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BRIEFING PAPER

Number 08926, 28 May 2020

Main Estimates: Government spending plans for 2020-21

By Larry Honeysett Philip Brien

Contents: 1. What are ‘Estimates’? 2. The 2020-21 Main Estimates 3. Parliament’s role in

considering Estimates

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2 Main Estimates: Government spending plans for 2020-21

Contents Summary 4

What are Estimates? 4 The 2020-21 Main Estimates 4 What has changed since last year? 4 Parliament’s role in considering Estimates 5

1. What are ‘Estimates’? 6 1.1 Introduction 6 1.2 The Estimates cycle 6 1.3 Content of an Estimate 6 1.4 Spending limits 7 1.5 Ambits 7 1.6 Detail of spending plans 7 1.7 Estimates memoranda 7 1.8 Estimates memoranda 8 1.9 Funding for devolved administrations 8

2. The 2020-21 Main Estimates 10 2.1 Overall spending in Main Estimates 10 2.2 Overall public spending: forecasts 10 2.3 The impact of the coronavirus outbreak on spending 10 2.4 Day to day spending (Resource DEL) 12 2.5 Investment spending (Capital DEL) 13 2.6 Annually Managed Expenditure 14

3. Parliament’s role in considering Estimates 15 3.1 Estimates day debates 15 3.2 Submitting a bid for an Estimates day debate 15 3.3 Selection of Estimates day debates 15 3.4 Motions 16 3.5 Approving, rejecting or amending motions 16 3.6 Role of Select Committees 16 3.7 Role of House of Lords 16

Annex A: Summary of content of 2020-21 Main Estimates 17 Cabinet Office 17 Department for Business, Energy and Industrial Strategy 17 Department for Digital, Culture, Media and Sport 19 Department for Education 19 Department for Environment, Food and Rural Affairs 20 Department of Health and Social Care 21 Department for International Development 22 Department for International Trade 23 Department for Transport 23 Department for Work and Pensions 24 Foreign and Commonwealth Office 25 Home Office 26 HM Revenue and Customs 27 HM Treasury 28 Ministry of Defence 29 Ministry of Housing, Communities and Local Government 29 Ministry of Justice 30 Northern Ireland 31

3 Commons Library Briefing, 28 May 2020

Scotland 33 Wales 35 Other departments 37

Cover page image copyright: Birdcage Walk and HM Treasury by Kiril Strax. Licensed under CC BY 2.0 / image cropped.

https://www.flickr.com/photos/thru_the_night/9234234368/in/photolist-brYJVQ-f4ZSao-5HSUDG-99yuYr-fLiK9m-nfXQ9L-8Q17vA-andt5b-anaEW2-6c3mio-6cgytV-6Q6zKy-6PPcxc-6QrrqG-8V13ps-pc2ywv-JEDEE-4tkUzN-pruQay-zHTq6-8hn1B7-ms9r8B-q1ihCx-5f3cg2-cAtGxb-ty3Qg2-tiykF-stWYi7-tiysV-5hnVqv-fyK7i9-wQDTu-pc3yVJ-zTAJf-6bTaUW-6bPVME-4QcwiA-tiyuM

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Summary What are Estimates? One of Parliament’s longest standing functions is the consideration and authorisation of the government's spending plans, requiring the government to obtain parliamentary consent before spending public money.

Main Estimates are the documents that contain the detail of those spending plans for a particular year. There is a separate Estimate for each Government Department. Changes are presented at the end of each year through Supplementary Estimates. Each of the Estimates must be authorised by Parliament before they take effect.

In the early part of the year, funding is provided through an advance, known as the Vote on Account. The new Contingencies Act 2020 also allows – for the next two years – further advances to be made before the authorisation of Main Estimates, up to 50% of past spending, on top of this 45%, so that departments do not risk running out of money.

The 2020-21 Main Estimates The 2020-21 Main Estimates were published on 4 May 2020. They show the initial budgets which the government is seeking for each department, divided into separate limits for current, day-to-day spending (also known as Resource) – on staff and other running costs, on goods and services and grants; and capital (investment) spending – covering purchase and sale of assets, loans and capital grants. Costs are further divided into spending subject to fixed limits, based broadly on the plans outlined for 2020-21 in the 2019 Spending Round, known as Departmental Expenditure Limits; and less predictable and more demand led spending, known as Annually Managed Expenditure. Cash block grant proposed to Scotland, Wales and Northern Ireland is also included under a separate heading

As is usual, it is expected these will be put to Parliament for approval in July, and if Parliament is content will be given legal effect by a new Supply and Appropriation Act.

What has changed since last year? Spending is rising significantly, primarily, but not exclusively, as a result of the coronavirus pandemic. The current situation has led to unprecedented interventions from government with significant spending implications. Alongside additional spending on health and social care, an array of support arrangements and schemes have been announced for individuals and businesses, to be paid and accounted for by a range of departments – from BEIS, HMRC, DWP, MHCLG and others.

Notable spending increases include:

• £10.2 billion extra for health, including £3.3 billion specifically as a result of coronavirus, plus a further extra £1.1 billion health investment spending;

• £63 billion for employment support as a result of the lockdown, including the job retention scheme (also known as the furlough scheme), self-employed income support and statutory sick pay;

• £24.5 billion in extra financial support for business, including business support grants, business interruption loans and business rate relief;

• £16.2 billion extra forecast on benefits, such as Universal Credit;

• £3.4 billion for extra transport investment including HS2, local authority transport, potholes and Network Rail;


• £2.1 billion to keep railways operating for key workers and cover revenue losses due to fewer people travelling;

• Further science and research funding of £1.3 billion channelled through BEIS and UK Research and Innovation;

• Funding for recruitment of extra police officers: £0.75 billion extra for Home Office supports the government’s plans to recruit an additional 20,000 police officers over time;

• Planned increased funding for Ministry of Justice: MoJ receives an additional £0.5 billion, to partly restore reductions made over the last ten years;

• Some extra funding for defence: there are increases to MoD’s budgets of £1.8 billion for personnel and equipment;

• Extra capital funding for MHCLG, totalling £4.7 billion including £2.4 billion to respond to housing market conditions, and £0.9 billion for cladding remediation;

• Extra flood defence funding for DEFRA of £0.2 billion; and

• Extra funding for devolved administrations of

o £4.6 billion resource, £1 billion capital for Scotland;

o £2.4 billion resource, £0.2 billion capital for Wales and

o £0.8 billion resource, £0.2 billion capital for Northern Ireland.

Parliament’s role in considering Estimates Before the latest Main Estimates can be approved, Estimates day debates will take place on the floor of the House of Commons. Any backbench member may bid for a topic for one of these debates, which should be linked to the spending, or an aspect of spending, contained in the Main Estimate of a department or other body. The Backbench Business Committee will consider bids for debates at a meeting in June, and decisions will be announced in a future business statement. Two days of debates on the Main Estimates are expected around the first week of July 2020.

Following the debates, the House is invited to agree motions on those Estimates selected for debate. Members may agree or reject these motions, or suggest amendments reducing expenditure. There is a further ‘roll up motion’ covering the remaining Estimates, which members may accept or reject. Under the ‘Crown prerogative’, only Government can propose spending, so amendments to increase spending are not permitted.

Once motions have been authorised, a Supply and Appropriation bill is presented. Unlike most bills there is no committee stage, and as with other financial legislation the House of Lords’ role is purely formal. On receiving Royal Assent, departments are able to draw upon the agreed funds set out in the Act for the purposes Parliament has authorised. Advances from the Contingencies fund are repaid.


1. What are ‘Estimates’?

1.1 Introduction One of Parliament’s longest standing functions is the consideration and authorisation of the Government’s spending plans, requiring the Government to obtain parliamentary consent before spending public money.

Estimates, sometimes known as Supply Estimates, are the documents presented to Parliament setting out the Government’s plans for spending for a given year. The process of obtaining Parliamentary approval to those plans is known as Supply. With a few specific exceptions,1 the Government is required to obtain authority from Parliament through the supply process before it can spend public money.2

1.2 The Estimates cycle The approval of public spending through Estimates (the supply process) operates on the basis of ‘annuality’, whereby money is voted for use in a particular financial year only. The normal steps in this process are:

• Vote on Account: consideration and approval of an advance of funding for the first four months of the financial year (April to July) for each government department. The Vote on Account is normally published in February and approved by Parliament in March, in time for the start of the new financial year commencing in April.

• Main Estimates: consideration and approval of the spending plans for the new financial year for each government department. Main Estimates are normally published in April, but not approved until July. Money already authorised through the Vote on Account is deducted from the amounts required for the year to provide government with funding for the remainder of the financial year.

• Supplementary Estimates (where required): consideration and approval of any changes to amounts or purposes of money required by departments. Supplementary Estimates are normally published in February and approved in early March to allow for any additional funds to be spent before the end of the financial year.

• Statement of excesses (where required): consideration and retrospective approval of any spending beyond the level or coverage previously approved by Parliament. This normally occurs only where inevitable spending is incurred or where mistakes have arisen, and is exceptional.3

1.3 Content of an Estimate Separate Estimates and Votes on Account are produced for each government department and published together by HM Treasury in a single volume. The key components of each Estimate are spending limits and ambits, which in each case apply to a single department for a single year only.

1 Exceptions are Consolidated Fund Standing Services, covering specific functions such as judges’ salaries,

returning officers’ expenses and payments to the EU. 2 References to Parliament refer to the House of Commons only. The House of Lords has no role in the

process of approval of public spending 3 In such cases a report is prepared by the Comptroller and Auditor General, and the Public Accounts

Committee may call for explanation and detail of measures taken to prevent recurrence.

7 Commons Library Briefing, xx May 2020

1.4 Spending limits Within each Estimate, spending is divided into a number of distinct budgetary limits for each department, covering spending of a specific type determined by HM Treasury. (Changes to the categorisation of spending between categories require prior consultation with Parliament.)

Box 1: Types of spending

Departmental Expenditure Limits (DELs) cover net spending which is subject to limits set in Spending Reviews and which it is assumed government departments can control.

• Resource DEL (also referred to as ‘day-to-day spending’) covers costs of running and purchasing goods and services; staff costs; current grants; rent; and maintenance costs. It also includes profit or loss on the sale of assets; depreciation; and some impairments.

• Capital DEL (also referred to as ’investment spending’) covers the purchase, disposal and major improvement of assets; capital grants (i.e. grants to purchase or enhance assets) and loans

Annually Managed Expenditure covers net spending which is more difficult to control and forecast:

• Resource AME covers benefits and state pensions; some impairments; and provisions for liabilities.

• Capital AME covers student loans and some financial transactions, mainly relating to the post 2008 financial crisis.

Switches of funding are not normally permitted by the Treasury from capital to resource (although exceptions, such as for health, are sometimes made), or from AME to DEL. Once Parliament has voted the limits, savings on any voted limit (DEL or AME) are not permitted to be used in support of spending under another.

1.5 Ambits The ambit is the description of what the spending within each of the limits will be spent upon. Government departments must ensure that their ambits are accurate and, subsequently, that no spending falls outside their scope. Should it do so, it would constitute an ‘excess vote’, i.e. illegal spending outside the authority authorised by Parliament.

