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HM Treasury

Spending Review

Annex A

Statistical Annex Introduction and summary

A1 Annex:

The framework

A2 The framework for planning and controlling spending remains as set out in the Economic and Fiscal Strategy Report of June 1998.

A3 Departments are given firm three year spending limits called Departmental Expenditure Limits (DELs) within which they can prioritise resources and plan ahead. In accordance with the fiscal rules, a clear distinction is made between current (now 'resource' spending under resource budgeting) and capital spending, which are budgeted for separately to ensure worthwhile capital investment is not crowded out by short-term pressures.

A4 Spending that cannot reasonably be subject to firm multi-year limits is included in Annually Managed Expenditure (AME). The composition is set out in Table A1. It includes social security benefits, local authority self-financed expenditure, payments under the Common Agricultural Policy, net payments to EC institutions and debt interest. AME is based on cautious estimates which are updated twice yearly at the Budget and Pre-Budget Reports. DEL and AME together make up Total Managed Expenditure (TME).

Spending plans

A5 Budget 2000 set a firm fiscal envelope for 2001-02 to 2003-04 for growth in current and current spending. Total Managed Expenditure is as announced in Budget 2000 except for the allowance for the underspend in 1999-2000. The Budget allowed for a £1 billion DEL underspend to be carried forward into 2000-01. Final outturn numbers for 1999-2000 now show a £3 billion underspend in DEL and a total underspend of £4.5 billion. £1.5 billion of the underspend in DEL will be carried forward, £750 million into 2000-01 and £750 million into 2001-02. Table A1 sets out the path for TME, DEL and AME and its components over the period.

A6 Within TME, total DEL by department is shown in nominal terms in Table A2, split into resource and capital budgets in Table A3 and shown in real terms in Table A4. The move to resource budgeting allows the measurement of the total costs of departmental activities in each year, including the annual cost of owning the assets used to deliver public services. This is shown in Table A5 reconciled to the national accounts measure of public sector current expenditure. New capital spending continues to be controlled separately. In Table A6 the capital budget is reconciled to the national accounts measure of public sector net investment. Table A7 provides a reconciliation between resource and cash budgets for the three years where cash budgets currently exist.

A7 A number of transfers between budgets have been made in this Review. These are:

A8 The AME forecast in table A1 has been updated since the Budget where relevant to show the outturn level for 1999-2000, policy changes and reclassifications in the Spending Review. Where they are relevant to the spending aggregates, National Audit Office (NAO) audited assumptions on unemployment, spend to save and market expectations of interest rates have been updated to incorporate the latest information available. The effect of these changes is set out in Table 2.2 in Chapter 2. The move to accruals budgeting better attributes social security benefit spending to the years it applies. This increases forecasts by some £300 million a year until 2001-02 compared to cash. The self-financing public corporations line in AME now records the capital expenditure of these bodies, previously in accounting adjustments in AME, rather than their external finance. It is therefore not comparable with the cash line.

