Chapter 22: Devolved Administrations
The Spending Review provides a major boost to the public services in Scotland, Wales and Northern Ireland:
Decisions on the use of this provision will be made by the Scotland, Wales and Northern Ireland administrations. The extra money will allow the devolved administrations to improve public services and determine their own particular public spending outcomes in line with the needs and priorities of the people of Scotland, Wales and Northern Ireland. |
Determining the budgets of the devolved administrations
22.1 The devolved administrations' budgets are determined within the United Kingdom framework of public expenditure control. The devolved administrations have freedom to make their own spending decisions, within the overall totals, on functions under their control in response to local priorities. The devolved administrations will make their own announcements in due course about their detailed spending plans.
Devolved funding arrangements
22.2 UK funding for the devolved administrations' budgets has been determined in the Spending Review alongside departments of the UK Government and in accordance with the established devolution funding arrangements. In general the changes to the devolved administrations' budgets have been linked to changes in spending plans of UK Government departments by the Barnett formula. The formula gives Scotland, Wales and Northern Ireland a population-based share of planned changes in comparable spending in UK departments, as set out in the Statement of Funding Policy published by the Treasury.
22.3 The increases announced in the Spending Review include the allocations already announced by the Government in the Budget in relation to health spending.
22.4 The increases include an extra allocation of £106 million a year in 2003-04, 2004-05 and 2005-06 to Wales to ensure funding of the European share of its Objective 1 needs, with resources for match funding provided for within the total spending settlement. The Government is also making available an allocation of £50 million in 2003-04, £62 million in 2004-05 and £80 million in 2005-06 for the Northern Ireland Executive's EU funded PEACE programme. In May 2002 the Government announced new borrowing powers for the Northern Ireland Executive and the establishment of a new strategic investment body, with funding of £200 million in the first three years. The costs of the Scotland and Wales Offices are met from within the total funds voted by the UK Parliament. The budget of the Northern Ireland Office has been determined separately; details are in Chapter 19.
Spending plans
22.5 Table 22.1 shows each devolved administrations' Departmental Expenditure Limit (DEL). Other budgetary items, defined as Annually Managed Expenditure (AME), are set annually. As the devolved administrations have freedom to reallocate spending between capital and resource budgets, the split between these budgets is indicative and reflects the consequentials of the application of the Barnett formula to planned changes in UK departments' spending.
Table 22.1: Key figures
| £ million | ||||||
| 2002-03 | 2003-04 | 2004-05 | 2005-06 | |||
| Scotland | ||||||
| Resource budget | 16,637 | 18,062 | 19,052 | 20,358 | ||
| Capital budget | 1,876 | 1,953 | 2,146 | 2,288 | ||
| Total Departmental Expenditure Limit1 | 18,207 | 19,718 | 20,884 | 22,319 | ||
| Wales | ||||||
| Resource budget | 8,829 | 9,655 | 10,240 | 11,000 | ||
| Capital budget | 801 | 830 | 919 | 999 | ||
| Total Departmental Expenditure Limit1 | 9,424 | 10,275 | 10,941 | 11,774 | ||
| Northern Ireland Executive | ||||||
| Resource budget | 6,167 | 6,486 | 6,796 | 7,208 | ||
| Capital budget | 342 | 423 | 483 | 523 | ||
| Total Departmental Expenditure Limit1 | 6,418 | 6,813 | 7,178 | 7,626 | ||
| Near-cash spending in devolved administrations DELs2 | 33,052 | 35,758 | 37,921 | 40,564 | ||
1 Full resource budgeting basis, net of depreciation. | ||||||
2 Consistent with previous control basis. | ||||||