017. Increased funding for elite sport ahead of Rio 2016

2015/16:

0.92%2019/20:

0.60%


DCMS



-22

514 510

137 142

337

4

515481

13297

349

-100

0

100

200

300

400

500

600

Olympics MuseumsGalleries and

Libraries

Arts and Heritage Sports Broadcasting andMedia

Other

2016/17

2017/18

1,633 1,578

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2016/17 2017/18

£ m

illio

ns

What new information is there? How does spending compare to 2016/17?

Spending is largely flat across the categories

3%reduction

+£283m Transfer of responsibility for Civil Society from Cabinet Office

-£44m Reduction in budget for National Citizens Service

Day-to-day Spending: Resource DEL budget (in cash terms) Largest changes:

Under ‘Other’ spending category

Under ‘Other’ spending category

Areas of Day-to-day spending:

BBC and Lottery funding is separate from these totals, in Annually Managed Expenditure

DCMS



106

78

38

121

80 86

37

246

0

50

100

150

200

250

300

Museums Galleries andLibraries

Arts and Heritage Sports Broadcasting and Media

2016/17 2017/18

£ m

illio

ns

£ m

illio

ns


354449

0

100

200

300

400

500

2016/17 2017/18

31%increase

Investment Spending: Capital DEL budget (in cash terms)

Increase largely due to:+£14m: re-classification of R&D costs from resource to capital

+32m: carry-over from previous year for Blythe House and BDUK

+£25m: 5G Digital Infrastructure Investment (first tranche of

overall ~£700m for digital communications as part of the National Productivity Investment Fund)

Investment spending on Museums, Galleries and Libraries , and Arts and Heritage has varied a lot throughout last 5 years.

Spending Review commitment that funding for’ arts, national museums and galleries’ would be protected in cash terms until 2019-20 clearly

does not extend to investment spending

DCMS



Education



What the 2015 Spending Review told us:Resource and Capital DEL budgets (in cash terms)

£ b

illio

ns

Share of government spendingon Resource DEL for DfE:

Share of government spendingon Capital DEL for DfE:

2015/16:

10.53% 2019/20:

8.84%

Capital spending on

schools broadly maintained in cash terms,

fall in real terms

2015/16:

17.01%

2019/20:

17.39%

Protect the overall school budget in real terms

Protect per pupil spending in cash terms on:

dedicated schools grant (up to 16)

pupil premium

national base rate for 16-19 year olds

• Plan to phase out the additional funding schools receive through

Education Services Grant, saving £600m

Government commitments:

DFE



63,232 64,850

11,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000


What new information is there?£

mill

ion

s

The remaining Day-to-day spending has gone up by 2.5%

Extra £11,000m were added in last year’s supplementary Estimate to cover increased

estimated student loan impairments.

Admin costs are down by 1.2%Bigger savings are required in future

years (further 7% over two years)

2016/17 2017/18

Budgets restated to take in new Higher and further education functions

Extra funds in 2017/18 Day-to-day budget (compared to 2016/17):

For the Education and Skills funding agency, as a result of the apprenticeship levy. The adult education budget has been protected in cash terms

£465.7m

For the National College for Teaching and Leadership’s Innovation fund (TLIF) and for an increase in teacher recruitment for the EBacc

£64.8m

£11.8mFor 12 opportunity areas to support local partnerships formed with early years providers, schools, colleges, universities, businesses, charities and local authorities

Blackpool, Derby, Norwich,

Oldham, Scarborough, and

West Somerset, Bradford,

Doncaster, Fenland & East

Cambridgeshire, Hastings,

Ipswich and Stoke-on-Trent

Areas selected based on

social mobility Commission

report’s social mobility index

£8mFor international programmes (transfer from BEIS, not new money)

DFE



36.3 3739.9 41 42 42.6

0.40.9

0

10

20

30

40

50

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 E2016-17 to 2019-20: Secretary of State’s statement to the House on 17 July 2017

Per pupil funding maintained in real terms until 2019-20

Spending per pupil will be minimum of £4,800 persecondary school pupil by 2019-20. Average per pupil rate(5-16 year olds) was £4,612 in 2015-16

There will be a 0.5% per pupil per year increase forevery school from 2017-18 to 2019-20

Core schools budgets, 2014/15 – 2019/20: £ billion

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 money from Treasury

Savings of at least £200m to come from DFE’scentral programmes

Will now increase

to 42.4Will now increase

to 43.5

DFE



Cumulative cost pressures on schools remain

Source: NAO: Financial Sustainability of Schools, p. 15

The DfE estimates cumulative cost pressures on schools of 3.4% in 2016-17,

rising to 8.7% by 2019-20

DFE



https://www.nao.org.uk/wp-content/uploads/2016/12/Financial-sustainability-of-schools.pdf

5,975

5,183

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2016/17 2017/18

Investment Spending: Capital DEL (Departmental Expenditure Limits)(in cash terms)

What new information is there?£

mill

ion

s

13%reduction

-£223m: spending on the Priority

Schools Building Programme (the first

phase nears completion)


-£325m: Spending on the Basic Need

funding for additional school places (This funding is allocated by

formula based on the number of new school places required.)

2017-18 Capital costs for Aggregator Vehicle Ltd (a company which provides Private finance for the Priority Schools

Building programme) have not yet been included. DFE expects to add

these in its supplementary estimate.

This amounted to £339m last year

+£17.4m: for Further education

capital (National College projects)

+£34.7m: for Student Loan

Company new policies

Savings of £420m in capital spending (£315m ofthat will come from healthy pupils capital funding);

Savings of £280m in free schools programme (up to

2019-20). This includes delivering 30 of 140 newschools through local authorities

Source: Secretary of State’s announcements made in July 2017

Savings expected for future years:

DFE



29%19% 16% 14% 9%

2% 2% 2% 1% 1%0%

20%

40%

60%

80%

2012 2013 2014 2015 2016

Outstanding Good Requires improvement Inadequate

Primary Schools:

Secondary Schools:

Performance of both

primary and secondary

schools has been

improving

Percentages in the charts are rounded and may not add to 100

Overall effectiveness judgments, 2012-2016

30%24% 23% 21%

16%

3% 5% 6% 5% 5%0%

20%

40%

60%

2012 2013 2014 2015 2016

Outstanding Good Requires improvement Inadequate

DFE



There are 110,000 more pupils in the school system in June 2017 than in January 2016

Growing number of pupils:

State-Funded Primary Schools

State-Funded Secondary Schools

4.69 million

3.22 million

Independent Schools

Special Schools0.11 million

0.58 million



0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Early years budget 5-16 budget Pupil premium freeschool meals

primary

Pupil premium freeschool meals

secondary

Pupil premiumservice children

Pupil premiumlocal authority care

children

16-19 budget

2014-15

2015-16

2016/17

16/17:N/A

Average spending per pupil, £:Note these are average funding

only - there is big variation between

different schools and areas

The Government originally said that no school would lose

more than 1.5% per pupil in any one year, or more than 3%

across the years. Increases would also be capped. (3% per

pupil 18-19 and 2.5% per pupil in 19-20), in cash terms.