Table A1: Total Managed Expenditure

£ billion
1999-00 2000-01 2001-02 2002-03 2003-04
Departmental Expenditure Limits:
Resource Budget 158.5 172.8 185.1 197.3 209.1
Capital Budget 18.2 22.4 27.0 31.9 36.6
Total Departmental Expenditure Limits 176.8 195.2 212.1 229.3 245.7
Annually Managed Expenditure
Departmental AME:
Social security benefits 97.1 99.5 104.4 107.3 111.9
Housing Revenue Account subsidies 3.2 3.3 3.3 3.2 3.1
Common Agricultural Policy 2.7 2.7 2.9 2.8 2.8
Export Credits Guarantee Department 0.9 0.8 0.4 0.2 0.0
Self-financing public corporations capital spending 0.9 1.6 1.2 1.2 1.3
Net public service pensions 5.1 5.7 5.5 5.7 6.0
National Lottery 1.9 2.3 2.0 2.1 2.1
Other programme expenditure -0.1 0.0 0.0 0.0 0.0
Non-cash items:
Depreciation 7.3 7.3 7.9 8.3 8.7
Cost of capital charges 12.7 13.0 13.2 13.5 13.8
Provisions and other charges 0.3 -0.4 -0.3 0.0 0.2
Total departmental AME (incl. non-cash items) 132.0 135.8 140.5 140.5 149.9
Other AME:
Net payments to EC institutions 2.9 2.7 2.5 2.6 2.9
Locally financed expenditure 17.2 18.0 18.9 19.8 20.6
CG debt interest 25.6 27.0 26.1 25.3 24.7
Accounting and other adjustments1 -13.82 -8.6 -8.11 -7.8 -7.11
Total other AME 31.92 39.1 39.31 39.9 41.11
AME margin 1.5 1.0 2.0 3.0
Annually Managed Expenditure 163.9 176.4 180.8 186.2 193.9
Total Managed Expenditure 340.7 371.6 392.9 415.4 439.6
of which:
Current expenditure 323.5 349.4 366.8 384.5 404.3
Net investment 2.6 7.2 10.6 15.0 19.0
Depreciation 14.6 15.0 15.4 15.9 16.3
1. Includes adjustments to deduct non-cash items in DEL and departmental AME which do not score in TME
2. Includes a reconciliation adjustment to national accounts estimate of TME.

Table A2: Departmental Expenditure Limits

£ billion
1999-00 2000-01 2001-02 2002-03 2003-04
Departmental Expenditure Limits:
Education and Employment 15.5 18.9 21.3 23.5 25.7
Health 40.9 45.3 49.5 54.4 59
of which: NHS 40.2 44.5 48.2 52.3 56.7
Environment, Transport and Regions 9.8 10.7 13.2 5.5 17.9
Local Government 34.2 35.4 36.8 39.2 41.9
Home Office 7.5 8.2 9.6 10.3 10.6
Legal Departments 2.8 3 3.1 3.2 3.2
Defence 1 21.9 23 23.6 24.2 25
Foreign and Commonwealth Office 1.2 1.1 1.2 1.3 1.3
International Development 2.5 2.8 3.1 3.3 3.6
Trade and Industry 3 3.8 4.6 4.3 4.3
Agriculture, Fisheries and Food 1.1 1 1.3 1.3 1.4
Culture, Media and Sport 1 1 1.1 1.2 1.2
Department of Social Security 3.2 3.2 3.9 4.3 4.2
Scotland 13.9 15 16.2 17.4 18.4
Wales 7.1 7.8 8.4 9.1 9.8
Northern Ireland Executive 4.9 5.3 5.7 6 6.3
Northern Ireland Office 1 1 1.1 1.1 1
Chancellor's Departments 3.5 3.7 4.1 4.3 4.3
Cabinet Office 1.4 1.4 1.5 1.5 1.5
Employment Opportunities Fund 2 0.5 0.9 0.9 0.9 1.4
Invest to Save Budget 0.1 0.1 0.1
Capital Modernisation Fund 0.1 0.4 0.9 1.2
Policy Innovation Fund 0.1 0.1 0.1
Reserve 2.7 3 1.5 2 2.5
Total Departmental Expenditure Limits 176.8 195.2 212.1 4 229.3 245.7
Education Spending in UK 40.6 45.8 49.5 53.4 57.7
1. Figures remain provisional in 1999-2000 and 2000-01.
2. Formerly Welfare to Work
3. Includes carry forward of underspend of £0.75 billion from 1999-2000
4. Includes previously unallocated Budget 2000 addition of £5.9 billion and a further 2000 Spending Review additional allocation of £3 billion - see Table 2.3 in Chapter 2.