1.6 Detail of spending plans Further detail of spending plans – breaking them down into a number of lines, known as subheads, within the totals above – is given within each Main and Supplementary Estimate. These breakdowns represent the Government’s best estimation of planned spending within the totals at the time the Estimates are prepared, but do not constitute limits within the totals. Government departments are totally free to switch resources from one subhead to another, providing they do not exceed the overall spending limits, or incur expenditure beyond the scope of the ambit.

1.7 Estimates memoranda Government departments are required to produce an explanatory memorandum to explain the content of each Main and Supplementary Estimate. This memorandum should compare spending plans to previous years and explain the reasons for changes proposed. Select committees currently publish memoranda on their webpages and the Scrutiny Unit uses the memoranda to prepare briefings for select committees and other Members.


1.8 Estimates memoranda Every department or other body which produces a Supplementary Estimate must also prepare an accompanying Estimates memorandum and submit this to the appropriate Departmental Select Committee.

The House of Commons Scrutiny Unit has been working with government departments to improve the quality and usefulness of memoranda, following a recommendation of the House’s Procedure Committee. New guidance and mock-ups were introduced last year and these have now been further refined in the light of experience, and in consultation with government.4

Following publication of Estimates, the relevant committee will approve publication of the associated memorandum. Memoranda which have been published will appear on the relevant committee and Scrutiny Unit webpages of the Parliament website.

1.9 Funding for devolved administrations The devolved Parliaments/assemblies receive cash funding through Estimates approved by the Westminster Parliament. The amount of cash they receive relates to calculations made using the Barnett formula and other increases to spending limits, and takes account of revised estimates of cash from other sources (e.g. devolved taxes). The Barnett formula is designed to ensure that where funding is announced in Spending Reviews and Budgets, the devolved governments receive equivalent funding per head for services that are devolved. Devolved administrations do not routinely receive equivalent shares of funding where UK departments have been granted additional in year funds from Treasury’s Reserve, but devolved administrations may make a claim on the Reserve should they feel it justified, which is for HM Treasury to consider.

The Westminster Parliament also needs to approve, through Estimates, the amount which the UK Government is collecting in tax on behalf of the Scottish Government and planning to pay over.

Devolved institutions need both to operate within the cash limits approved by the Westminster Parliament and the spending limits (i.e. Resource and Capital DELs, which

4 The requirement is for the changes to take effect from Main Estimates 2019-20, although many

departments have chosen to adopt the improvements earlier, with effect from the 2018-19 Supplementary Estimates.

https://commonslibrary.parliament.uk/research-briefings/cbp-7386/


also cover non-cash costs) set by HM Treasury. Subject to these, devolved administrations have freedom to spend the resources allocated to them on any devolved functions.


2. The 2020-21 Main Estimates

2.1 Overall spending in Main Estimates The Main Estimates for 2020-21 were published on 4 May 2020. The plans they show include significant increases to public spending compared to recent years.

Estimates do not contain all public spending. Items such as debt interest; in the past, payments to the EU, and local authorities self-financed expenditure are excluded. Nonetheless they give a good picture of the trends in public spending. Within Estimates,

• Resource DEL rises from £328.0 to £362.0 billion (+10.4%)

• Capital DEL rises from £64.1 to £75.8 billion (+18.3%)

• Resource AME rises from £427.3 to £440.5 billion (+3.1%)

• Capital AME rises from £25.6 to £29.8 billion5 (+16.4%)

The 2020-21 Main Estimates include at least an additional £119.2 billion on items related to, or a consequence of, the coronavirus pandemic.6 They do not, however, represent the final estimate of costs for the year. Since they were published, additional announcements have already been made, such as the extension of the job retention scheme until October, and these additional costs will need to be included in budgets proposed in Supplementary Estimates for 2020-21, presented in February 2021.

Immediate funding, in advance of Estimates approval by Parliament, can be provided by Treasury under emergency arrangements approved by Parliament through the Contingencies Act 2020.

2.2 Overall public spending: forecasts Before the coronavirus pandemic took hold in the UK the Office for Budget Responsibility forecast that overall public spending would rise from £886.8 billion in 2019-20 to £927.7 billion in 2020-21 (an increase of 4.6%).

Subsequently, the additional costs of public services and the economic response amount have been significant. The Office for Budget Responsibility put the cost of this response at least another £118.4 billion (14 May);7 the National Audit Office at £124.3 billion (21 May)8 (this includes some spending at the end of 2019-20).

2.3 The impact of the coronavirus outbreak on spending The coronavirus pandemic has led to unprecedented interventions from government with significant spending implications. Alongside additional spending on health and social care, an array of support arrangements and schemes have been announced for individuals and businesses, to be paid and accounted for by a range of departments – from BEIS, HMRC, DWP, MHCLG and others. The most significant of these, together with the costs included in the Main Estimates are:9

5 Figures taken from Central Government Main Estimates 2021-21 and Supplementary Estimates 2019-20.

Excludes some independently prepared estimates, e.g. for National Audit Office. 6 House of Commons’ Scrutiny Unit analysis of Estimates memoranda 7 Office for Budget Responsibility, Policy monitoring database, updated 14 May 2020 8 National Audit Office, Overview of the UK Government’s response to the Covid-19 pandemic, 21 May

2020 9 Some costs are included in Departmental Expenditure Limits – where the costs are possible to estimate

with a degree of certainty – such as business rates relief and Business Support grants. Others are demand

https://obr.uk/coronavirus-analysis/

https://www.nao.org.uk/report/summary-of-uk-governments-response-to-the-covid-19-pandemic/?slide=1


• Extra funding for health: before the coronavirus pandemic there were already plans for increasing health spending, and at least £3.3 billion has since already been added since to deal with coronavirus (in England only – devolved administrations receive their own equivalent extra funding through the Barnett formula).

• Extra financial support for employment: This includes

─ the Coronavirus Job Retention Scheme: £42 billion (HMRC: Resource AME), otherwise known as the furlough scheme, providing funding for 80% of a staff salary where someone is retained but not working. Based on a three-month period (the job retention scheme has already since been extended to October);

─ the Self-employment Income Support Scheme: £10 billion (HMRC: Resource AME) provides similar support for the self-employed. Based on a three-month period;

─ Support to employers for Statutory Sick Pay: £1 billion (DWP: Resource AME): funding for employers for sick pay resulting from coronavirus or self- isolation;

• Extra financial support for business. This includes:

─ Coronavirus business support grant schemes: £12.409 billion (BEIS: Resource DEL): grants of £10,000 and £25,000 for small businesses payable through local authorities (England only – devolved administrations receive their own equivalent extra funding through the Barnett formula);

─ Coronavirus business interruption loans: £1.324 billion (BEIS: Resource & Capital DEL) plus a further £11.576 billion provision for potential losses: Resource AME): loans for businesses, 80% backed by government and with fees and interest paid by government for the first 12 months. Administered by banks;

─ Additional Business rates relief: £10.806 billion (MHCLG: Resource DEL): certain business properties get an additional business rate holiday. Funding from MHCLG compensates local authorities for lost revenue (England only – devolved administrations receive their own equivalent extra funding through the Barnett formula);

─ Support for rail franchises: £2.075 billion (DFT: Resource DEL) to keep railways operating for key workers and cover revenue losses;

• Extra forecast spending on benefits:

─ forecast spending on Universal Credit is expected to increase by £20 billion compared to last year, £4.8 billion of which is due to this benefit gradually replacing tax credits paid by HMRC (a net £15.2 billion increase: DWP Resource AME);

─ Forecast spending on tax credits is also expected to rise by £9.95 billion (HMRC Resource AME).

led and rough forecasts only, and are hence included in Annually Managed Expenditure. Nevertheless, with the duration of the payment and the number of claims uncertain, all amounts included in the Main Estimate are likely to alter significantly and be amended in the Supplementary Estimate.


2.4 Day to day spending (Resource DEL) Not all of the changes to day to day spending are a direct or indirect consequence of coronavirus. Other notable changes to day to day spending (in Resource DEL) include:

• Health spending. An increase of £6.8 billion, including £5.8 billion for NHS England was already planned, on top of the £3.3 billion extra specifically made available for dealing with coronavirus (see Section 2.3 above);

• Funding for recruitment of extra police officers: £0.75 billion extra for Home Office supports the government’s plans to recruit an additional 20,000 police officers over time;

• Planned increased funding for Ministry of Justice: MoJ receives an additional £0.5 billion, to partly restore reductions made over the last ten years;

• Some extra funding for defence: there are increases to MoD’s budgets of £1.8 billion for personnel and equipment;

• Support for farmers: £1.75 billion extra through DEFRA’s Estimate replaces payments previously made by the EU;

• Devolved administrations receive additional Resource DEL funding to reflect functions devolved in Scotland, Wales and Northern Ireland (including some coronavirus measures). This amounts to £4.6 billion for Scotland, £2.4 billion for Wales and £0.8 billion for Northern Ireland.

0 10 20 30 40 50

Statutory sick pay

Rail Franchises

Personal tax credits

Self-employed income support

Additional business rates relief

Coronavirus business support grantschemes

Coronavirus Business InterruptionLoans (CBILS)

Universal Credit

Job retention scheme

RDEL

RAME

The Government's economic response to the coronavirus outbreakMajor additional spending included in 2020-21 Main Estimates, £ billions


2.5 Investment spending (Capital DEL) The 2019 Spending Round and 2020 Budget indicated the government’s intention to boost investment in infrastructure. Notable increases in Capital DEL included in the Main Estimate 20-21 include:

• Extra funding for DFT including:

─ An extra £2 billion for HS2;

─ An extra £0.9 billion for local authority roads/transport including funding for potholes;

─ An extra £0.6 billion for Highways England;

─ An extra £0.5 billion for Network Rail;

• Further science and research funding of £1.3 billion channelled through BEIS and UK Research and Innovation;

• Extra health investment funding of £1.1 billion;

-8,869

-531

-155

-92

-50

-39

89

111

293

494

806

1,291

1,826

2,044

2,381

2,607

4,663

10,208

11,609

12,386

-11%

-7%

-15%

-25%

-3%

-1%

19%

4%

5%

6%

7%

11%

5%

89%

15%

23%

16%

8%

145%

348%

-10,000 -5,000 0 5,000 10,000 15,000

DfE

DfID

CO

HMT

DCMS

HMRC

DIT

FCO

DWP

MoJ

N.Ireland

HO

MoD

Defra

Wales

DfT

Scotland

DHSC

MHCLG

BEIS

Changes in day-to-day spending (Resource DEL), by departmentChanges from last year's Supplementary Estimates, £ millions

% change from 2019-20 Supplementary Estimates


• Extra capital funding for MHCLG, totalling £4.7 billion including a large contingency fund of £2.4 billion to respond to housing market conditions, including the impact of coronavirus and £0.9 billion for cladding remediation/removal of non-aluminium composite material cladding;

• Extra flood defence funding for DEFRA of £0.2 billion;

• Devolved administrations receive additional Capital DEL funding to reflect functions devolved in Scotland, Wales and Northern Ireland (including some coronavirus measures). This amounts to £1 billion for Scotland, £0.2 billion for Wales and £0.2 billion for Northern Ireland.