National Funding Formula:

There are large differences between the amounts that different

schools receive per pupil. These are largely historic, based on needs many

years ago. National Funding is updated for increased numbers of school

pupils, but otherwise on a cost plus basis.

Local authorities have their own local formulae for distributing the

money they receive (inc. for academies)

The 2015-17 government consulted on a new national funding formula.

This was planned to be implemented starting 2018-19 (at local authority

level) and for 2019-20 at school level.

(For further information, read the HoC Library Note)

In July 2017 the Government went further and promised Per pupil funding would be maintained in real terms until

2019-20

Spending per pupil would be minimum of £4,800 per secondary school pupil by 2019-20.

There would be a 0.5% per pupil per year increase for every school from 2017-18 to 2019-20

Implementation of new formula at schools level deferred

until 2020-21

DFE



http://researchbriefings.files.parliament.uk/documents/SN06702/SN06702.pdf

Environment, Food and

Rural Affairs



£ b

illio

ns

Resource and Capital DEL budgets (in cash terms)

Share of government spending onResource DEL for DEFRA:

Share of government spending onCapital DEL for DEFRA:

2015/16:

0.48%2019/20:

0.43%

Capital budget remains flat over period, efficiency savingsover time to reduce resource

spending

Capital £2.3bn to be invested in flood defences over six year period:

1,500 schemes ‘Better protect over 300,000 homes’

£130m investment in DEFRA’s science estates by 2021

Resource Spending: Flood defence maintenance funding to be protected Protection of over £350m of funding for National Parks, forests

and Areas of Outstanding Natural Beauty

2015/16:

1.14%2019/20:

1%


DEFRA



1,898 1,873

0

500

1,000

1,500

2,000

2016/17 2017/18




Due to uncertainty over the resource/capital

requirements of the Environment Agency (EA) for

flood prevention, DEFRA holds budget as

Resource at the beginning of the year. However, it

can be transferred into Capital budget later on.

£ m

illio

ns

671 685

0

200

400

600

800

2016/17 2017/18

£ m

illio

ns

2.1% increase (£14m) due to additional flood management funding

1.3% reduction (25m):£34.5m reduction in admin£9.5m increase in programme spending

Day-to-day spending budget is £60m higher than planned at 2015 Spending Review

This is largely due to:

+£40m for flood maintenance

+£15m transfer from DfiD for

additional Official Development Assistance

DEFRA



16

94

15

472

73

7

86

14

443

134

0

100

200

300

400

500

Support anddevelop farming

Environment andbiodiversity

Animal and plantdiseases

Flood Protection Other(Departmental

Operating costs)

£m

illio

ns

2016/17 2017/18

260

568

211

358

501

202

482

207

339

642

0

100

200

300

400

500

600

700

Support anddevelop farming

Environment andbiodiversity

Animal and plantdiseases

Flood protection Other(Departmental

Operating costs)

£ m

illio

ns

2016/17 2017/18

Day-today spending: Resource DEL budget expenditure (in cash terms)

Investment: Capital DEL budget expenditure (in cash terms)

Areas of spending:

Increase due to transfer of corporate service budgets from other spending categories to ‘core Defra’.

Has the effect of reducing spending in other categories

An internal re-structuring has caused

large movements in (from Better

Regulation and Waste programmes)

and out (Natural environment and EU

and International Trade programmes)

2016-17 investment budget is higher

because there was a transfer from

resource budget for EA, and allocation of

flood defence funding following 2015-16

winter floods

Increase due to investment in the science estate and IT infrastructure

DEFRA



Flooding: background

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

Resilience to flooding must be improved, with greater liability for unsatisfactory developers.

Key findings and recommendations from EFRA Committee Inquiry into Future Flood Prevention(October 2016):

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

The Report also indicated current planned maintenance spending will be inadequate

in the medium-term….

DEFRA



https://www.publications.parliament.uk/pa/cm201617/cmselect/cmenvfru/115/115.pdf

Flooding: funding structure

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.

2016/17 Central Government funding for Flood and Coastal Erosion Risk Management (FCERM): £735.6m

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.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/549093/Funding_for_Flood_and_Coastal_Erosion_in_England_Sep_2016.pdfSource:

DEFRA



https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/549093/Funding_for_Flood_and_Coastal_Erosion_in_England_Sep_2016.pdf

Flooding: planned spending

Sources: http://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-7514

https://www.gov.uk/government/publications/reducing-the-risks-of-flooding-and-coastal-erosion-an-investment-plan-2014

Expenditure on Flood and Coastal Erosion Risk Management, Resource and Capital (real terms)

Additional funding planned since the 2015 Spending Review:

£200m additional capital investment following 2015/16winter floods

£700m (£140m for maintenance) for flood defence andresilience, in the March 2016 Budget

0

100

200

300

400

500

600

700

800

900

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

six-year funding commitment of

£2.3bn from 2015 Spending

Review, following Defra’s 2014

Investment Plan.

Future resource budgets only currently contain

agreed flood defence maintenancefunding; further increases in resource budgets will be confirmed annually – partly reflecting

the approach of topping-up after unpredictable flood events

£ m

illio

ns

In addition, DCLG is getting £27.2m from the Treasury for ‘coastal Communities’ (potentially for flood defence and/or maintenance)

DEFRA



http://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-7514

https://www.gov.uk/government/publications/reducing-the-risks-of-flooding-and-coastal-erosion-an-investment-plan-2014

Exiting the EU



101.0 100.0 95.2

0

20

40

60

80

100

120

2016/17 2017/18 2018/19 2019/20

Planned future budget

Previous years

Current budget

£ m

illio

ns

£ m

illio

ns

0.1

1.5

0.1 0.10

1

2

3

2016/17 2017/18 2018/19 2019/20

Planned future budget

Previous years

Current budget

Investment Spending: Capital DEL (Departmental Expenditure Limits)(in nominal terms)

Day-to-day Spending: Resource DEL (Departmental Expenditure Limits)(in nominal terms)

2016/17 Spending provision

£48.9m started mid-way in the financial

year (department was set up in July)

DExEU: planned spending

DEXEU



DExEUsupports the Prime Minister to deliver the Government’s objective of exiting the EU, including:• the negotiation of the UK’s future relationship with the EU

The policy work to support the UK’s negotiations to leave the EU and to

establish the future relationship between the EU and the UK

Working very closely with the UK’s devolved administrations, Parliament, and a wide range of other interested parties on what the approach to those

negotiations should be

Conducting the negotiations in support of the Prime Minister including supporting bilateral discussions on

EU exit with other European countries

Leading and co-ordinating cross-government work to seize the opportunities and

ensure a smooth process of exit on the best possible terms

Key Responsibilities

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 to understand and capture their views