Table A3: Departmental Expenditure Limits - Resource and Capital Budgets

£ billion
1999-00 2000-01 2001-02 2002-03 2003-04
Resource Budget:
Education and Employment 14.2 16.6 18.8 20.4 21.8
Health 40 43.6 46.9 51.2 55.7
of which: NHS 39.4 42.9 45.7 49.1 53.5
Environment, Transport and Regions 3.9 4.3 5.1 5.6 5.7
Local Government 33.9 35.3 36.7 39 41.5
Home Office 7 7.6 8.7 9.3 9.8
Legal Departments 2.7 2.9 3.1 3.1 3.1
Defence1 16.9 17.8 18.1 18.5 18.7
Foreign and Commonwealth Office 1 1 1.1 1.1 1.1
International Development 2.2 2.5 2.7 2.9 3.1
Trade and Industry 2.8 3.3 3.9 3.5 3.2
Agriculture, Fisheries and Food 1 0.9 1.1 1.1 1.1
Culture, Media and Sport 0.9 0.9 1 1.1 1.2
Department of Social Security 3.2 3.2 3.8 4.1 4.1
Scotland 12 12.7 13.5 14.4 15.2
Wales 6.3 6.9 7.4 8 8.5
Northern Ireland Executive 4.2 4.5 4.8 5 5.2
Northern Ireland Office 1 1 1 1.1 1
Chancellor's Departments 3.4 3.8 3.9 4.1 4.1
Cabinet Office 1.1 1.2 1.3 1.3 1.4
Employment Opportunities Fund 2 0.5 0.9 0.9 0.8 1.4
Invest to Save Budget 0.1 0.1 0.1
Capital Modernisation Fund
Policy Innovation Fund 0 0 0
Reserve 2 1.2 1.6 2
Total Resource Budget DEL 158.5 172.8 185.1 197.3 209.1
Capital Budget :
Education and Employment 1.2 2.3 2.5 3 3.8
Health 0.9 1.7 2.6 3.2 3.3
of which: NHS 0.9 1.6 2.5 3.2 3.2
Environment, Transport and Regions 5.8 6.4 8.1 9.9 12.2
Local Government 0.3 0 0.1 0.3 0.3
Home Office 0.5 0.6 0.9 1 0.9
Legal Departments 0.1 0.1 0.1 0.1 0.1
Defence1 5 5.2 5.5 5.7 6.2
Foreign and Commonwealth Office 0.1 0.1 0.1 0.2 0.2
International Development 0.3 0.3 0.4 0.4 0.4
Trade and Industry 0.2 0.5 0.7 0.8 1
Agriculture, Fisheries and Food 0.1 0.2 0.2 0.2 0.2
Culture, Media and Sport 0.1 0.1 0.1 0.1 0.1
Department of Social Security 0 0 0.1 0.1 0
Scotland 1.8 2.3 2.7 3 3.2
Wales 0.9 0.8 1 1.2 1.3
Northern Ireland Executive 0.7 0.8 0.9 1 1.1
Northern Ireland Office 0 0 0.1 0.1 0
Chancellor's Departments 0.1 -0.1 0.2 0.2 0.2
Cabinet Office 0.2 0.2 0.2 0.2 0.2
Employment Opportunities Fund 2 0 0 0
Invest to Save Budget 0 0 0
Capital Modernisation Fund 0.1 0.4 0.9 1.2
Policy Innovation Fund Reserve 0.7 0.3 0.4 0.5
Total Capital Budget DEL 18.2 22.4 27 31.9 36.6
Total Departmental Expenditure Limits 176.8 195.2 212.1 229.3 245.7
1. Provisional figures for 1999-2000 to 2000-01.
2. Formerly Welfare to Work