2.6 Annually Managed Expenditure Big increases to Annually Managed Expenditure mainly reflect the new coronavirus response programmes referred to in section 2.3, i.e. the job retention scheme, self-employed income support, provisions for losses on coronavirus business interruption loans and increased forecast spending on Universal Credit and tax credits.

-585

-181

-51

-16

-7

2

2

29

119

161

181

197

204

368

564

1,067

1,106

1,688

3,368

4,752

-12%

-95%

-33%

-2%

-34%

0%

0%

15%

15%

10%

2%

171%

9%

73%

27%

24%

16%

14%

23%

55%

-1,000 -500 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500

DfE

HMT

FCO

DCMS

DIT

HO

HMRC

DWP

Defra

N.Ireland

MoD

CO

Wales

MoJ

DfID

Scotland

DHSC

BEIS

DfT

MHCLG

Changes in investment spending (Capital DEL), by departmentChanges from last year's Supplementary Estimates, £ millions

% change from 2019-20 Supplementary Estimates


3. Parliament’s role in considering Estimates

3.1 Estimates day debates Three days are set aside for debates on Estimates each year. The Backbench Business Committee selects the Estimates topics for debate on these days. These are allocated as follows:

• Two days (usually four debates) for Main Estimates, in July;

• One day (usually two debates) for Supplementary Estimates, in late February or early March.

3.2 Submitting a bid for an Estimates day debate Any backbench member can submit a bid for an Estimates day debate.

The key requirements are:

• The topic must relate to spending included in one or more of the Estimates presented to, and yet to be approved by, Parliament;

• The title of the debate should be in the form:

o The spending of [name of Department]; or

o the spending of [name of Department] on [name of programme/name of arms length body/name of activity]; or

o [name of Department] spending and its consequences for grants to the devolved institutions.

Bids for new Estimates day debates should give the names of those members who will take part in the debate and be submitted to the Backbench Business Committee using a new variant of the bid form which will be made available on the committee’s webpage. The Committee will use the list of names to gauge the likely level of cross-party interest in a debate. The deadline for submission of bids will be published by the Backbench Business Committee and is likely to be around mid-June 2020.

The title of the debate restricts the scope of the debate. Members need to adhere to the topic of the debate, and may be warned or prevented from speaking by the Speaker if their remarks stray beyond this.

A few specific items of spending (e.g. judges’ salaries, debt interest) are not annually voted by Parliament in Estimates. For this reason, bids for debates on spending on these items should not be made.

3.3 Selection of Estimates day debates Debates will be considered by the Backbench Business Committee, and endorsed by the Liaison Committee, before being announced in the weekly Business Statement in the usual way. Successful bidders for debates will be notified in the usual way by the Backbench Business Committee.


3.4 Motions Estimates selected for debate may be amended downwards or rejected outright by the House in motions following debates. Remaining Estimates which are not the subject of debates are put to the House as a ‘roll up motion’ – they cannot be amended, although they can theoretically be rejected outright. All Estimates presented – those debated and those not debated – are then put into effect (if approved) through the passage of a Supply and Appropriation Act. Following Royal Assent, departments may draw down the additional funds contained in the Main Estimate.

3.5 Approving, rejecting or amending motions When Estimates day debates are held, votes may take place on the floor of the House on those Estimates relevant to the Estimates day debates. But it is a long-standing convention that only the government may propose additional spending (the Crown Prerogative). While it is possible for an Estimate selected for debate to be rejected or amended downwards (if proposed, a token reduction of £1,000 is conventional), for such a vote to be successful is, in practice, extremely rare.

The remainder of Estimates not selected for debate – the vast majority – are put together in a ‘roll up’ motion and voted without debate.

The funds are formally authorised first by Supply Resolutions, and subsequently through a Supply and Appropriation Bill. There are two of these Bills each year: one for the Main Estimates, and one for the Supplementary Estimates and Vote on Account.

3.6 Role of Select Committees Select Committees have a continuing role in financial scrutiny. The Liaison Committee has set out a number of core tasks which are common to Select Committees. There is a specific core task:

“to examine the expenditure plans, outturn and performance of the department and its arms length bodies and the relationship between spending and the delivery of outcomes”

Committees are supported in this role by the House of Commons Scrutiny Unit. The Scrutiny Unit routinely provides analysis and data visualisations of Estimates for committees, which are subsequently available on its webpages. Committees also publish the memoranda on Estimates sent to them by departments.

3.7 Role of House of Lords The House of Lords involvement in approval of Estimates is purely formal, with no debates or votes taking place.


Annex A: Summary of content of 2020-21 Main Estimates

Definitions

Resource Department Expenditure Limits (RDEL): day to day spending on services, pay and running costs, including grants to support such spending Capital Department Expenditure Limits (CDEL): investment spending, including loans and capital grants Resource Annually Managed Expenditure (RAME): spending on benefits and pensions and other day to day spending which is demand led or difficult to forecast. Long term provisions for liabilities are also included. Capital Annually Managed Expenditure (CAME): spending on investment or loans which is demand led or difficult to forecast Non-budget: cash block grant to the devolved institutions, which they decide how to spend. Devolved institutions use this cash, voted by the Westminster Parliament, to support the spending power which HM Treasury allows them through the DELs which it sets (but which are not voted by the Westminster Parliament), and which can be increased as a result of the Barnett formula and other changes.

Cabinet Office Cabinet Office proposes a decrease of £155.0 million (-14.6%) in its Resource DEL, reducing it to £910.4 million. Notable changes to the Cabinet Office’s Resource DEL budget include:

• A decrease in election related costs of £321.7 million;

• A decrease in EU Exit preparation costs of £75.1 million;

• A decrease in Grenfell Inquiry costs of £30.4 million;

• An increase of £26.7 million to cover depreciation costs;

• An increase of £37.1 million to cover costs relating to Covid-19; and

• An increase of £215.6 million for the United Nations Climate Change conference.

Cabinet Office plans an increase in its Capital DEL budget of £196.6 million (+171%), taking it to £311.4 million. Notable changes to the Cabinet Office’s Capital DEL budget include:

• An increase of £163.0 million for the Covid-19 ventilator programmes;

• An increase of £27.3 million for the Government Property Agency for the development of the Hubs programme and Old Admiralty Arch; and

• An increase of £8.5 million for the Geospatial Commission.

Cabinet Office has also provided indemnities for the emergency provision of ventilators for contracts signed between 26 March and 28 March 2020. Cabinet Office will offer similar indemnities where accelerated manufacturing process are used to address supply issues relating to Covid-19.

Department for Business, Energy and Industrial Strategy The Department for Business, Energy and Industrial Strategy (BEIS) provides support for business and energy policy including spending to address climate change.


BEIS proposes an increase of £12,386 million (+348%) to its Resource DEL for 2020-21, compared to 2019-20, taking it to £15,940.8 million.

This large increase is mainly composed of:

• £12,409 million extra for coronavirus business support grant schemes;

• £1,000 million extra for Coronavirus Business Interruption Loans (this does not include any changes in budgets that may be required following the addition of the Coronavirus Large Business Interruption Loan Scheme (CLBILS) and the Coronavirus Small Business Interruption Loan Scheme (CSBILS), which will be made at the Supplementary Estimate); and

• Less £1,201 million of one-off funding last year, not repeated in 2020-21, to cover the costs of the Official Receiver prior to the sale of British Steel.

BEIS’ Capital DEL is also set to rise, by £1,688 million, compared to last year, taking it to £13,522.8 million, an increase of 14%. Of this increase:

• £324 million is also for Coronavirus Business Interruption Loans;

• £1,334 million extra is allocated for science and research, much of which appears to have been planned and announced before the coronavirus pandemic;

• £189 million extra for tackling climate change;

• £220.5 million extra for international climate finance; and

• £283 million extra for Nuclear Decommissioning.

These increases are offset by reductions of £861.7 million, compared to last year caused by:

• there being one off spending last year in relation to the British Steel sale (-£331.3 million); and

• currently lower planned payments to the British Business Bank of £530 million (around the amount that was only added late last year at Supplementary Estimates).

BEIS’ Resource Annually Managed Expenditure budget includes some big changes to estimated provisions for liabilities, compared to last year, but as they largely offset one another the net decrease is of only £307 million, or -2%, reducing the budget from £15,055 million to £14,747.5 million.

The changes include

• An increase of £11,594 million to cover provisions associated with the Coronavirus Business Interruption Loan Scheme (CBILS);

Offset by:

• A decrease of £6,600 million in estimated liabilities for the Low Carbon Contracts company. These estimates are likely to be heavily revised later in the year;

• A decrease of £1,123 million in British Steel liabilities – the provision for last year was not needed, hence there is now a credit; and

• A decrease of £4,173 million in estimated nuclear decommissioning liabilities, largely down to changes to discount rates.

BEIS’ Capital Annually Managed Expenditure budget is set to reduce by £73 million or 10%, from £723 million last year to £649.7 million in 2020-21. This is largely due to a forecast decrease in the net capital expenditure of Nesta (the innovation foundation).


Department for Digital, Culture, Media and Sport The Department for Digital, Culture, Media and Sport (DCMS) proposes a Resource DEL budget in 2020-21 of £1,855.8 million. This is a reduction of £50.1 million (-2.6%) compared to the final budget for last year of £1,906.0 million.

Several components of the DCMS budget are usually finalised or added only in the Supplementary Estimate, including claims from the Treasury Reserve for the Museums’ Freedom scheme, the Listed Places of Worship grant scheme and the tampon tax; last year this increased the budget by around £71 million. Compared to last year’s initial budget (set in the 2019-20 Main Estimate) DCMS’s Main Estimate this year actually shows an increase of £85.6 million (+4.6%).

Compared to the original budget last year, the main drivers of the proposed changes are:

• £53.4 million increase for the Birmingham Commonwealth Games in 2022;

• £26 million increase for the UK Gigabit programme;

• £21.7 million increase for DCMS central support;

• and smaller increases across most programme areas, partly as a result of the inflationary uplift applied in the 2019 Spending Round;

Offset by:

• a £67.3 million reduction in the budget for the National Citizens Service; and

• a £24.8 million reduction in the budget for depreciation and the effects of accounting changes (the ‘IFRS 16’ changes to the treatments of leases, which DCMS was an early adopter of last year).

DCMS also proposes a Capital DEL budget of £629.8 million. This is a reduction of £15.9 million (-2.5%) compared to the final budget last year of £645.6 million. The main drivers of the proposed budget changes are: • £120.8 million decrease for the impacts of the IFRS 16 accounting treatment

changes;

• £36.1 million decrease for Blythe House (building an archive facility for London museums – the project is now nearing completion);

• £18.1 million decrease for BDUK superfast broadband programme and £15.6 million decrease for 700 MHz spectrum clearance programme (both nearing completion and having underspent budget last year); and

• Offset by a £95.9 million increase for the UK Gigabit programme, £36.2 million for digital NPIF and £36 million for Local Full Fibre Networks.