Establishing the department and setting it up to succeed

Main Priorities of DExEU:

DEXEU



Foreign and

Commonwealth Office



Spending trends:

RESOURCE DEL BUDGET (Day-to-day spending), cash terms:

1,971 2,067 2,138

0

500

1,000

1,500

2,000

2,500

2015/16 2016/17 2017/18

CAPITAL DEL BUDGET (Investment), cash terms:

139

62

134

0

50

100

150

2015/16 2016/17 2017/18

£ m

illio

ns

£ m

illio

ns

Net spending reduced by higher level of income from capital assets (e.g., buildings)

4.7% increase in real terms from 2015-16 to 2017-18

Spending Review 2015 noted that the FCO budget would be

protected in real terms

FCO



Reconciliation between Main Estimate 2017/18 and Spending Review settlement:

RESOURCE DEL BUDGET (Day-to-day spending):

£1,169m£220m

£2,138m2017/18 FCO

Resource budget

Spending Review Settlement

Transfer from DFID for

CSSF (Conflict, Security and

Stability Fund )

Autumn Statement

2016 uplift for Trade Officers

£808m

Transfer from DFID

£436m for conflict prevention

£372m for peacekeeping

This includes: £96m for ODA

£72m for BBC world service

£28m for Scholarships

£23m for British Council

£10.4m

Net transfers to/from other Departments

This includes: £14.2m from other

departments for FCO platform

£5m to Cabinet Office for Commonwealth Heads of Government

2.5m to MoD for Falkland's demining

£68.5m

Treasury’s non-cash reduction

£1.5m £2.9m

Transfer of European

Directorate to Dept for

Exiting EU (Machinery of Government)

FCO




CAPITAL DEL BUDGET (Investment):

£98m £134.4m2017/18 FCO Capital

budget


Uplift for receipts banked

in 2016-17

£33m £3.4m

Transfer from BEIS for Science and

Innovation network

FCO uses receipts from capital (mostly building) disposals to increase its

capital budget

FCO



Conflict, Stability and Security Fund (CSSF)

The CSSF came into being on 1 April 2015 and replaced the Conflict Pool.

It brought together existing conflict resources (the Conflict Pool and the Peacekeeping Budget) along with defence, diplomatic, development, security and intelligence capabilities.

Scope: Conflict reductionDevelopment assistance Tackling threats to UK

interests. Funding the UK’s contributions

to multilateral peacekeeping budgets and related commitments.

Initially held in

DFID’s budget.

Conflict, Stability and

Security FundGoverned by the National

Security Council

MOD

HMRCNational Crime

AgencyHome Office

Throughout the financial year, the CSSF funds are transferred to other

departments (though DFID will retain some funds for itself)

Other departments

e.g. DEFRA etc.

FCO

FCO



Health



102114

16

14

0

20

40

60

80

100

120

140

2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

NHS TDEL Rest of DH

2014-2021 Department of HealthTotal departmental budget (in 2017/18 real terms)

12.5% cut to budgets outside NHS

England from 2015/16 to 2020/21 ,including public health, health educationand Care Quality Commission

12% increase to the NHS

budget from 2015/16 to 2020/21

DH’s share of total government spending on Resource DEL :

DH’s share of total government spending on Capital DEL :

2015/16:

35.4%

2019/20:

37.8%

2015/16:

11.0% 2019/20:

9.6%

£ b

illio

n


NHS’s share of total DH budget:

2014/15: 86.4%2020/21: 89%

HEALTH



What new information is there?

0

1

2

3

4

5

6

7

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

£ b

illio

ns

Capital (investment) spending, in real terms2017/18 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.

“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

In 2016-17, DH transferred £1.2bn (20%) from capital to resource to mitigate

pressures on the providers (like hospitals).

HEALTH



How much is the Department expecting providers to spend in 2017/18? How does it compare?

Resource DEL expenditure by all NHS trusts andNHS Foundation Trusts (in nominal terms)

Provider Deficits:0

10

20

30

40

50

60

70

80

2014/15 2015/16 2016/17 2017/18

£ b

illio

n

NHS Improvement worked with poorly performing providers to try and reduce their deficits through Financial Improvement plans.

Some providers sold property and improved

their collection of income from other parts of the health service.

2015/16 Deficit:£2,500m

2016/17 Deficit:£791m 2016/17 Target:

£580m

2016/17 Deficit has exceeded the target largely because acute

trust deficits were £285m greater than planned

HEALTH



Source: IFS: Spending on Public Services

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.

Neither party has provided an analysis of how it would fund increase in Health

spending or reduce its long term growth.

HEALTH



https://www.ifs.org.uk/uploads/Presentations/Rowena Crawford, 2017 General Election, manifesto analysis.pdf

BREXIT7.9m

10.7m

PressuresAgeing population:

39% increase in 65+ population


Source: King’s Fund Demography

Over the next 20 years:

Rise in long-term conditions:

Source: Health Select Committee Managing the care of people with long term conditions p. 3

Estimated increase in the number of people with long-term conditions:

2014 2025

15m

18m

Workforce pressures:

Demands on Hospitals:

No corresponding budget rise for ambulance trusts

Source: NAO report on NHS Ambulance Services

Increase in ambulance calls andNHS 111 transfers:

2009/10 2015/16

2015: 10% paramedic vacancy rate

2017: 19% decrease in applications to nursing and midwifery courses

11% of NHS doctors received their primary medical qualification in EEA countries

17% of specialists received their primary medical qualification in an EEA countries

Staff shortages:

46% of staff think that there is not enough staffat this organisation for me to do my job properly’

In 87 trusts, more than 50% of staff think there is not enough staff. South East Coast Ambulance Service NHS Foundation Trust:

82% of staff think there is not enough staff.

2016 NHS staff survey:

HEALTH



https://www.kingsfund.org.uk/time-to-think-differently/trends/demography

https://www.publications.parliament.uk/pa/cm201415/cmselect/cmhealth/401/401.pdf

https://www.nao.org.uk/wp-content/uploads/2017/01/NHS-Ambulance-Services.pdf

Home Office




£ b

illio

ns

Share of government spending onResource DEL for HO:

Share of government spending onCapital DEL for HO:

2015/16:

3.27% 2019/20:

3.23%

• Overall police funding protected in realterms over the next four years.

• The Government claims this means an “extra£900m” for the police, although there aresuggestions that this may include additionallocally raised income through council tax.

• The overall Home Office resource budgetincreases by around £300m, and then stays flat

National Crime Agency’s funding protected (£200m of capitalinvestment).

£500m extra (over Spending Review period?) for counterterrorism budget.

£1bn for next generation 4G communications network foremergency services.

Border immigration and citizenship resources to be halvedthrough efficiencies, and investment in technology.