Table A4: Departmental Expenditure Limits in real terms

£ billion, 1999-2000 prices
1999-00 2000-01 2001-02 2002-03 2003-04
Departmental Expenditure Limits:
Education and Employment 15.4 18.5 20.3 21.9 23.3
Health 40.9 44.3 47.2 50.7 53.6
of which: NHS 40.2 43.5 46 48.7 51.5
Environment, Transport and Regions 9.8 10.5 12.6 14.4 16.2
Local government 34.2 34.6 35.1 36.5 38
Home Office 7.5 8 9.2 9.6 9.6
Legal Departments 2.8 2.9 3 3 2.9
Defence 21.9 22.5 22.5 22.5 22.7
Foreign and Commonwealth Office 1.2 1.1 1.1 1.2 1.2
International Development 2.5 2.7 3 3.1 3.2
Trade and Industry 3 3.7 4.4 4 3.9
Agriculture, Fisheries and Food 1.1 1 1.2 1.2 1.2
Culture, Media and Sport 1 1 1.1 1.1 1.1
Department of Social Security 3.2 3.2 3.7 4 3.8
Scotland 13.9 14.7 15.5 16.2 16.7
Wales 7.1 7.6 8.1 8.5 8.9
Northern Ireland Executive 4.9 5.2 5.4 5.6 5.7
Northern Ireland Office 1 1 1 1.1 0.9
Chancellor's Departments 3.5 3.7 3.9 4 3.9
Cabinet Office 1.4 1.3 1.4 1.4 1.4
Employment Opportunities Fund1 0.5 0.9 0.8 0.8 1.2
Invest to Save Budget 0.1 0.1 0.1
Capital Modernisation Fund 0.1 0.4 0.8 1.1
Policy Innovation Fund 0 0 0
Reserve 2.6 2 1.4 1.9 2.3
Total Departmental Expenditure Limits 176.8 190.9 202.4 213.4 223.1
1. Formerly Welfare to Work.
2. Includes carry forward of underspend of £0.75 billion from 1999-2000

Table A5: Resource Budget and Public Sector Current Expenditure

£ billion
1999-00 2000-01 2001-02 2002-03 2003-04
Resource Budget:
in Departmental Expenditure Limits 158.5 172.8 185.1 197.3 209.1
of which:
Departmental DEL 158 170 183 194.8 205.6
Non-departmental DEL 0.5 2.8 2.1 2.5 3.4
in Departmental AME 128.7 132.5 137.6 141.6 147.2
of which:
Departmental AME (excluding non-cash items) 108.5 112.6 116.8 118.9 124.6
Non-cash items in Departmental AME:
Depreciation 7.3 7.3 7.9 8.3 8.7
Cost of capital charges 12.7 13 13.2 13.5 13.8
Provisions and other charges 0.3 -0.4 -0.3 0 0.2
Total Resource Budget 287.2 305.3 322.7 338.9 356.3
Other current spending in AME:
Net payments to EC institutions 2.9 2.7 2.5 2.6 2.9
Locally financed current expenditure 16.4 17.3 18.2 19 19.8
CG debt interest 25.6 27 26.1 25.3 24.7
AME margin (current) 0 1.4 1 1.9 2.9
Accounting and other adjustments1 -12.3 2 -7.7 -7.5 -7 -6.4
Classification changes to national accounts3 3.6 3.4 3.9 3.8 4.1
Public sector current expenditure 323.5 349.4 366.8 384.5 404.3
1. Includes adjustments to deduct non-cash items in DEL and departmental AME, which do not score in TME
2. Includes a reconciliation adjustment to national accounts estimate of TME.
3. Adjusts for classification differences between resource budgeting and national accounts

Table A6: Capital Budget and Public Sector Net Investment

£ billion
1999-00 2000-01 2001-02 2002-03 2003-04
Capital budget:
in Departmental Expenditure Limits 18.2 22.4 27 31.9 36.6
of which:
Departmental DEL (excl. public corporations) 14.6 18 22.9 27.2 31.5
Public corporations capital expenditure 3.7 3.6 3.3 3.3 3.3
Non-departmental DEL 0 0.8 0.7 1.3 1.8
in Departmental AME (excl. non-cash items) 3.3 3.3 2.8 2.7 2.7
of which:
Departmental AME (excl. self-financed PCs) 2.4 1.7 1.6 1.4 1.2
Self-financed public corporations capital expenditure 0.9 1.6 1.3 1.3 1.5
Non-departmental AME
Total Capital Budget 21.7 25.8 29.8 34.7 39.3
Other capital spending in AME:
Locally financed capital expenditure 0.8 0.7 0.7 0.8 0.8
AME margin (capital) 0.1 0 0.1 0.1
Accounting and other adjustments -1.5 1 -0.9 -0.6 -0.8 -0.7
Classification changes to national accounts -3.6 -3.4 -3.9 -3.8 -4.1
Public sector gross investment 17.2 22.3 26.1 30.9 35.4
less Depreciation (national accounts) 14.6 15 15.4 15.9 16.3
Public sector net investment 2.6 7.3 10.6 15 19
1 Includes a reconciliation adjustment to national accounts estimate of TME.

