2016/17 Supplementary Estimates:

Transcription

1 2016/17 Estimates: Overview of in-year Budget Revisions This document provides help for Members and staff to better understand: Changes in departments overall budgets; Reallocations of funding within those budgets reflected in the Estimates. Briefing on each Department SCRUTINY UNIT Strengthening scrutiny through specialist support If you have any questions, comments, feedback on this document s usefulness or otherwise, and any suggestions for inclusion in a future year s edition, please contact Joe Robins in the Scrutiny Unit robinsj@parliament.uk

2 What are the Estimates? The Estimates provide the last chance for government departments to alter in-year budgets in the light of latest forecasts. Changes to forecasts for spending areas that are difficult to predict (e.g., welfare) Claims on the Reserve: New money from Treasury for specific, unforeseen items. Main Reasons for Estimates Underspending: Departments may return money they know they will not spend. Offering it up now means they may be able to draw down the money again next year (known as Budget Exchange ). Machinery of Government changes: establishing new Departments and reallocating funding as responsibilities alter Moving money between Resource and Capital. Transfers of money between departments: e.g., joint projects

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4 Departments (click on the link to view slides for each department): Cabinet Office Business, Energy and Industrial Strategy Communities and Local Government (Communities) Communities and Local Government (Local Government) Culture, Media and Sport Education Environment, Food and Rural Affairs Exiting the EU Foreign and Commonwealth Office Health Home Office International Development International Trade Ministry of Defence Ministry of Justice Transport Work and Pensions Her Majesty s Treasury Her Majesty s Revenue and Customs Devolved Administrations: Scotland Wales Northern Ireland Sources

5 Cabinet Office

6 millions Changes to 2016/17 Cabinet Office budget: Resource DEL (Departmental Expenditure Limits) (in nominal terms) Reduction sought now Budget proposed in / / / / / / / / / /20 36% reduction in Resource DEL: 277m CABINET OFFICE Previous years Budget reduction sought Planned future budget Changes in Resource DEL (see next slide for details): 28m 4.7m 273.5m 20m 28.2m new money from the Treasury for various activities goes to DExEU as the European and Global Issues Secretariat moves there 35m goes to DIT as responsibility for the Great campaign transfers there moves to DCMS as responsibility for the Office of Civil Society transfers there Underspend/ budget exchange Net transfers to/from other Departments 277m reduction in Resource DEL

7 28m of new money from the Treasury for following activities: CABINET OFFICE What does CO request new money for? Which areas have underspends? 20m in underspends: There were underspends in these areas: The Government Digital Service ( 2.2m budget exchange and 13.5m underspend). The government property portfolio ( 4.1m budget exchange and 0.5m underspend).

8 Other notable movements of money: CABINET OFFICE 23.6m moved from programme to admin This money relates to the National Security Council It was originally transferred to CO in the Main Estimate in April 2016 from the Defence budget Normally transfers from programme to admin are not allowed 16.4m (including 5m Capital) from the security services which cover IT projects The Cabinet Office has spent money on digital security and the Security Services are reimbursing them for the expenditure.

9 Business, Energy and Industrial Strategy

10 millions 2016/17 BEIS Resource DEL budget: BUSINESS, ENERGY AND INDUSTRIAL STRATEGY Resource DEL (Departmental Expenditure Limits) (in nominal terms) Machinery of Government changes: 2016/17 Resource DEL: 2,337m BEIS acquired its 2016/17 Resource DEL budget through a series of following changes: 3,000 2,500 2,000 1,500 1, Previous years Current budget Planned future budget (restated for previous and future years to take into account change of departmental functions) 11,126m BIS budget New changes: 2,472m 22m 912m 9,413m 22m 131m 2,472m DECC budget Higher and Further Education to DFE International trade to DIT Offender learning to MoJ New BEIS RDEL budget before other changes 150m 71m 30m 4m 2,337m New BEIS RDEL budget before other changes Carry forward to future years Surrendered to Treasury (underspends) Additional non cash from Treasury for impairments R and D funding (moved to capital because of last year s reclassification) Net amount transferred to other Departments Resulting BEIS RDEL budget

11 2016/17 BEIS Capital DEL budget: 2016/17 Capital DEL: 11,274m BEIS acquired its 2016/17 Capital DEL budget through a series of following changes: Machinery of Government changes: 12,000 10,000 8,000 6,000 4,000 2,000 0 BUSINESS, ENERGY AND INDUSTRIAL STRATEGY Capital DEL (Departmental Expenditure Limits) (in nominal terms) Previous years Current budget Planned future budget (restated for previous and future years to take into account change of departmental functions) 8,867m BIS budget New changes: 2,420m 346m 3m DECC budget Higher and Further Education to DFE International trade to DIT 10,917m New BEIS CDEL budget before other changes 10,917m New BEIS CDEL budget before other changes 44m Northern Powerhouse/ Midlands Engine reprofiling 110m Other carry forward to future years 132m 365m Net increase for British Business Bank Green Investment Bank 30m R and D funding (moved to capital because of last year s reclassification) 15m Net amount transferred to other Departments 11,274m Resulting BEIS CDEL budget