2015/16:

0.92%2019/20:

0.80%

2015-2020 Home OfficeResource and Capital DEL budgets (in cash terms)

HOME OFFICE



10,573 10,510

0

2,000

4,000

6,000

8,000

10,000

12,000

2016/17 2017/18

Day-to-day Spending: Resource DEL budget (in cash terms)

£ m

illio

ns


0.6%reduction

8,366

856 922121

832

-525

8,515

825 96394

696

-582-2,000

0

2,000

4,000

6,000

8,000

10,000

Crime andpolicing

Office forsecurity and

counterterrorism

UK BorderAgency/Border

Force

Arms lengthbodies (net)

Enablers Other

2016/17 2017/18

£ m

illio

ns

Spending on crime and policing and fire has increased by 1.8% compared to last year. However,

this year’s budget is actually lower than planned in 2015 Spending Review despite transfer of

Fire and Resilience function from DCLG last year.

Slight reduction in 2017/18 spending despite planned increases to ring-fenced

Counter Terrorism

‘Other’ includes income from UK Visas and Immigration, and from HM Passport Office. Overall income is increasing, despite income from Passport Office declining (due to lower volume of passports),

suggesting visa income is increasing


HOME OFFICE



82

105

74

22

183

15

152

122

90

11

51

91

0

20

40

60

80

100

120

140

160

180

200

Crime andpolicing

Office forsecurity and

counterterrorism

UK BorderAgency/Border

Force

Arms lengthbodies (net)

Enablers Other

2016/17 2017/18

482516

0

100

200

300

400

500

600

2016/17 2017/18


£ m

illio

ns


7.1%increase

There is higher capital spending in all major spending categories, except Enablers (central services and policy work), which is falling by £130m. 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.

HOME OFFICE



Increased risk of terrorism in light of recent attacks in the UK

(as of March 31 of each year)

Challenges:

Spending on the police decreased

by 17% from 2009/10 to 2015/16.

Continued reduction in number of Police Officers

Source of figures: IFG Performance Tracker

HOME OFFICE



https://www.instituteforgovernment.org.uk/sites/default/files/publications/Performance Tracker final web.pdf

International Development




RESOURCE DEL BUDGET (Day-to-day spending):

£9,336m £80m£7,604m2017/18 DFID

Resource budget


Transfers to other Departments,

including:

Transfer from Capital to Resource

R&D reclassification: technical accounting adjustment - all R&D is now classified as

capital

£1,727m

Reduction in the UK’s total ODA*

allocation

£407m

Transfers from capital to resource are

not normally allowed by Treasury. DFID said that the Treasury agreed to

this to “ensure the Departments delivers against the UK Aid Strategy…

whilst achieving value for money”

-£217.2m to FCO

-£114.1m to Dept of Health

-£138.7m to Home Office

-£320m to BEIS

-£915.4m to the Conflict, Stability and Security Fund (CSSF) which is then transferred to other departments

Note: Most of these transfers were forecast in the Spending Review

£482m

*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.

2015 Spending Review Settlement increases DFID’s budget by 21% from 2015-16 to 2019-20 in real terms to ensure UK meets UN aid target(0.7% of GNI to be spent on ODA)

DFID




CAPITAL DEL BUDGET (Investment):

£3,248m £2,889m2017/18 DFID Capital budget


Transfers to other

Departments

Transfer from Capital to Resource

R&D reclassification(technical accounting adjustment – all R&D

is now classified as capital)

£17m £482m

Transfer to AME budget: capital injection in Commonwealth

Development Corporation group –

company which invests in private companies in developing countries

£407m£267m

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

DFID









Initially held in

DFID’s budget.



Security Council

MOD

HMRCNational Crime

AgencyHome Office



Other departments

e.g. DEFRA etc.

FCO

DFID



DfID and UN TARGET of0.7% Spend of GNI (Gross National Income) on ODA

Increased risk of Treasury tinkering with the Department’s budget as

forecasts changes.

To only just MEET the Target

2013:UK meets this target

Meeting the 0.7% has meant, … that in recent years DFID has gone through

"various contortions, with spending being speeded up or slowed down to fit the target in question. This disrupts programmes and diverts

management attention away from more useful activity.”Predecessor International Development Committee

Treasury’s requirement:

Adjusting spending in year according to

forecasts of output growth and

other departments’ ODA spending to ensure that UK meets the target.

CHALLENGE for DfID:

The International (Official Development Assistance Target) Act 2015 enshrines in law UK’s commitment to spend 0.7% of

GNI on ODA annually .

DfID’s share of ODA spending fell from 89.5% in 2011 to 80.5% in 2015

OECD total

DFID



International Trade



351.4 364.2304.6 302.9

9.9 6.7

3 3

0

50

100

150

200

250

300

350

400

2016-17 2017-18 2018-19 2019-20

Day-to-day Spending Investment Spending

£ m

illio

ns

Day-to-day and Investment Spending: Resource and Capital DEL (Departmental Expenditure Limits)(in nominal terms)

DIT: planned spending

DIT has not yet produced a Single Departmental Plan but is developing one currently

INTERNATIONAL TRADE



ONS: UK trade by country, 2015

0 50 100 150 200 250 300 350

Germany

Netherlands

France

Spain

Italy

Ireland

Belgium

Poland

Sweden

Czech Republic

Denmark

Rest of Europe

EU

Norway

Switzerland

EFTA (includes Iceland)

USA

China

Japan

India

Turkey

Hong Kong

Canada

Russia

Australia

Singapore

Saudi Arabia

South Korea

Rest of the world

Total World Excluding EU

EU Non-EU

Imports, £ billions0 50 100 150 200 250 300

Germany

Netherlands

France

Spain

Italy

Ireland

Belgium

Poland

Sweden

Czech Republic

Denmark

Rest of Europe

EU

Norway

Switzerland

EFTA (includes Iceland)

USA

China

Japan

India

Turkey

Hong Kong

Canada

Russia

Australia

Singapore

Saudi Arabia

South Korea

Rest of the world

Total World Excluding EU

EU Non-EU

Exports, £ billions

INTERNATIONAL TRADE



Defence



What the 2015 Spending Review told us:£

bill

ion

s

2015-2020 Ministry of DefenceResource and Capital DEL budgets (in cash terms)

Share of government spending on

Resource DEL for MoD:

2015/16:

16.25%

Share of government spending onCapital DEL for MoD:

2019/20:

16.27%

Increases in both capital and resource

spending

2015/16:

8.63%

2019/20:

9.13%

MOD




£ b

illio

ns

£ b

illio

ns

Investment: Capital DEL (Departmental Expenditure Limits) (in cash terms)


This reduction is largely due to reduction in spending on operations [AND WHAT ELSE?].Operations will likely have further Day-today budget spending requests later in financial year.

37.836.0

0

5

10

15

20

25

30

35

40

2016/17 2017/18

8.8 8.5

0

2

4

6

8

10

2016/17 2017/18

4.8%decrease

2.6%decrease

MOD









Initially held in

DFID’s budget.