Table A7: Departmental Expenditure Limits - reconciliation of cash budgets with resource budgets

£ million
1999-00 2000-01 2001-02
DEL Current budget (cash) to resource budget DEL:
DEL current budget (cash) - plans at Budget 20001 166,094 176,252 1 181,752 2
Underspend on 1999-2000 plans and carry forward2 -1,904 12,503 750
Other changes since Budget 131 0
DEL current budget (cash) - July 2000 164,190 177,633 182,502
Resource Budgeting changes:
Timing adjustments -600 33 416
Switches from current to capital budget -
Defence fighting equipment -3,622 -3,267 -3,457
Switches from current to capital budget - other -12 -145 -201
Switches from capital to resource budget 135 137 214
Capital charges on the civil estate 229 244 246
Public corporations scoring adjustments -326 -463 -281
Non-departmental public bodies - scoring adjustments 50 85 85
NHS trust adjustment -1,293 -1,248 -1,479
Other adjustments 19 8 22
Other budgeting changes -248 -218 -269
Resource budget - DEL (before Spending Review) 158,522 172,799 177,798
Changes announced in Spending Review 0 0 7,298
Resource budget - DEL (after Spending Review) 158,522 172,799 185,096
DEL Capital Budget (cash) to Capital Budget DEL:
DEL capital budget (cash) - plans at Budget 2000 13,794 16,452 17,777
Underspend on 1999-2000 plans and carry forward -1,086 500
Other changes since Budget -131 0
DEL capital budget (cash) - July 2000 12,708 16,821 17,777
Budgeting changes:
Timing adjustments 13 348 13
Switches from current to capital budget -
defence fighting equipment 3,622 3,267 3,457
Switches from current to capital budget - other 12 145 201
Switches from capital to resource budget -135 -137 -214
Public corporations - scoring adjustments 2,026 2,002 2,217
Non-departmental public bodies - scoring adjustments -4 -1 6
Capital budget - DEL (before Spending Review) 18,242 22,445 23,457
Changes announced in Spending Review 0 0 3,555
Capital budget - DEL (after Spending Review) 18,242 22,445 27,012
1. Excluding carry forward of underspend announced in Budget 2000.
2. Excludes extra money for NHS announced in Budget 2000.
3. Includes carry forward announced in Budget 2000.

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Table A10: Accounting and other adjustments

£ billion
1999-00 2000-01 2001-02 2002-03 2003-04
Non-trading capital consumption 7.6 7.8 8.1 8.4 8.7
VAT refunded on general government expenditure 5.8 5.7 6 6.2 6.4
EC contributions -5.5 -5.4 -5.1 -4.7 -4.2
Income tax credits 2.8 5.3 5.7 5.9 6.1
Adjustments for public corporations 3.9 3.8 3.8 3.7 3.9
Intra general government debt interest -3.3 -2.8 -3.3 -2.9 -2.9
Financial transactions in departmental budgets -1.9 -2.2 -1.8 -1.8 -1.8
Adjustments for expenditure financed by receipts 0 -0.1 0 0 0
Other accounting adjustments -0.3 -0.5 -0.5 -0.5 -0.5
Reconciliation to national accounts -2.4
less:
Non-cash items in DEL -0.3 -0.3 -0.3 -0.3 -0.3
Non-cash items in AME -20.2 -19.9 -20.8 -21.8 -22.6
Total accounting and other adjustments -13.8 -8.6 -8.1 -7.8 -7.1
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