The DCMS budget is largely split between museums, galleries and libraries, arts and heritage and digital broadcasting and media, which each represent around a quarter of the total. The final quarter is split between sport, ‘civil society’ (largely the National Citizens Service) and other spending, mainly on tourism.

Department for Education The Department for Education provides funding for early years, schools, child social care, Further Education and Higher Education, with grants to schools making up around two thirds of the departments’ total day-to-day spending.

The Department for Education proposes a Resource DEL of £72,071.8 million, a fall of £8,869 million from the final budget for last year. However, both figures include student loan provisions which are hugely volatile reflecting estimates of amounts not expected to be paid back long in the future and generally reassessed at the end of each financial year.


Excluding these student loans, gives a better picture of DFE’s day to day spending, which is set to increase by £3,901 million or 6.2% from £63,431 million to £67,332 million.

The increase reflects:

• £3,147 million extra for schools (+6%);

• £358 million extra for further education (+7.3%);

• £352 million extra for Education and Skills Funding Agency (+15.2%), the increase primarily relating to apprenticeships; and

• £43 million extra for social care and disadvantage (+11.5%) primarily to address Children’s Social Care, SEND and Alternative Provision.

DFE’s Capital DEL is set to decrease from £4,912.3 million to £4,327.2 million, a reduction of £585 million or 11.9%. This is largely caused by:

• A reduction of £475 million (-21%) in capital spending for schools. DFE says costs of capital programmes vary between years according to the status of construction and level of need;

• A reduction of £196 million (-12%) in capital early years spending; and

• Increases in capital spending of £89 million for further education and £41 million for higher education.

Department for Environment, Food and Rural Affairs The Department for Environment, Food and Rural Affairs (Defra) proposes a Resource DEL budget in 2020-21 of £4,331.7 million. This is an increase of £2,043.9 million (+89.3%) compared to the final budget last year of £2,287.8 million.

This substantial increase is predominantly explained by an increase in funding of £1,751 million for direct payments to farmers through the Rural Payments Agency, following the UK’s departure from the EU. These were previously funded by the European Commission but will now become an ongoing part of Defra’s budget.

Other main drivers of the proposed budget changes are:

• £210 million increase as a result of the coronavirus pandemic, to ensure food supply to vulnerable people;

• £87 million increase for the flood and coastal defence programme, including the Winter Defence Repair Fund following the flooding this winter, as announced at the March 2020 Budget;

• £86 million increase largely for Environment Agency projects: each year at the Supplementary Estimates a portion of the budget is moved to Capital DEL as project requirements become clear – last year £86 million was transferred, and a similar switch is likely in February 2021;

• Offset by a £115 million decrease in EU Exit funding: this is similar to the allocation in the last Main Estimate, and additional funding may again be requested in the Supplementary Estimate.

Defra also proposes a Capital DEL budget of £902.5 million. This is an increase of £119.2 million (+15.2%) compared to the final budget last year of £783.3 million. The main drivers of the proposed budget changes are:

• £179 million increase for the flood and coastal defence programme (as with the Resource DEL budget) announced at the March 2020 Budget;


• £67 million increase for the Animal and Plant Health Agency’s site at Weybridge, required to maintain food security following exit from the EU;

• Offset by the removal of £86 million previously transferred (outlined above); and

• £20 million decrease in the budget for EU Exit.

With this new expenditure on Direct Payments, around 43% of the Defra budget is now allocated to ‘food and farming’, all of which is day-to-day (resource) spending. A further 22% of the budget is for ‘flood protection’, the majority of which is investment (capital) spending. Around 17% is for ‘improving the environment’ with the remaining budget split between ‘plant and animal health’, ‘rural services’ and ‘departmental operating costs’.

Department of Health and Social Care The Department of Health and Social Care (DHSC) provides funding for the NHS in England and for bodies such as Public Health England.

DHSC proposes an increase in Resource DEL funding of £10,207.8m (+7.6%), taking it to £144,835.5m. The notable increases are:

• An increase of £5,806.6m for NHS England in-line with the NHS Long Term Plan, Spending Review 2019, and DHSC’s funding settlement as outlined in the NHS Funding Act 2020;

• An increase of £3,373.0m for Covid-19 funding (please see Addendum below);

• An increase of £501.3m relating to the 2019 election manifesto commitments, netted off against a change in DHSC’s inter-group transaction forecast;

• An increase of £347.4m for the Public Health Grant investment via local authorities as per the 2019 Spending Round; and

• An increase of £229.3m for Health Education England to provide national leadership, and coordination, for the education and training in the health and public health workforce as agreed in the 2019 Spending Round.

DHSC is proposing an increase in its Capital DEL funding of £1,106.0m (+15.5%), taking it to £8,231.1m. The notable increases are:

• An increase of £874.0m to invest in the capital infrastructure of NHS England; and

• An increase of £355.8m following the Spring Budget 2020 for capital investments, which will be distributed across the DHSC group within the financial year.

DHSC’s Resource Annually Managed Expenditure, which covers provisions for increased liabilities and guarantees, is set to fall to £10,001.9 million, 12.4% lower than last year.

Addendum: The Main Supply Estimates are prepared to coincide with start of the new financial year in April. This means that it was not possible for DHSC to seek budgetary cover for all of the additional Covid-19 related costs that it will incur in 2020-21. It has been agreed that DHSC will seek further budgetary cover in the Supplementary Estimates to cover the associated expenditure.

In addition, to minimise the administrative pressure on NHS organisations whilst responding to Covid-19, DHSC suspended operational planning process for the financial year, and made significant changes to its financial allocation processes. The most notable of these changes are:

• DHSC will provide monthly block grants to NHS Providers between 1 April and 31 July;


• NHS providers will claim monthly for additional Covid-19 related costs including staffing, decontamination and testing; and

• Provision of ‘top-up’ payments to NHS Providers where there is a difference between the expected costs and block contacts, to avoid NHS Providers having to manage deficits.

Department for International Development The Department for International Development (DFID) plans a Resource DEL (day-to-day spending) budget of £7,548.4 million in 2020-21, 7% lower than last year’s final budget of £8,079.7 million.

The main components of DFID’s spending are:

• Regional programmes: £3,106 million (reduction of 17% from last year, in order to accommodate commitments to multilateral and centrally managed programmes which are managed elsewhere within DFID);

• Policy priorities, international organisations and humanitarian: £3,187 million (decrease of 4% from last year);

• Conflict, Stability and Security Fund (CSSF): £66 million (reduction of 36% from last year);

• Operating costs: £393 million (increase of 17% from last year);

• Other central programmes: £209 million, compared with a revised budget of only £40 million last year. The explanation for this large difference is that “Other central programmes” includes the redeployable crisis reserve, meaning that funds are transferred out of this budget line in year as/when crises occurred.

• Scholarships: £28 million (increase of 1% from last year);

• Independent Commission for Aid Impact: £4 million (increase of 8% from last year);

• The Prosperity Fund: £97 million (increase of 199% from last year, however DFID hold £38 million of this fund to transfer to other government department later in the financial year); and

• European Union Attributed Aid: £459 million (reduction of 1% from last year). These are amounts attributed to DFID to reflect spending on development activities by the European Commission from its budget.

DFID plans a Capital DEL (investment budget) of £2,623.3 million in 2020-21, 27% above last year’s final budget of £2,059.6 million. This increase reflects new multilateral replenishments.

DFID’s Resource AME requirement of £30.7 million includes potential reductions in the value of DFID’s Development Capital Investment (DCI) portfolio generated by a required change in accounting treatment, partially offset by declines in the other requirements that become clear during the year.

DFID’s Capital AME budget of £1,134 million (an increase of 19% from last year) in line with increased capital injections into Commonwealth Development Corporation Group Plc (CDC).

The UK has committed £744 million in international aid in response to COVID-19, though it is not clear how this has been allocated between day-to-day and investment spending. Specific funding streams include:


• up to £150m of UK aid to the International Monetary Fund’s Catastrophe Containment and Relief Trust (CCRT) to help developing countries deal with the short-term economic disruption caused by coronavirus;

• £31m for the research of vaccines and diagnostic tests, to support the World Health Organization and other international humanitarian organisations;

• £250m to the Coalition for Epidemic Preparedness Innovations (CEPI) to rapidly develop a coronavirus vaccine;

• £40m to develop affordable treatments for coronavirus patients;

• £23m to further develop easily-manufactured testing devices;

• £50m in a joint campaign with Unilever to tell up to a billion people about the importance of handwashing to stop the virus spreading in developing countries; and

• £200m to support UK charities and international organisations to help reduce mass infections in developing countries which often lack the healthcare systems to track and halt the virus.

Department for International Trade The Department for International Trade (DIT) plans a Resource DEL (day-to-day spending) budget of £567.4 million in 2020-21, 19% or £88.7 million higher than last year’s final budget of £479 million.

DIT received a total settlement of £522 million for 2020-21 day-to-day spending in the 2019 Spending Round and there have been several further budget changes to reach the 2020-21 DIT Main Estimate total of £567 million, which are:

• £14 million Overseas Development Assistance funding transferred in for the Africa Strategy, the Investment Promotion Programme, and capability building in the development team;

• £14 million received at Budget 2020 for a range of new and enhanced services to support UK exporters and attract inward investment;

• A £9 million increase, carried forward from last year, following revisions to the spend profile for the Dubai Expo;

• £9 million extra for the GREAT Campaign;

• £4 million extra for the Dubai Expo;

• £3 million extra from the Foreign and Commonwealth Office for the HMG Platform Charge;

• £1 million extra for other programmes; and

• £8 million transferred out, including £4.2 million for DIT’s contribution towards the costs of COP 26 and £3.4 million for DIT’s contribution to the ONS Statistics Improvement Programme.

The Department for International Trade only spends a small amount of its overall budget on capital investment. DIT plans a Capital DEL (investment) budget of £14.4 million in 2020-21, £7.5 million or 34% below last year’s final budget of £22 million.

Department for Transport The Department for Transport (DfT) proposes an increase in Resource DEL funding of £2,607.4 million (+22.5%), taking it to £14,192.3 million. The key driver for this change in DfT’s Resource DEL is an increase of £2,775.1 million to provide financial support to the


rail franchises to ensure continuation of critical services and support essential journeys during Covid-19.

DfT also proposes an increase in its Capital DEL funding of £3,367.7 million (+22.9%), taking it to £18,063.8 million. Notable drivers for this increase include:

• Increases of £2,050.7 million relating to Notice to Proceed consisting of £305.7 million for High Speed Rail and £1,745.0 million for High Speed Two Limited;

• An increase of £867.7 million for Local Authority Transport, of which £500 million is to tackle potholes and the rest is from the first year’s funding for the Major Road Network (MRN) and Large Local Majors (LLM) programmes;

• An increase of £616.4 million for Highway England predominately to fund the first year of the new Road Investment Strategy (RIS2);

• An increase of £558.9 million for Network Rail which mostly consists of £348.9 million for renewals, and £210m for enhancements deferred from 2019-20; and

• A decrease of £854.9 million for Crossrail as the provision required to cover the agreed Crossrail Loan funding via Transport for London included in last year’s budget is not (yet) repeated in 2020-21.