Security Council

MOD

HMRCNational Crime

AgencyHome Office



Other departments

e.g. DEFRA etc.

FCO

MOD



4.7

2.4

1.5

4.0

2.7

1.8

0

1

2

3

4

5

Single Use MilitaryEquipment

Other Capital Other

2016/17

2017/18

9.0

1.3

20.7

0.9 0.4

5.4

9.5

1.8

20.8

1.0 0.3

2.8

0

5

10

15

20

25

ServicePersonnel

CivilianPersonnel

Equipment andInfrastructure

AdministrationCosts

OperationsCosts

Other

2016/17

2017/18

Day-to-day spending: Resource DEL budget expenditure (in cash terms)

38% increase in civilian personnel

expenditure despite government’s

plans to reduce civilian personnel to

41,000 during 2016-2020.

£ b

illio

ns

Investment: Capital DEL budget expenditure (in cash terms)

£ b

illio

ns

Areas of spending:

15% reduction in spending on “Single Use

Military Equipment” (equipment that can only be used for military purposes)

This increase is largely due

to a £340m increase in

R&D (21%)

This includes a £125m

reduction in R&D (66%)

MOD



25 25

246

64.67054

474

89

0

50

100

150

200

250

300

350

400

450

500

Afghanistan Wider Gulf Counter Daesh Conflict, Stability and SecurityFund (CSSF)

2016/17 2017/18

£ m

illio

ns

Cost of Operations and Peacekeeping:Largest area of

spending: Counter-Daesh operations

MoD does not indicate what the money from CSSF will be spent on

MOD



The new Strategic Defence and Security Review covering new threats of ISIS and increased Russian actions in Ukraine

Do the Armed Forces have the resources they need?

The UK Military spend asproportion of GDP has reducedover time, and continues to movecloser to the NATO commitmentto spend 2% of GDP on Defence.

Items previously not includedsuch as pensions for retired MoDcivilians are now counted asmilitary spend.

UK military spend as a percentage of GDP

Number of troops over the period 2010-15The reduction in troop numbers has contributed to the growing deficit of

required numbers of armed forces

MOD



Justice




£ b

illio

ns

Share of government spending onResource DEL for MoJ:

Share of government spending onCapital DEL for MoJ:

2015/16:

1.97%2019/20:

1.71%

Reductions to both resource and capital

spending.

Resource Spend: Efficiency savings possible because of capital

investment in prisons and courts Administration budget to be cut by 50%, 20% more

than any other DepartmentCapital Spend: £1.3bn to building nine new prisons £700m to digitise the courts system

2015/16:

0.92%2019/20:

0.80%

2015-2020 Ministry of JusticeResource and Capital DEL budgets (in cash terms)

MOJ



-97

3,737

1,615 1,631

209 375

-683

3,891

1,693 1,628

223 422

-1,000.0

0.0

1,000.0

2,000.0

3,000.0

4,000.0

5,000.0

Central Funds Prison andProbation

HM Courts andTribunals

Legal Aid andServices

Youth JusticeBoard

Other

2016/17 2017/18

7,470 7,173

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2016/17 2017/18

£ m

illio

ns


Gross spending is up, funded by higher levels of income from charges (-£587m).

This is the first year in which the full income is expected to be collected. Last

year, implementation of probate fee changes was delayed.

4%reduction

+£131m Transfer of responsibility for Offender Learning from BEIS

Net funding for day to day services: Resource DEL budget (in cash terms) Largest change:


2016/17 budget included a one-off spend on:

£136m for delayed implementation of probate fees

£36m for costs arising in O’Brien judgement for payments owed to judges

5% increase from the Courts Reform

Programme

This includes £125m for prison safety and staff

recruitment

MOJ



192

103

142

11 4 7

360

200

162

12 3 70

50

100

150

200

250

300

350

400

CorporateServices and

Central Funds

Prison andProbation

HM Courts andTribunals

Legal Servicesand Legal Aid

Youth JusticeBoard

Other

2016/17 2017/18

459

742

0

100

200

300

400

500

600

700

800

2016/17 2017/18

£ m

illio

ns

£ m

illio

ns


62%increase


Increase largely due to: +£204m: carry-over from previous year

Planned extra spending on prison and court reform

Additional funding for the Prisons Estates Transformation programme

Areas of Investment spending:

Additional funding for the Prison Reform

programme

Additional funding for the Courts Reform

programme

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

MOJ




Source of captions and figures: IFG Performance Tracker

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.

MOJ




Transport



Resource Savings:• Reducing the subsidy paid to rail franchises• Phasing out the TfL Resource grant, saving £700m in 2019-20

Capital Spend:£46.7 billion capital investment by DfT over the next 5 years (2016-

17 to 2020-21) on High Speed 2 (HS2), roads and localtransport, in addition to Network Rail’s investment programme.

Share of government spending onResource DEL for DfT:

2015/16:

13.96%

Share of government spending onCapital DEL for DfT:

2015/16:

0.83%2019/20:

0.55%

2019/20:

22.89%

0

2

4

6

8

10

12

14

2015-16 2016-17 2017-18 2018-19 2019-20

£ b

illio

ns

Resource Capital

New measures for rail passengers:• compensation when trains are over 15 minutes late

• improving Wi-Fi and mobile connectivity on trains

• freezing rail fares in real terms (RPI) for the courseof this Parliament

What the 2015 Spending Review told us:Resource and Capital DEL budgets (in cash terms)

DFT



-3

-1

1

3

5

7

9

Highways England Local authoritytransport

GLA transportgrants

Bus subsidies andconcessionary

fares

Other railways Support forPassenger Rail

Services

Network Rail

2016/17

2017/18

3.23.3

0

1

2

3

4

2016/17 2017/18


£ b

illio

ns

£ b

illio

ns


5% increase

Funding for operating and maintaining the railway network, including staff and

equipment costs (part of Annually Managed Expenditure (AME) budget

11% increase compared to last year, in line with Road Investment Strategy

Increase largely due to increase in funding for

Highways England

Reduction due to transfer of responsibility to GLA

Day-to-day spending by area:

Includes extra £2 m for Midlands Railway hub

DFT



5.5

6.4

0

1

2

3

4

5

6

7

2016/17 2017/18

Investment Spending: Capital DEL (Departmental Expenditure Limits)(in cash terms)

£ b

illio

ns


17% increase

Local roads and transport

networks

Strategic roads and …

Future transport

Smart ticketing

Strategic studies development

+£375m extra for National Productivity Investment Fund:

£210m£95m

£40m

£25m £5m

-£936m: Transfer to DCLG for the Local

Growth Fund and Local Sustainable Transport Funds

(transfer of some of the funding and responsibility for local roads)

+£77.9m for flood

defences:

£50m for roads

£27.9m for rail

+£1m for the M62This becomes £65m in

2018/19 and £95m in 2019/20

+£658 million for High Speed 2 reflecting the

new phase of the project’s development

+£190 million relating to moving spending from subsequent years into

2017-18

DFT



0

1

2

3

4

5

6

7

Highways England Local authoritytransport

HS2 Other railways Funding of otherALBs (net)

NationalProductivity

Investment Fund

Sustainable travel Network Rail

2016/17

2017/18

Investment spending by area:£

bill

ion

s

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

£1.7bn increase in investment spend for HS2 consequent on

the project starting

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

DFT




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.

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

The Airport’s Commission estimated the cost of

Heathrow at £17.6bn in 2014 prices. Source: House of Commons Library: Heathrow

DFT




Work and Pensions



77.27

106

0

20

40

60

80

100

120

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20

£ b

illio

ns

Working age and other Pensions and pension credit

People with disabilities and illness

DWP: What the 2015 Spending Review told us:

Disability and carer benefits spending is forecast to rise by 3.6%. This is due to theuprating of benefits by 1%, a higher proportion of high value awards, and a rise in carer’sallowance caseloads.

Spending on pensioners is forecast to rise by 1.6%. This is made up of the 2.5% increaseto pensions (triple lock), offset by reductions in spending as the state pension age rises,particularly affecting spending on pension credit.

Universal Credit and predecessor benefits: DWP’s spending on these is forecast to riseby 2.4% overall but this is entirely accounted for by DWP taking on the tax credit caseloadfrom HMRC as tax credits are replaced by Universal Credit. Without this spending moving

from HMRC to DWP, DWP’s spending on these benefits would be down.

Annually Managed Expenditure (in cash terms)Forecast Spending (OBR)

Share of government spending onResource DEL for DWP:

Share of government spending onResource AME for DWP:

2015/16:

1.84%2019/20:

1.64%

Many admin functions were reclassified as programme

2015/16:

53%2019/20:

48.3%

Resource and Capital DEL (in cash terms)

Spending on pensions forecast to continue rising

Big savings required in admin of DWP of 22%, including

34% on technology and 20% in size of DWP EstateFor 2017/18 (compared to 2016/17):

DWP




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)

March 2017 OBR Economic and fiscal outlook, p. 140

Why is welfare spending changing? (2016/17 to 2021/22)

DWP



Changes in benefits:

10

15

20

25

30

New overall benefits cap:The main exemptions : those working and get working tax credit

those of pension age getting pension credit

those receiving Disability Living allowance

or Personal independence payments

From November 2016

£20,000

£13,400

Previous cap:£26,000

Previous cap: £18,200

£23,000

£15,400In London

In London

Outside London

Outside London

With children:

Without children:

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.

From April 2017

Benefits Cap

Other Changes

DWP



Government has announced the rollout schedule of

UC until September 2018.

Full rollout not now expected until 2022,

five years later than originally planned.

Changes in benefits:

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.

Universal Credit

Up by 2.4% (linked to

earnings, May to July 2016):

Pension credit

Upratings for 2017-18

Most benefits frozen for four years,

including: Child Benefit

Jobseekers’ Allowance

Employment and Support Allowance

Income Support

Housing Benefit under women’s state pension age

Local Housing Allowance rates

Child Tax Credit

Working Tax Credit

Universal Credit

Up by 1% (CPI inflation index at

September 2016): Attendance Allowance

Personal Independence Payment

Disability Living Allowance

Carer’s Allowance

Bereavement Allowance

Maternity Allowance

Statutory Maternity/Paternity etc Pay

Statutory Sick Pay

Up by 2.5% (triple lock: earnings, price

inflation or 2.5% whichever is greater):

State pension

Click here for more information on 2017 benefits uprating (HOC Library briefing paper)

DWP



http://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-7818#fullreport



Resource and Capital DEL Budgets (Departmental Expenditure Limits) (in cash terms):

Cash limited spending, including costs of

employment programmes and running DWP:

DWP has said it will reduce

administration spending by 22% over

the Spending Review period.

6.07 6.23

0.31 0.38

0

1

2

3

4

5

6

7

2016/17 2017/18

£ m

illio

ns

Resource CapitalOverall resource DEL spending rises

by 1.8%, before falling in

subsequent years.

An increase in capital spending in 2017/18 (mainly to deliver technology reforms),

However, overall technology spend to fall

by 29% by 2019-20

DWP



Managing future reductions in DWP workforce without

reducing capability

Ageing population:



Source: King’s Fund Demography

Over the next 20 years:

Growth in number of pensioners

DWP: CHALLENGESRising levels of child poverty

Source: DWP: Households Below Average Income: An analysis of the UK income distribution: 1994/95-2015/16

Percentage of children below low income(relative measure of income, before housing costs)

DWP



https://www.kingsfund.org.uk/time-to-think-differently/trends/demography

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/600091/households-below-average-income-1994-1995-2015-2016.pdf

Treasury and HMRC



5

187

0

50

100

150

200

2016/17 2017/18

2016/17 2017/18

183169

0

50

100

150

200

2016/17 2017/18

Day-to-day Spending: Resource DEL (Departmental Expenditure Limits) (in cash terms)

£ m

illio

ns

£ m

illio

ns


HM Treasury: How does spending compare to 2016/17?

Large increase because of admin increase. Also there is

£80m for Asian Infrastructure Investment Bank.

7% reduction due to reduction in spending on admin

HM Treasury also has both resource and capital Annually Managed Expenditure (AME) that are

subject to significant fluctuations.

This is because AME reflects movements in Bank of England funds and Government holdings of

banks (Northern Rock/Bradford & Bingley) (acquired during the financial crisis 2007-08)

Running costs of Treasury, Debt Management Office, OBR and other Treasury associated bodies

HMT AND HMRC



43,183 42,388

0

10,000

20,000

30,000

40,000

50,000

2016/17 2017/18

£m

illio

ns

341

247

0

100

200

300

400

2016/17 2017/18

3,861 3,946

0

1,000

2,000

3,000

4,000

5,000

2016/17 2017/18

Day-to-day Spending: Resource DEL (Departmental Expenditure Limits) (in cash terms)

£ m

illio

ns

£ m

illio

ns


HMRC: How does spending compare to 2017/18?

28% reduction: investment budget is subject to fluctuations as capital projects start and stop

2% increase in HMRC running costs

Resource Annually Managed Expenditure(largely consists of benefits and tax credits)

Largest components: £27,721m – personal tax credit £11,579m – child benefit

HMRC spending on tax credits is reducing, and

DWP spending increasing as Universal Credit is rolled out

HMT AND HMRC



234 242

0

50

100

150

200

250

300

2016/17 2017/18

£m

illio

ns

3.61 3.88

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2016/17 2017/18

£b

illio

ns

Resource DEL (Departmental Expenditure Limits) (in cash terms)

Running costs of HMRC and National Insurance Fund

Capital DEL (Departmental Expenditure Limits) (in cash terms) (MILLIONS not BILLIONS)

Running costs of HMRC: How does spending compare to 2016/17?