DfT plans a decrease in its Resource AME funding of £260.3 million (-9.8%) taking it to £2,408.5 million. The key drivers for this are:

• A decrease of £291.4 million in the fair value of financial liabilities for Network Rail;

• £19.1 million less required to cover the one-off costs relating to the collapse of Thomas Cook;

• £11.1 million less in expected costs for the decommissioning of the Royal Sovereign Lighthouse; and

• An increase of £54.6 million following the release of a VAT provision for Highways England.

Department for Work and Pensions Much of DWP’s spending, including all spending on benefits and state pensions, lies within the budget known as Resource Annually Managed Expenditure (which is not subject to pre-set limits set in Spending Reviews). The budget sought for this spending in 2020-21, based on DWP and OBR assumptions, is £213,482.0 million, 11.7% or £22,402 million above the latest forecast for 2019-20 of £191,080 million. (The Supplementary Estimate budget last year, at £191,802 million was a little higher as it included a forecast margin.)

Of this increase:

• £15.7 billion is to cover the estimated impact in increased costs arising from coronavirus on Universal Credit, Jobseeker’s Allowance, Employment and Support Allowance and Pension Credit;

• £1 billion extra is to cover the costs of Statutory Sick Pay, which will be funded by DWP rather than employers during the Coronavirus outbreak;

• £4.8 billion extra for Universal Credit and equivalent DWP benefits, before coronavirus impacts took hold, as a result of Universal Credit roll-out and migration of HMRC tax credits to Universal Credit;

• £2.9 billion extra for state pensions and pension credit – largely a consequence of the triple lock increase of 3.9% (average earnings) for basic and new state pension


and 1.7% in additional state pension rates, as well as changes in forecast claimant counts;

• A £1.7 billion decrease in forecast spend on disability and carer benefits is driven largely by the devolution to the Scottish government of Attendance Allowance, Disability Living Allowance and Personal Independence Payments. Industrial injuries benefits and Severe Disablement Allowance have also been devolved; and

• Many benefits rates which have been frozen for the last four years are being uprated by 1.7%.

DWP is also proposing an increase of £293.2 million or 4.7% in its Resource DEL, from £5,905.4 million last year to £6,198.6 million for 2020-21. This limit covers DWP’s running costs, support for local authorities and for employment programmes. The change includes:

• £222 million extra in response to coronavirus measures, including £56 million for a shielding helpline contact centre;

• £117 million of other increases to operational delivery and operating costs; and

• A £73 million reduction to spending on employment programmes reflecting the smaller and more focussed Work and Health Programme. DWP says future employment programmes will likely need to be tied into future economic recovery work, given the completely different economic situation and unemployment levels.

DWP proposes a Capital DEL for 2020-21 of £224.6 million, a rise of 15.1% or £29.4 million. Changes include:

• £19 million extra for the Social Fund, partly as a result of the increase in Funeral Expense Payments from £700 to £1,000; and

• £29 million extra for Departmental capital costs, as a result of reduced income from sale of IP addresses.

Foreign and Commonwealth Office The Foreign and Commonwealth Office (FCO) plans a Resource DEL (day-to-day spending) budget in 2020-21 of £2,755.8 million, 4% (£110 million) above last year’s final budget of £2,645 million. This rise is mainly driven by a £224 million increase in funding for the Conflict, Stability and Security Fund.

The main components of FCO’s day-to-day spending are:

• Administration, frontline diplomacy and overseas network – mainly costs of running the embassies: £1,073 million (reduction of 9% from last year);

• Core FCO programme funds and grants to third parties (including international subscriptions e.g. OECD): £340 million (reduction of 11% from last year);

• British Council: £176 million (increase of 6% from last year);

• Net funding for non-departmental public bodies: £7 million (increase of 1% from last year);

• Prosperity Fund: £156 million (increase of 26% from last year);

• Conflict, Stability and Security Fund programme expenditure: £616 million (increase of 40% from last year); and

• Conflict, Stability and Security Fund (peacekeeping): £388 million (increase of 14% from last year).


Funding for the Conflict, Stability and Security Fund (CSSF) and Prosperity Fund are mainly transferred from the Department for International Development (DFID), which transferred £988 million and £150 million respectively. Funding for the Gulf Strategy has moved categories from the Prosperity Fund to core FCO programme funds in 2020-21.

Within the above totals, significant changes include:

• £333 million additional Official Development Assistance (ODA) funding transferred from DFID to support the UK’s existing foreign policy objectives and commitments.

• £20 million transferred from the Ministry of Defence (MOD) for the Gulf Strategy Fund.

• £18 million transferred from DFID for the Africa Strategy.

• £13 million for the costs related to staff who joined the department when the Department for Exiting the European Union (DExEU) was disbanded in January 2020.

The FCO is currently focusing on short-term objectives which support the Government’s response to the Covid-19 pandemic, reviewing discretionary budgets, in order to prioritise the Covid-19 response. Formal budget allocations for 2020-21 will be confirmed “as soon as possible.”

FCO plans a Capital DEL (investment) budget of £101.8 million for 2020-21, 33% below (£50.7 million) last year’s final budget of £152.5 million. There are often fluctuations in FCO’s investment budgets year-on-year due to the investment profile of capital projects as well as one-off income gains from sales of assets. In particular, FCO’s capital programme is dependent on asset sales such as the sale of the Bangkok embassy. The funding from the Bangkok embassy sale will support a number of projects under the FCO’s Global Asset Management Plan (GLAMP). These include completing the fit-outs of new embassies in Bangkok, Mexico City and a number of smaller posts, as well as continuing major refurbishments/reconfiguration programmes in Washington and Paris.

The FCO’s planned Resource Annually Managed Expenditure (Resource AME) budget for 2020-21 is £100 million, less than half of the final budget for 2019-20 of £202 million. However, it should be noted that between the initial and final budgets in 2019-20, FCO’s Resource AME budget more than doubled from £100 million to £202 million. Resource AME is driven by non-cash expenditure such as impairments, provisions and foreign exchange volatility. These rely on in-year data and so cannot be taken up until the Supplementary Estimate.

Home Office The Home Office (HO) proposes a Resource DEL budget in 2020-21 of £12,713.3 million. This is an increase of £1,291.1 million (+11.3%) compared to the final budget last year of £11,422.2 million.

This significant increase is largely driven by an additional £750 million this year for the continued recruitment of 20,000 additional police officers (over a three-year period). Other contributions to the increase include the following proposed changes:

• £207 million increase for the Border, Immigration and Citizenship Systems (BICS) directorate, largely as a result of EU Exit preparations; there is an increase of £95 million for asylum support, and additional funding of £40 million for Border Force Transit recruitment, £40 million for a skills-based immigration system and £10 million to tackle illegal immigration;

• £85 million increase for the Office for Security and Counter-terrorism (OSCT);


• £75 million increase for major law enforcement; and

• £62 million increase for the Serious Organised Crime group.

The Home Office also proposes a Capital DEL budget of £741.4 million. This is an increase of £1.6 million (+0.2%) compared to the final budget last year of £739.8 million. This essentially flat profile represents an increase of £163.3 million since the Main Estimate 2019-20, following a £106 million switch from the resource to capital budget at the Supplementary Estimate.

Within the capital budget there is a proposed reduction of £86 million in the ‘public safety and national security directorate’, including a £53 million reduction for the police force. There is a proposed increase of £100 million for the BICS directorate, mainly focused in its core operations but with around £12 million increases for Border Force and immigration enforcement.

There are likely to be further switches from the resource budget at the Supplementary Estimates in February.

The public safety directorate accounts for 80% of the total HO budget, with the police settlement alone accounting for nearly two-thirds of the budget, and the OSCT nearly 10%. Central functions, called ‘enablers’ and also incorporating ‘major law enforcement’, accounts for 14%. BICS accounts for the remaining 6%; however, this is net of income from visa and passport operations, which is equivalent to around a fifth of the HO budget.

HM Revenue and Customs Her Majesty’s Revenue and Customs (HMRC) is responsible not only for collecting tax, but for paying child benefit and tax credits. Since the advent of the coronavirus lockdown, HMRC has also taken on responsibility for two further major support schemes:

• the Coronavirus Job Retention Scheme (also known as the “furlough” scheme); and

• the Self-Employment Income Support Scheme to help compensate the self-employed for loss of income as a result of Covid-19.

Taken together with other AME spending such as tax credits and child benefit these have pushed up HMRC’s Resource AME, which covers all of these demand-led support schemes from £46,100 million last year to £108,831.4 million in 2020-21, an increase of £62,730.7 million (+136.1%). The notable changes to HMRC’s Resource AME budget include:

• forecast spend of £42,000 million on the Coronavirus Job Retention Scheme (before the extension to October was announced);

• forecast spend of £10,000 million on the Self-Employment Income Support Scheme;

• an increase of £9,950 million for Personal Tax Credit, which is also known as Working Tax Credits. The increase is driven by the Government’s response to Covid-19;

• an increase of £426.1 million for Tax Free Child Care to reflected anticipated scheme uptake rates and savers’ investment behaviour;

• An increase of £205.2 million in Child Benefit due to CPI adjustment and the impacts of Covid-19; and

• An increase of £142 million for Lifetime ISAs to reflect the OBR’s forecasts base on scheme uptake rates and levels of investment.


HMRC, like other departments, also has a Resource DEL, to cover the costs of collecting taxes and administering these benefits. HMRC proposes a decrease of £39.3 million (-0.9%) in its Resource DEL taking it to £4,331.1 million. This decrease in Resource DEL is predominately driven by a decrease in spending on the National Insurance Fund of £31.3 million.

HMRC also plans to increase its Capital DEL by £1.8 million (+0.5%) taking it to £365.5 million.

HM Treasury HM Treasury proposes a decrease in its Resource DEL of £92.1 million (-25.0%) taking it to £276.9 million. Notable changes to HM Treasury’s Resource DEL include:

• a decrease of £54.0 million relating to Decommissioning Relief Deeds; and

• an increase of £24.0 million for the acquisition of additional skills and capacity from external experts in corporate finance, to response to Covid-19 related demands.

HM Treasury are also seeking a Capital DEL of £9.7 million, a reduction of £181 million compared to the budget of £190.3 million last year (-94.9%).

The two notable factors in this decrease are:

• Decrease of £93.3 million relating to the Asian Investment Bank as the final instalment was paid in 2019-20; and

• Decrease of £90.7 million due to the reclassification of Infrastructure Finance Unit Limited (IFFUL) to Capital AME*. IFFUL is the company that administers the Digital Infrastructure Fund and the Charging Infrastructure Investment Fund on behalf of HM Treasury.

HM Treasury is decreasing its Resource AME by £60,796.7 million (-99.5%) taking it to £303.1 million. The notable drivers in this decrease are:

• Last year £47,000 million was included for the EU withdrawal settlement; this is not repeated this year;

• A decrease of £13,949.0 million relating to the fair-value adjustment of the Bank of England Asset Purchase Facility Fund derivative that sits in the Assistance to financial institutions line of the estimate. The fair value price is very volatile, with the current figure reflecting the fair value of the assets brought under quantitative easing; and

• An increase of £125 million for UK Asset Resolution, which was looking to sell its residual asset portfolio and legal entities in 2020. That said, the global impact of Covid-19 may mean it is an inopportune time to do this. This will be revised at the Supplementary Estimates.