8% cash increasefrom last year

3% cash

increase from last year

Resource DEL is £78m higherthan SR settlement due to:

extra £30m from 2016 Budgetfor digital transformation

£49m from adjustment fordepreciation

-£0.8m transfers to otherdepartments

Capital DEL is £1.4m lower than SR settlement due to:

extra £0.3m from 2016 Budget

-£1.7m transfers to otherdepartments

HMT AND HMRC



0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20

£m

illio

ns

Resource DEL Capital DEL

HMRC: Trends in Running Costs and capital, 2011/12-2019/20.

Resource and Capital DEL budget expenditure (in real terms) Future projections indicate

that there will be an increasein the budget in 2016-17

followed by steady falls thereafter throughout

Spending Review period

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.

HMT AND HMRC



11.90

29.45

3.110.07

11.65

28.52

0.022.70

0.080

5

10

15

20

25

30

35

Child Benefit Personal taxcredit

Tax freechildcare

Tax reliefs &allowances

Other

£b

illio

ns

2015-16

2016-17

-1,000

4,000

9,000

14,000

19,000

24,000

29,000

34,000

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

£m

illio

ns

Personal tax credit

Child Benefit

Tax reliefs and allowancesOther

Trends in 2010/11 – 2017/18 (in real terms)

Resource AME: Spending on Benefits and Tax credits.

Spending in 2017/18 compared to 2016/17 (in cash terms)

Downward trend in child benefit and tax credit in

real terms over the course of the last Spending Review and

into the new one

2%reduction 3%

reduction

13%reductionNEW

Overall: 3.5% cash reduction

from last year from £44.54bn in 2015-16 to £42.97bn in 2016-17.

Reduction in personal tax credit is as a result of:

Falling unemployment A rise in average earnings Operational changes targeting

debt, error and fraud.

2016-17 forecasts are based on OBR estimates.

HMT AND HMRC



Scotland



21.6

3.3 3.8

4.9

15.4

3.45.1

11.8

0

5

10

15

20

25

30

£ b

illio

ns

2016/17 2017/18

Resource Capital AME

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 devolutionof income tax related to Scotland Act 2012.

Therefore, payover of income tax was smaller.

Scottish Rate of Income Tax Payover

AME (Annually Managed Expenditure) is demand-led spending outside

spending limits (student loans, NHS pensions, teachers’ pensions, NHS

impairments)

SCOTLAND



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

Getting from Spending Review settlement to Main Estimate (block grant):

RESOURCE DEL BUDGET (day-to-day spending):

*includes depreciation and student loan charge

£6m£27,356m £341m

Scotland’s 2017/18 Day-to-day spending

£15,374m

Barnett Consequentials

Block grant adjustment for devolved taxes

Fiscal framework baseline additions

£12,450m

Other movements

£122m

Spending Review* settlement

This includes:+ £140.9m from Business Rates+ £99.1m from social care

This includes Income tax, Stamp duty tax and Landfill tax

Barnett consequentials arise from UK Government measures listed above.

However, the Scottish Government can spend the additional funds on other functions.

This includes -£41.6m R&D transfer from

resource to capital (accounting adjustment)+£34.2m Machinery of Government transfers

SCOTLAND




CAPITAL DEL BUDGET (Investment spending):

£3,191m

Spending Review settlement

£143.6m

Scotland’s 2017/18Investment Budget

£3,389m

Barnett Consequentials:

Budget 2016

City deals

£41.6m

R&D transfer from Resource to Capital(change in accounting

policy)

£13m

This includes: £44.6m from affordable housing grants£23.5m from accelerated build-out£10.7m from social transformation

£11.6m for Aberdeen£1.4m for Inverness


However, the Scottish Government can spend the additional funds on other functions.

SCOTLAND



18.8

5.1

17.0

11.8

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Scotland's Budget Cash paid to Scottish Government

£b

illio

ns

Total DELAMECash GrantPay-over of Scottish Rate of Income Tax

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 Payments towards Scottish NHS (£1.7bn).

DEL adjusted downwards from Spending Review

Settlement for block grant adjustment of Scottish Rate

of Income Tax (£11.8bn)

Total DEL in block grant:£15.4bn resource

+£3.4bn capital

Total AME in block grant

Pay-over of Scottish Rate of Income Tax. This is

now paid in addition to cash grant (£17bn)



Trends in Scotland’s Block Grant in 2010/11-2019/20:(Resource Departmental Expenditure Limit (DEL) in real terms)

0

5

10

15

20

25

30

35

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18

Resource budget Scottish Rate of Income Tax transfer

2017-18 is first year of full devolution of income tax under Scotland Act 2016.

In 2016-17 there was only partial devolutionof income tax related to Scotland Act 2012.

Therefore, payover of SRIT was smaller.

SCOTLAND



Devolution of Powers: TIMELINE

Holyrood

AD

DIT

ION

AL

PO

WER

S D

EVO

LVED

:

Stamp Duty tax and Landfill tax

Income Tax(partial

devolution)

Full devolution of Income TaxScotland Reserve comes into

place/ extension of Scottish borrowing powersWelfare: Scottish

Government to be given legislative powers over a series benefits in 2017/18, but not over delivery of some of them until April 2020

2012 Scotland Act

2016 Scotland Act

April 2015 April 2016 April 2017

Air Passenger Duty

April 2018

VAT assignment (The receipts raised in Scotland by the first 10 percentage points of the standard rate of Value Added Tax (VAT) will be assigned to the Scottish Government’s budget

April 2019

SCOTLAND



21.6

Scottish Income Tax :

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: £43,000Higher rate threshold rest of UK: £45,000

Block grant adjustment for Scottish Rate of income tax:Reduction by £11.750bnThis 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 GovernmentThe HMRC collects income tax in Scotland on behalf of Scottish Government.Then this tax is transferred from HMRC back to ScotlandPay-over of Scottish income tax is determined by rates of income tax in Scotland

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

Pay-over of Scottish income tax > Block grant reduction

£11.829bn £11.750bn

Therefore Scottish Gov decision raises taxes for itself

SCOTLAND



https://www.ifs.org.uk/publications/9124

The Barnett Formula

Extra funding available to the governments of Scotland, Wales and

Northern Ireland

(may also be a spending cut)

Share of change related to

DEVOLVED FUNCTIONS(e.g., health)


functions RESERVED TO UK GOVERNMENT

(e.g., defence)

NO CHANGE TO THE BLOCK GRANT

provided to Scotland, Wales and Northern

Ireland

These funds can be spent on ANY DEVOLVED FUNCTION

Change (rise or fall) in Resource DEL budget

determined by UK government

Population share (compared to England or

England and Wales)

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 the share had remained as before.

Increase of £100m in

UK Departments’ Resource DEL budget.

Example:75% relates to

functions which are

devolved; 25% are UK

reserved functions.

9.85%(Scotland’s population compared to England)

Extra

£7.388m to Scottish

government

Block grant adjustments: in addition block grant adjustments can be made: reductions where taxes are devolved or additions where welfare is devolved.

SCOTLAND



Wales



Wales’ Block Grant in 2016/17 and 2017/18 (Main Estimate):(in cash terms)

Block grant to Wales Govt(resource and capital)

remains largely unchanged from last year

13.9

1.6

14.0

1.6

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Resource Capital

£'b

illio

ns

2016-17 2017-18Note: 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.

WALES



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


RESOURCE DEL BUDGET (day-to-day spending):

*includes depreciation and student loan charge

£41.6m£13,783m

Spending Review* settlement

£109.7m

Wales’ 2017/18 Day-to-day spending

£14,001m


Budget 2016


Autumn 2016

£71.3m


Spring Budget 2017

£9.7m

Transfers from other Departments


However, the Welsh Government can spend the additional funds on other functions.

This includes:+ £57.2m from social care

This includes:+ £81.4m from Business Rates+ £9.7m from Academies+ £5.3m from School sports

premium

This includes:+ £8.5m from Right to Buy

Transfers from Home Office:£10.1m for police funding£7.2m health migrant levy

WALES



This includes: £5.7m from health capital£6.2m from social transformation

This includes: £11.9m from local roads£25.8m from affordable housing grants


CAPITAL DEL BUDGET (Investment spending):

£1,522m


£2m

Wales’ Capital DEL

£1,604m


Budget 2016


Autumn 2016

£12m


Spring Budget 2017

£68m


However, the Welsh Government can spend the additional funds on other functions.

WALES



0

2

4

6

8

10

12

14

16

2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20

£b

illio

ns

Resource budget 2015 SR planned resource Capital budget 2015 SR planned capital

Trends in Wales’ Block Grant in 2011/12-2019/20:

Resource and Capital Departmental Expenditure Limit (DEL) in real terms

2015 Spending Review forecast a slight reduction in real terms in Wales’ Resource budget between 2015/16 and 2019/20.

Note: Figures prior to 2015/16 are not strictly comparable because various functions were devolved to Wales over the time period.

There is now an increase in real

terms mainly due to increased allocations for UK government

departments awarded in Autumn Statements and budgets leading to

greater allocation to Wales through the Barnett formula

WALES



Devolution of Powers: TIMELINEA

DD

ITIO

NA

L P

OW

ERS

DEV

OLV

ED:

Stamp Duty land tax and Landfill tax

2018/19

2019/20

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 115% in the future.

2015 Wales Act

Increase in borrowing powers: 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.

Welsh Rates of Income Tax

2015 Wales Act

WALES



The Barnett Formula


Northern Ireland






(e.g., defence)



Ireland

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 for Wales from the Barnett Formula than would have resulted if the share had remained as before.



Example: CHANGE EXAMPLE




75% relates to

functions which are


reserved functions.

5.69%(Wales’s population

compared to England)

Extra

£4.268m to Welsh

government

Population share (compared to England)

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 115% in the future.

WALES



Northern Ireland



10.6

1.0

10.5

1.20

2

4

6

8

10

12

NI Government Resource NI Government Capital

£ b

illio

ns

2016/17 2017/18

31.6

0.6

22.3

0.50

5

10

15

20

25

30

35

Resource DEL Capital DEL£

mill

ion

s

2016/17 2017/18

Northern Ireland’s Block Grant in 2016/17 and 2017/18 (Main Estimate):

Budget for Northern Ireland Office (in cash terms) (Figures in millions not billions)

(in cash terms) Billions

Northern Ireland Devolution of powers:Corporation tax powers will be devolved by April 2018, leading to a reduction of the rate for Northern Ireland Corporation tax to 12.5%(Stormont House Agreement)

Note: Cash grant is £15.7bn for 2017-18 . This is calculated by adding Resource and Capital and making adjustments including adding AME (Annually Managed expenditure) – mostly public sector pensions and welfare and removing non-cash items.

Block grant to Northern Ireland Executive remains relatively unchanged from 2016-17 to 2017-18

NORTHERN IRELAND



Day-to-day spending (RESOURCE DEL budget):

£4.7m£10,413m £115.4m

Northern Ireland’s 2017/18 Day-to-day

spending

£10,524m


Other movements

Spending Review settlement This includes:

+ £4.2m from HO for Immigration Health Surcharge- £11.7m R&D transfer from resource to capital (technical accounting adjustment)

This includes:+ £47.3m from Business Rates (Budget 2016)+ £33.3m from Social Care (Budget 2017)


However, the Northern Irish Executive can spend the additional funds on other functions.


The Immigration Health Surcharge was

introduced by the Home Office on 2015.

Non-EEA residents coming to the UK for

more than six months have to pay

money towards the National Health

Service (healthcare in the UK).

The Surcharge is collected by the Home Office and after deducting a small amount for collection costs, is transferred to the Department of Health and the three devolved administrations.

NORTHERN IRELAND




Investment spending (CAPITAL DEL BUDGET):

£1,137m


£48.4m

Northern Ireland’s 2017/18

Investment Budget

£1,209m


R&D transfer from Resource to Capital(change in accounting

policy)

£13m

Funds carried forward from previous year

£11.7m

This includes: £15.0m from affordable housing grants(Autumn Statement 2016)£7.9m from accelerated build-out (Autumn Statement 2016)


However, the Northern Irish Executive can spend the additional funds on other functions.

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 agreement between the Conservative Party and DUP in June 2017 are not part of this Main Estimate, and will not lead to any additional funds to Wales or Scotland through Barnett Consequentials

Infrastructure development

Broadband development

Pressures in health and education

Health Service Transformation

Support for mental health

Target pockets of severe deprivation

(£200m for 2 years)

(£75m for 2 years)

(£20m for 5 years)

(£50m for 2 years)

(£100m for 2 years)(£10m for 5 years)

NORTHERN IRELAND



0

2

4

6

8

10

12

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20

£ b

illio

ns

Resource budget 2015 SR planned resource Capital budget 2015 SR planned capital

Trends in Northern Ireland’s Block Grant in 2010/11-2019/20:

Resource and Capital Departmental Expenditure Limit (DEL) in real terms

Additional funding from the agreement between the Conservative Party and DUP

in June 2017 will be added to these totals in the due course

NORTHERN IRELAND



The Barnett Formula


Northern Ireland






(e.g., defence)



Ireland




Population share (compared to England or

England and Wales or Great Britain)

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 Ireland from the Barnett Formula than would have resulted if the share had remained as before.



Example:75% relates to

functions which are


reserved functions.

3.39%(Northern Ireland’s

population compared to England)

Extra

£2.543m to Northern Irish

government

NORTHERN IRELAND



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

The spending categories used are based on groups of programmes or “subheads” used by the Government in its Main Estimates andprevious Annual Reports and Accounts.

“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.

Categories of spending:



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