HM Treasury is also proposing an increase in its Capital AME of £766.8 million to -£1,330.0 million. Notable factors in this increase are:

• No repeat of net repayments of £650 million to UK Asset Resolution Limited included last year;

• An increase of £90.7 million due to Infrastructure Finance Unit Limited being reclassified from Resource AME*.

*NB: The reclassification on Infrastructure Finance Unit Limited has been processed as part of 2019-20 adjustments by HM Treasury in their Estimates Memorandum but had not been processed in the 2019-20 Provisions figures presented in the Main Supply Estimates. For transparency, the adjustment has been included in this note.


Ministry of Defence The initial Ministry of Defence (MoD) budget given in the Main Estimates each year generally differs significantly from the final budget due to two common practices in MoD’s Supplementary Estimates:

• claims on the Treasury Reserve for ongoing military operations and peacekeeping, including missions in Afghanistan, the Wider Gulf, and counter-Daesh; and

• switches from the Resource DEL budget to Capital DEL for Single Use Military Equipment (SUME) – ammunition and missiles, for example – reflecting the latest MoD usage forecast.

The MoD proposes a Resource DEL budget in 2020-21 of £39,248.8 million. This is an increase of £1,826.5 million (+4.9%) compared to the final budget last year of £37,422.4 million. This year’s budget does not repeat last year’s £263 million SUME transfer, and also a £700 million reduction in depreciation funding, but does additionally incorporate £200 million in previous commitments for transformation programmes and shipbuilding. The main drivers of the proposed budget change are:

• £472 million increase for service personnel and £256 million increase for civilian personnel;

• £330 million increase for infrastructure costs, mainly property management and IT;

• £140 million increase for equipment support costs;

• Offset by £128 million reduction in operations and peacekeeping costs, which will be updated in the Supplementary Estimate in February;

The MoD also proposes a Capital DEL budget of £10,535 million. This is an increase of £180.9 million (+1.7%) compared to the final budget last year of £10,354.1 million. This proposed change is largely driven by an increase in the SUME budget of £305 million. There is an offsetting reduction of £141 million for other (fiscal) capital.

A quarter of the total MoD budget is committed to personnel (21% for service, 4% civilian). Around 17% is for depreciation; this reflects the significant investment in infrastructure and vehicles by the department. Both equipment support and SUME account for 14% of the budget.

Ministry of Housing, Communities and Local Government The Ministry of Housing, Communities and Local Government (MHCLG) has two separate Resource DEL (day-to-day spending) budgets - one for ‘Communities’ (including housing) and another for ‘Local Government’. MHCLG says that the figures provided at this time are based on their best estimates for funding requirements and are likely to require revision as a result of Covid-19.

MHCLG proposes a Communities Resource DEL of £2,687.9 million, a reduction of £159.1 million (-5.6%) compared to last year. Notable items driving this decrease are:

• A decrease of £188.2 million to reflect the accounting adjustments needed in the Help to Buy scheme following the implementation of IFRS 9;

• A decrease of £77.6 million in the Voluntary Right to Buy Schemes where the majority of the sales in the Midlands completed in 2019-20;

• A decrease of £55.4 million in funding required for Local Governments to prepare for the EU Exit;

• An increase of £34.1 million for Remediation safety works;


• An increase of £46.0 million to fund the Devolution Deals in Sheffield and West Yorkshire;

• An increase of £65.0 million to deliver the government’s manifesto commitment to “fully enforce the Homelessness Reduction Act”.

MHCLG Local Government Resource DEL proposed for 2020-21 is £16,954.7 million, an increase of £11,768.5 million (+226.9%) compared to last year. This increase is predominately driven by additional funding provided in response to Covid-19. The notable increases are:

• An increase of £10,805.7 million additional Business Rates reliefs announced at the Spring 2020 budget alongside the Government’s response to Covid-19; and

• An increase of £959.6 million for Business Support Grants, as a result of the reduction in the number of Business Rates Retention pilots.

MHCLG proposes a Capital DEL budget of £13,336.9 million, an increase of £4,752.5 million (+55.4%), compared to last year. The most notable changes are:

• An increase of £2,485.5 million in “Department Unallocated Provision” (a contingency fund). This portion of the budget has been left unallocated at this stage to give MHCLG flexibility to use the funding in response to market conditions, and in particular in response to the impact of Covid-19;

• An increase of £939.9 million for Remediation works to remove and replace unsafe non-Aluminium Composite Material (ACM) cladding systems;

• An increase of £601.9 million for the Help to Buy scheme based on MHCLG’s current assessment of demand;

• An increase of £506.2 million for Local Enterprise Partnerships (LEP) Stewardship, based on the 2016 agreed funding profile to support growth projects, particularly where transport projects will no longer be taken forward;

• An increase of £235.9 million in Infrastructure for Housing as some projects have moved into the ‘delivery phase’ in 2020-21; and

• A decrease of £324.9 million in Building Affordable Housing to offset additional funding provided in 2018-19 to accelerate delivery.

Ministry of Justice The Ministry of Justice (MoJ) proposes a Resource DEL budget in 2020-21 of £8,903.4 million. This is an increase of £494 million (+5.9%) compared to the final budget last year of £8,409.4 million. This increase is largely driven by the uplift planned as part of the Spending Round 2019, with an additional £148 million committed at the 2020 Budget in March, including £69 million for community sentences in England and Wales, £56 million for prison maintenance issues and £15 million for victim support. Overall these drive the following proposed changes:

• £176 million increase for ‘decent and safe prisons’ of which £90 million is for prisons and £75 million for prison contracts;

• £103 million increase for the ‘transparent and efficient court system’, including a £43 million increase for the HM Courts and Tribunals Service (HMCTS), £32 million for the change programme and £23 million for victim and witness services; and

• £61 million increase for ‘public protection’, including an increase of £74 million for the National Probation Service, but offset by a £20 million reduction for community rehabilitation companies (CRCs) and £17 million reduction for electronic monitoring.


The MoJ also proposes a Capital DEL budget of £873.0 million. This is an increase of £368.6 million (+73.1%) compared to the final budget last year of £504.6 million. As with the resource budget, a planned uplift as part of the Spending Round is further increased by £150 million for new prison building, announced at the 2018 Budget, and £100 million for prison maintenance, announced at the 2020 Budget. The majority of this budget has not been allocated to directorates yet; £253 million of this increase in budget is held centrally. More detailed information on the allocation can be expected in the Supplementary Estimates in February.

Around one-third of the MoJ budget is committed to ‘decent and safe prisons’, with prisons themselves accounting for a quarter. Around 20% is committed to ‘access to justice’, which is almost entirely the Legal Aid Fund, and 15% is committed to ‘a transparent and efficient court system’, almost entirely accounted for by HMCTS.

Northern Ireland The Northern Ireland Office’s Main Estimate seeks authorisation for:

• the cash grant to the Northern Ireland Executive. The cash grant (shown in the Estimates as ‘Non-Budget’ expenditure) provides funding for the Northern Ireland Consolidated Fund - the main source of funding for Northern Ireland Executive expenditure; and

• funds for the Northern Ireland Office (this is a UK ministerial department responsible for the smooth working of the devolution settlement and relations between the UK and NI Governments).

Northern Ireland Executive grant

The cash grant proposed for the Northern Ireland Executive is £22,602.9 million for 2020-21, 34% above the amount sought last year, £16,888.2 million.

The cash grant is based on a calculation worked out by taking the spending power (the Departmental Expenditure Limits allowed for the NI Executive by the UK Treasury) plus Annually Managed Expenditure (this is expenditure such as welfare payments that is deemed more difficult to control than DEL), less non-cash items such as depreciation, and adjusted for timing differences.

Changes in DEL budgets

The Northern Ireland Executive plans a total DEL settlement of £15,349.8 million (£13,613 million Resource and £1,736.8 million Capital), an increase of 15% compared to last year’s final budget. This is made up of an increase to the Resource DEL of £1,800.8 million (+15%), and an increase in Capital DEL of £161.2 million (+10%).

Key drivers of increased funding include:

• £523 million funding from the New Decade, New Approach agreement; and

• £279 million of funding as a result of the UK Government’s commitment to maintain farm support for the duration of the parliament following the UK’s exit from the European Union

Spending decisions taken by the UK Government have also resulted in additional funding being directed to Northern Ireland through Barnett Consequentials. The UK Government’s 2020 Budget generated around £204 million of Barnett Consequentials (£77 million Resource DEL and £127 million Capital DEL). Subsequent Barnett Consequentials set out in the Main Estimate 2020-21 are largely a result of UK Government responses to COVID-19, and total £1,041 million Resource DEL and £13 million Capital DEL. Barnett


Consequentials generated by measures announced since the 2020 Budget are summarised in the table below:

Northern Ireland's Barnett Consequentials from 2020-21 Main Estimates

Department Measure Resource £millions

Capital £millions

ONS ONS BAU pressures 0.2

Housing, Communities & Local Government

Additional compensation for existing Business Rates reliefs 2.6 Covid-19: Business rates reliefs (12-month retail, hospitality, leisure and nurseries holiday) 353.2 Covid-19 Response Fund - local government 52.4 Local Authority Hardship Fund 16.4

Business, Energy & Industrial Strategy Small Business Grants Fund 406.9

Health and Social Care

Enhanced NHS discharge/suspension of means test 42.6 Shielding measures 9.6 Personal Protective Equipment procurement 3.3 Purchasing independent sector capacity 45.2

Work and Pensions

Operational resilience 4.7 Call centre for the National Shielding Centre 1.8

Environment, Food & Rural Affairs

Shielding - Food boxes for the clinically vulnerable 6.9

Transport Emergency Measures Agreements 95.0 Transforming cities fund 8.2

Justice HMP Glen Parva 4.7 Total 1,040.9 12.8

The Northern Ireland Office

Northern Ireland Office itself plans day-to-day spending of £24.2 million, a 40% reduction relative to the final 2019-20 budget and a 16% reduction relative to the original 2019-20 budget. The main reason for this significant reduction is that the 2019-20 budget contained budget uplifts to fund the costs of delivering the 2019 General Election. There is no equivalent funding in the 2020-21 Main Estimate as no elections are expected.

Other areas where there was additional funding in 2019-20 but there is no equivalent funding in 2020-21 include:

• £0.4 million RDEL in relation to the running costs of the Independent Reporting Commission (IRC) set up under the Fresh Start Agreement Scotland;


• £3.7 million RDEL for additional pressures arising from preparations for EU Exit and the lack of an Executive, provided at supplementary estimates in 2019-20. There is no equivalent funding in the 2020-21 Main Estimate, though any sustaining pressures will be considered through the Supplementary Estimates process; and

• £3.5 million for “pressures faced by the Department due to a substantial change in the circumstances and environment in which the Department was operating compared to the situation when baselines were set in SR2015”.

The Northern Ireland Office has a very small investment (Capital DEL) budget of £0.3 million for 2020-21. This is 63% lower than the final investment budget for 2019-20.

Scotland The Scotland Office Main Estimate 2020-21 seeks authorisation for:

• the cash grant to the Government of Scotland. The cash grant (shown in the Estimates as ‘Non-Budget’ expenditure) provides funding for the Scottish Consolidated Fund - a main source of funding for Scottish Government expenditure. The cash grant has been reduced to reflect the fact that taxes such as stamp duty, landfill tax and income tax are now devolved to Scotland (these adjustments are referred to as block grant adjustments);

• pay-over of Scottish rate of income tax to the Government of Scotland. Income tax (on non-savings, non-dividend income) is a fully devolved tax for Scotland and is determined by Scottish Government policy. However, HMRC continues to collect it on behalf of Scotland. (Scotland collects its own stamp duty and landfill tax so these do not show up in the Main Estimate, unlike income tax); and

• funds for the Scotland Office (this is a UK ministerial department responsible for relations between the UK and the Scottish Government).

Scottish Government grant and pay-over of income tax

The Main Estimate seeks a cash grant for the Scottish Government of £29,405.4 million for 2020-21, a substantial increase of £9,540.7 million (+48%) compared to last year’s final budget of £19,864.7 million. The cash grant is based on a calculation worked out by taking the spending power (the Departmental Expenditure Limits allowed for the Scottish Government by the UK Treasury) plus Annually Managed Expenditure (this is expenditure that is deemed more difficult to control than DEL), less non-cash items such as depreciation, and adjusted for timing differences. The driving factor behind the increased cash grant is a substantial increase in Scotland’s Departmental Expenditure Limit (DEL) budget. Changes to this have been set out below.

Changes in DEL Budget

The Scottish Government total DEL budget on which the 2020-21 Main Estimate is based is £31,053 million, an increase of £8,608 million (+38%) compared to last year. Changes to the Departmental Expenditure Limit (DEL) budget, which affect the cash grant, consist of

• an increase in Resource DEL of £7,542.7 million (+42%), to £25,554.7 million and

• an increase in Capital DEL of £1,066.6 million (+24%) to £5,498.2 million.

The level of UK centrally provided funding was determined at Spending Review 2015 (SR15) and Spending Round 2019 (SR19). Since the outcome of SR15 and SR19, funding has increased following Barnett consequentials and non-Barnett allocations from UK Government budgets and estimates rounds.


The substantial increase in DEL for 2020-21 is driven to a large extent by Barnett Consequentials – funding arising from UK spending decisions, corresponding to that provided for UK government departments; and additional funding from the Treasury Reserve. The UK 2020 Budget and the UK Government’s subsequent funding for the response to Covid-19 and the subsequent Barnett Consequentials for the Scottish Government have driven a large proportion of this increase. The UK Budget 2020 resulted in Barnett Consequentials of £228 million Resource DEL and £377 million Capital DEL.

Funding announcements subsequent to the Budget that resulted Barnett Consequentials for the Scottish Government in the 2020-21 Main Estimate amounted to:

• £3,071 million Resource DEL; and

• £38 million Capital DEL.

This is broken down as follows:

Scotland's Barnett Consequentials from Main Estimates 2020-21

Department Measure Resource £millions

Capital £millions

ONS ONS BAU pressures 0.6

Housing, Communities & Local Government

Additional compensation for existing Business Rates reliefs 7.6 Covid-19: Business rates reliefs (12-month retail, hospitality, leisure and nurseries holiday) 1,047.1

Covid-19 Response Fund - local government 155.4 Local Authority Hardship Fund 48.6

Business, Energy & Industrial Strategy Small Business Grants Fund 1,206.0

Health and Social Care

Enhanced NHS discharge/suspension of means test 126.3 Shielding measures 28.5

Personal Protective Equipment procurement 9.7

Purchasing independent sector capacity 134.1

Work and Pensions Call centre for the National Shielding Centre 5.4



Transport

Emergency Measures Agreements 281.7 Transforming cities fund 24.3

Justice HMP Glen Parva 13.8 Total 3,071.3 38.1


Further notable (non-Barnett) increases in funding at the Main Estimate have been set out below:

• £449 million post-EU Exit Farm Support funding (Resource DEL);

• £80 million in Common Agricultural Policy convergence funding (Resource DEL);

• £80 million for Network Rail funding (Resource DEL); and

• £26 million in respect of the Bew Review (Resource DEL), which relates to direct farm support funding.

Deductions have been made to the Departmental Expenditure Limit (DEL) budget to take account of the fact that the grant no longer includes Scotland’s share of devolved taxes. These deductions are referred to as block grant adjustments and calculated by estimating income from devolved taxes, had the Scottish government retained taxes in line with the rest of the UK.

In the case of income tax, while the tax is devolved, HMRC continues to collect the funds on the Scottish government’s behalf. The actual amount of tax revenue expected is forecast by the Scottish Fiscal Commission and based on Scottish Government tax policies. The pay-over of Scottish rate of income tax to the Scottish government in the Main Estimate is £11,423.7 million (a decrease of 2% from 2019-20).

In April 2020, around £3 billion of welfare benefits were devolved to the Scottish Government, which has driven a large proportion of the increase in DEL. This includes Personal Independence Payments, Disability Living Allowance, Attendance Allowance, Severe Disablement Allowance and Industrial Injuries Disablement Benefit.

Scotland Office spending

The Scotland Office itself plans expenditure of £10 million, a reduction of £2 million compared to last year’s final budget (-15%). Almost all of the Office’s budget is Resource DEL, with a modest investment budget of £0.05 million. The reason for this reduction is that the Main Estimate does not include the funding for VAT of staff salaries which is expected to be added at Supplementary Estimates. The Supplementary Estimate provision for 2019-20 is also higher as it included one-off additional funding relating to the Departments IT Transition and move the UK Government Hub in Edinburgh.

Wales The Wales Office Main Estimate seeks authorisation for:

• the cash grant to the Government of Wales. The cash grant (shown in the Estimates as ‘Non-Budget’ expenditure) provides funding for the Welsh Consolidated Fund – a main source of funding for Welsh Government expenditure; and

• funds for the Wales Office (the UK ministerial department responsible for relations between the UK and Welsh Governments).

Welsh Government grant

The cash grant proposed for the Welsh Government at the 2020-21 Main Estimate is £16,430.6 million, £2,852 million (+19%) higher than the amount sought in the 2019-20 final budget of £13,848.6 million.

The cash grant is based on a calculation worked out by taking the spending power (the Departmental Expenditure Limits allowed for the Wales Government by the UK Treasury) plus Annually Managed Expenditure (this is expenditure that is deemed more difficult to


control than DEL), less non-cash items such as depreciation, and adjusted for timing differences.

Changes in DEL budget

The Welsh Government total DEL budget sought at the Main Estimate is £17,805.9 million, an increase of £2,462 million (+16%). This consists of:

• an increase in Resource DEL (day-to-day spending of £2258.6 million (+20%) to £15,376.1 million; and

• an increase to Capital DEL (investment spending) of £203.5 million (+9%) to £2,430 million.

Deductions have been made to the Departmental Expenditure Limit (DEL) budget to take account of the fact that the grant no longer includes Wales’ share of devolved taxes. These deductions are referred to as block grant adjustments and calculated by estimating income from devolved taxes, had the Welsh government retained taxes in line with the rest of the UK.

The substantial increase in DEL for 2020-21 is driven to a large extent by Barnett Consequentials – funding arising from UK spending decisions, corresponding to that provided for UK government departments; and additional funding from the Treasury Reserve. The UK 2020 Budget and the UK Government’s subsequent funding for the response to Covid-19 have led to Barnett consequentials for the Welsh Government driving a large proportion of this increase. The UK Budget 2020 resulted in Barnett Consequentials of £123 million Resource DEL and £222 million Capital DEL.

Funding announcements subsequent to the Budget that resulted Barnett Consequentials for the Scottish Government in the 2020-21 Main Estimate amounted to:

• £1,861 million Resource DEL; and

• £15 million Capital DEL.

This is broken down as follows:

Welsh Barnett Consequentials from Main Estimates 2020-21

Programme/Department Measure

Resource £millions

Capital £millions

Communities & Local

Government

Additional DEL compensation for existing BR reliefs 4.6

Business rates reliefs (12-month retail, hospitality and leisure holiday) - compensation for LAs 627.4 Business rates reliefs (12-month nurseries holiday) - compensation for LAs 7.2 Covid-19 Response Fund - local government 94.2

Local Authority Hardship Fund 29.4 Business, Energy & Industrial Strategy Small Business Grants Fund 730.9




Work and pensions

Call centre for the National Shielding Centre 3.3

Health

Enhanced NHS discharge/suspension of means test 76.5 Purchasing independent sector capacity 81.2 Shielding measures DHSC elements 17.2

PPE procurement 5.9

Transport

Emergency Measures Agreements 170.7

Transforming cities fund 14.7

Total 1,860.9 14.7

Further notable (non-Barnett) increases in funding at the Main Estimate have been set out below:

• £231 million post-EU Exit Farm Support funding (Resource DEL);

• £3 million in respect of the Bew Review (Resource DEL), which relates to direct farm support funding;

Wales Office spending

The Wales Office itself plans a Resource DEL of £5 million and Capital DEL at £0.03 million at the 2020-21 Main Estimate. These amounts are broadly consistent with the final budgets for 2019-20.

Other departments Charity Commission

The Charity Commission (CC) proposes a Resource DEL of £29.2 million, an increase of £1.7 million (+6.2%) compared to last year. The CC also proposes a Capital DEL of £2.2 million, unchanged since last year.

Competition and Markets Authority

The Competition and Markets Authority proposes a Resource DEL of £95.3 million, a reduction of £0.6 million (-0.6%) compared to last year’s budget of £95.9 million.

The Capital DEL sought is £1 million, substantially down (-95%) on the £19.8 million sought last year. Capital spending in 2018-19 and 2019-20 was significantly above normal due to the fitting out costs of the new building at Canary Wharf, and has now returned to more comparable levels to previous years.

Crown Estate Office

The Crown Estate Office raises most of its funds from revenue it generates. Approval to a Resource Annually Managed Expenditure budget of £2.4 million is sought, similar to 2019-20, to cover salary and administrative costs of the Commissioners and associated non-cash items

Crown Prosecution Service

The Crown Prosecution Service (CPS) proposes a Resource DEL of £631.4 million, an increase of £73.4 million (+13.2%). The main drivers of the proposed increase are the expected need for increased prosecutional capacity as a result of the recruitment of an


additional 20,000 police officers; and meeting disclosure obligations, particularly with the growth in digital evidence.

The CPS also proposes a Capital DEL of £2.8 million. This is unchanged from last year.

Food Standards Agency

The Food Standards Agency is proposing an increase of £9.3 million (+9.7%) in its Resource DEL, taking it to £105.7 million. This is primarily driven by:

• An increase of £5 million following the reclassification of Research and Development in 2019-20 from Resource DEL to Capital DEL;

• An increase of £3 million agreed in Spending Round 2019; and

• An increase of £1.3 million for investment by the EU Exit and National Food Crime Unit to replace and enhance their systems, tools and equipment.

FSA also seeks a Capital DEL of £8.7 million, a small increase from £8.5 million last year.

Government Actuary’s Department

The Government Actuary’s Department (GAD) is seeking a token net Resource DEL of £0.001 million – gross day-to-day running costs are covered by income from fees charged. GAD estimates that its gross income will increase by £0.7 million (+3%) to £21.5 million.

GAD also plans a decrease in its Resource AME of £0.1 million (-65%) as it releases a dilapidation provision that the underlying liability has been professionally revalued.

HM Land Registry

HM Land Registry presents its first Main Estimate in 2020-21, following its reclassification by the Office for National Statistics. Income previously netted off when it was a Trading fund is now surrendered direct to Treasury now that it is a non-ministerial department, part of the central government sector.

This means that Land Registry requires an Estimate to seek funds to cover its Resource DEL expenditure, amounting to £361.3 million (compared to £319 million last year under the old arrangements). Capital DEL of £40.2 million is also sought.

In broad terms the increase in 2020/21 budget relates to additional training and recruitment as part of delivering HMLR’s 5-year strategy alongside the full year effects of 2019/20 recruitment, and other inflationary and contractual obligations £323 million in income is expected to be surrendered to Treasury in 2020-21.

Income of £326 million (mainly from fees, and to be surrendered to Treasury) is noted in the estimate, but this is likely to affected to the slowdown in the housing market from the coronavirus pandemic.

HM Procurator General and Treasury Solicitor

The Procurator General and Treasury Solicitor proposes a Resource DEL of £10.9 million, £3.8 million less (-26%) than last year; and a capital DEL of £1.4 million, £3.9 million (-74%) less than last year.

Last year additional resource funds were provided for lease overlap; and additional capital funds for fitting out of a new building. These costs are not repeated in 2020-21.

The National Archives

The National Archives (NA) proposes a Resource DEL of £40.7 million, an increase of £3 million (+8.1%). The NA also proposes a Capital DEL of £0.8 million, a reduction of £2.4 million (-75%), following investment last year in the estate and software development.


National Crime Agency

The National Crime Agency (NCA) proposes a Resource DEL of £468 million, a reduction of £21.3 million (-4.4%). This is driven by lower transfers in of funding from other government departments this year than last: £14.3 less for ‘illicit finance’ and £10.2 million less from the Foreign and Commonwealth Office for the Conflict, Stability and Security Fund. It is possible that new transfers, for 2020-21, may be made in the Supplementary Estimates filling some or all of this gap.

The NCA also proposes a Capital DEL of £50.1 million, a reduction of £16.3 million (-24.5%) compared to last year’s final budget. This is also due to £10.5 million less in budgets transferred in from other departments for ‘illicit finance’, and by a £3 million switch from the resource budget last year, used for the ‘acquisition of additional assets’, not being repeated in 2020-21.

National Savings and Investments

National Savings and Investments is proposing an increase in its Resource DEL of £4.1 million (+3.3%) to £127.4 million. This increase is mainly driven by an increase in their Outsource Provider Costs which includes all investment in the NS&I transformation programme.

NS&I’s gross costs are estimated to be £248.4 million in 2020-21, with income estimated to be £121 million. These estimates are comparable to estimated costs and income in previous financial years.

Ofgem

Ofgem proposes a Resource DEL of £0.7 million.

Most of its income comes not from voted funds, but from fees charged, expected to generate £106.7 million this year and fund most of Ofgem’s expenditure of £107.4 million. A capital DEL budget of £4.3 million is also sought.

Office of Rail and Road (ORR)

Office of Rail and Road is seeking a token net Resource DEL of £0.003 million as it covers its costs from the fees it charges. The expected gross expenditure and income for ORR in 2020-21 remains the same as those reported in the 2019-20 Supplementary Estimates, at £36.6 million.

ORR is also seeking to decrease its Capital DEL by £5.6 million (-47.6%), taking it down to £0.72 million. This is because ORR incurred fit-out costs for its new London office in 2019-20.

Ofsted

The Office for Standards in Education, Children’s Services and Skills (Ofsted) proposes a Resource DEL of £135.8 million, an increase of £2.9 million or 2% compared to last year. The increase reflects an inflation uplift and increased costs of depreciation due to investment in IT assets.

Due to the coronavirus pandemic most routine inspections have been halted, but staff are being redeployed in related support services such as children’s services within local authorities, and the Department of Work and Pensions, while their salaries remain payable by Ofsted.

Ofsted also proposes a Capital DEL of £3.5 million, a small reduction of £0.6 million or 15% compared to last year.


Ofqual

The Office for Qualifications and Examination Regulation (Ofqual) is seeking a Resource DEL of £22.9 million, an increase of £3 million or 18% compared to last year’s budget of £19.4 million. Additional funding is sought to enable Ofsted to continue delivery of reforms in vocational and technical qualifications. Ofsted also seeks a small capital DEL budget of £0.1 million.

Ofwat (Water Services Regulation Authority)

Ofwat proposes a Resource DEL of £0.15 million, unchanged since last year. Licence fee income is expected to reduce from £36.5 million to £31.4 million, having completed their price review. Ofwat also proposes a Capital DEL budget of £0.15 million, a reduction of 32%.

Parliamentary and Health Services Ombudsman

The Parliamentary and Health Services Ombudsman is seeking a small increase of £1.5 million (+5.1%), in its Resource DEL budget taking it to £30.1 million. This is because PHSO has experienced a 13% increase in demand for its services.

The Ombudsman is seeking a decrease in its Capital DEL budget of -£0.1 million (-3.2%), reducing it to £2.1 million. In addition, the Ombudsman is also planning a decrease in its Resource AME of £0.1 million (-47.6%), taking it to £0.7 million.

Security and Intelligence Agencies

The Security and Intelligences Agencies (SIA), which covers MI5, Secret Intelligence Service (MI6) and GCHQ, propose a Resource DEL of £2,842.9 million for 2020-21, an increase of £38.7 million (+1.4%) compared to last year.

They also propose a Capital DEL of £808.6 million, an increase of £164.5 million (+25.5%). Due to the sensitive nature of SIA work, details of these budgets are not published, but they are scrutinised by the Intelligence and Security Committee of Parliament.

Serious Fraud Office

The Serious Fraud Office (SFO) proposes a Resource DEL of £53.4 million, a decrease of £12.2 million (-18.6%). However, the budget is broadly in line with last year’s initial budget. The in-year increase last year was due to the SFO funding mechanism whereby the additional cost of cases above £2.5 million (so-called ‘blockbuster cases’) are allocated as part of the Supplementary Estimate, and if this arises in 2020-21 additional funds will be added later in the year.

The SFO also proposes a Capital DEL of £4 million, an increase of £1.1 million (+37.9%). The proposed increase is driven by additional funding for a new case management system, and investment in digital forensic equipment.

Statistics Board

The Statistics Board is proposing an increase of £139.4 million (+42.6%) in its Resource DEL, increasing it to £466.5 million. The key drivers for this overall increase are:

• An increase of £143.0 million for the Census and Data Collection Transformation Programme (CDCTP);

• An increase of £8.0 million roll-forward of the Contingency budget for the CDCTP from 2019-20;

• An increase of £6.5 million following the Spending Round 2019 settlement; and


• An increase of £5.0 million for the Integrated Data Platform announced in the March 2020 budget.

The Statistics Board is also planning an increase of £2.4 million (+31.6%) to its Capital DEL, raising it to £10.0 million. This rise relates to on-going investment in its IT Infrastructure, Research & Development, and Major Works Property Projects.

UK Export Finance (Export Credits Guarantees Department)

Most of UK Export Finance (more formally known as the Export Credit Guarantees Department)‘s spending is classified as Annually Managed Expenditure.

UKEF’s Resource AME covers underwriting and export finance activities, including income received while supporting exporters. UKEF seeks a net £377 million for these activities, 202% higher than last year. The increase in Resource AME is mostly driven by increased expected claims owing to Covid-19 and increased foreign exchange movements in relation to the increased direct lending activities (which are mostly US dollar denominated).

UKEF’s Capital AME covers lending activity – drawings less repayments. Any deals that are expected to have a probability of materialising of less than 25% have been excluded from the Estimate. UKEF plans net Capital AME spending of £2,787 million: £1,010 million payments less £74 million receipts. This is 383% higher than the final budget for 2019-20. The increase in Capital AME sought is partially due to the Budget in March 2020 which provided a boost to exports by extending UK Export Finance’s direct lending scheme and allocating two additional branches of recyclable direct lending capacity:

• £2 billion for clean growth projects and £1 billion for defence and security; and

• one-off £2 billion direct lending increase announced at the 2018 Budget has been made permanently available.

Under the Direct Lending Facility UK Export Finance provides loans up to a cumulative maximum of £8 billion (total scheme limit announced at Budget 2020) to overseas buyers to finance the purchase of capital goods and/or services, from exporters carrying on business in the UK. The increase in Capital AME also reflects the additional direct lending requirement that the department estimates it will use in 2020-21. This will not be the full amount of the budget increase because it will take time to build up to these amounts. Also included in this Estimate is the Qatar transaction of around £700 million, to support the purchase of Typhoon aircrafts from BAE Systems and MBDA.

As this Estimate was being prepared the full extent of the impact of Covid-19 was becoming apparent. At this point there remains a significant amount of uncertainty about the way in which Covid-19 will impact the department’s control totals, as time is required to carry out full assessment. For the purposes of this Estimate a stress test has been carried out on UKEF’s portfolio to review the impact of potential claims and this has been incorporated into the required provision for 2020-21.

UEKF also seeks a net token Resource DEL of £0.001 million in 2020-21. This is a 99.9% reduction when compared with the final budget for 2019-20, because as part of the 2019 Spending Round (SR19) it was agreed with HM Treasury that all UKEF spending would be financed by trading income in future. The voted net RDEL position is a token £1,000 reflecting the fact that UKEF now covers all its administration costs from the premium it charges for its products. Gross Resource spending increased substantially from £44 million in 2019-20 to £57 million in 2020. This uplift is a result of the SR19 settlement and the following Budget 2020 announcements:

• Headcount growth in 2020-21 (cost not specified);


• £4 million increase in project costs to account for the Financial Reporting Changes (IFRS 9 and 17 implementation);

• £2 million marketing costs;

• £2 million international Export Finance Executives network; and

• £0.5 million funding for two additional Export Finance Manager (EFM) posts, £0.5 million.

UK Supreme Court

The UK Supreme Court (UKSC) proposes a Resource DEL of £6.2 million, a reduction of £0.2 million (-3.8%). Previous increases in the UKSC budget have largely been driven by increased pension contributions and uplifts in the pension’s actuarial assumptions. The UKSC also proposes a Capital DEL of £0.5 million, a reduction of £0.1 million (-9.9%), largely as the UKSC has now completed previously planned investment work.

BRIEFING PAPER Number 08926 28 May 2020

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