12 What is new funding from DECC for? BUSINESS, ENERGY AND INDUSTRIAL STRATEGY Resource DEL Capital DEL

13 Annually Managed Expenditure (AME) Resource AME: BUSINESS, ENERGY AND INDUSTRIAL STRATEGY Capital AME: Machinery of government changes: BIS budget...- 1,060m DECC budget m (mainly Renewable Heat incentive scheme and nuclear decommissioning) Transfer to DfE. + 1,452m (transfer shows up as positive because negative budget for student loans is transferred to DfE) BEIS Resource AME budget... 1,205m (before other changes) Further big changes: Nuclear decommissioning increase in provision for future years spending m Low carbon contracts company - increase in estimated Contracts for Difference (CFD) liabilities.+ 10, 948m Various other changes to provisions.+ 322m New BEIS Resource AME: 17,412m Machinery of government changes: BIS budget....13,261.3m Transfer of student loan book to DfE. -13,465m Energy Legacy from DECC (income) m (transfer shows up as negative because it represents coal pension liabilities) BEIS Capital AME budget m (before other changes) Other forecasting changes: Government as a shareholder.+ 537m Innovation and Enterprise m Other changes.+ 322m New BEIS Capital AME: 310.8m

14 BUSINESS, ENERGY AND INDUSTRIAL STRATEGY Shape of new BEIS budgets after Estimates:

15 Communities and Local Government

16 millions Changes to 2016/17 DCLG (Communities) Resource DEL budget: Resource DEL (Departmental Expenditure Limits) (in nominal terms) 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Reduction sought now 2010/ / / / / / / / / /20 Previous years Budget reduction sought Planned future budget Budget proposed in % reduction in Resource DEL: 185m DCLG (COMMUNITIES) Changes in Resource DEL: New money from the Treasury, including 27m for Coastal Communities Net transfers to/from other Departments, including 10m from DfE to cover City Deal Projects for Leeds and Ipswich 114m 1m 43m 7m 37m 45m From Cabinet Office to cover transfer of responsibility for Cities and Local Growth Team Net transfers to/from Local Government Transfer from Resource to Capital 114m Money surrendered to the Treasury to be carried over into the future years ( Budget Exchange) This includes: 59m from Troubled Families 8m from Domestic Violence 16m from Controlling Migration Fund 18m from Homelessness 5m from Voluntary Right to Buy (pilot) Surrendered to the Treasury (mainly relating to devolution deals) 185m reduction in Resource DEL

17 millions Changes to 2016/17 DCLG (Communities) Capital DEL budget: Capital DEL (Departmental Expenditure Limits) (in nominal terms) 7,000 6,000 5,000 4,000 Reduction sought now 6.4% reduction in Capital DEL: 355m DCLG (COMMUNITIES) 3,000 2,000 Budget proposed in , / / / / / / / / / /20 Previous years Budget reduction sought Planned future budget Changes in Capital DEL: 354m Money surrendered to the Treasury to be carried over into the future years ( Budget Exchange ) from various housing programmes 112m Money surrendered to the Treasury This includes: 30m from Devolution deals 12m from Direct Commissioning 70m from Income from Housing Programmes 114m Transfer from Resource to Capital 3m Net transfers to/from other Departments 355m reduction in Capital DEL

18 millions Changes to 2016/17 DCLG (Local Government) budget: Resource DEL (Departmental Expenditure Limits) (in nominal terms) DCLG (LOCAL GOVERNMENT) 30,000 25, % increase in Resource DEL: 25m 20,000 15,000 10,000 5,000 0 Increase sought Budget proposed in / / / / / / / / / /20 Previous years Budget increase sought Planned future budget Changes in Resource DEL: LG s Resource AME budget is mainly driven by Business Rates retained by the Government (which are then redistributed to the Local Authorities by LG) 62m 37m 25m increase in Resource DEL 0.7% increase ( 94m) Resource AME (Annually Managed Expenditure) in nominal terms: New money from the Treasury, including 60m for Rural Services Delivery Grant Net transfers to/from Local Government LG budget.. 12,770m Extra provisions for Business Rate Retention...+44m BRR outturn adjustments contingency..+50m New LG Resource AME: 12,864

19 Ageing population: Over the next 20 years: Pressures DCLG (COMMUNITIES AND LOCAL GOVERNMENT) Decline in new affordable housing: 39% increase in 65+ population 106% increase in 85+ population Source: Health Select Committee Managing the care of people with long term conditions p. 3 Source: Library Briefing Paper What is affordable housing? November 2016 Real-terms budget cuts to local authorities: Hospital delays: Delayed days: In the 12 months to November 2016: 2.12m delayed days due to delayed transfer of care 22% higher compared to previous 12 months Rise in delays: 15%: where the NHS was partly responsible 35%: where the Social Care was partly responsible Source: King s Fund Demography Source: Library Briefing Paper NHS Indicators January to : 37% (Source: NAO Impact of funding reductions on local authorities, to Further 7.8% Business rates have a variable effect on council revenues, mostly boosting rural councils not urban. They are not necessarily correlated with economic growth (Source: NAO Overview : Local Government 2016 Source: Library Briefing Paper Property taxation and revenue incentives February 2017

20 Culture, Media and Sport

21 millions Changes to 2016/17 DCMS Resource DEL budget: Resource DEL (Departmental Expenditure Limits) (in nominal terms) 4,000 3,500 3,000 2,500 2,000 1,500 1, Increase sought now 2010/ / / / / / / / / /20 Previous years Budget increase sought Planned future budget Budget proposed in % increase in Resource DEL: 289m CULTURE, MEDIA AND SPORT Changes in Resource DEL: 275m Transfer of funds and responsibilities from Cabinet Office for the Office for Civil Society (OCS) (see next slide for details) 28m New money from the Treasury for various projects Transfers from capital to resource are NOT NORMALLY ALLOWED. Possible concerns that investment budgets are being raided to fund running costs. 26m Net transfers to/from other Departments 3m Transfer from Capital to Resource DEL: 2m for Royal Parks 1m for admin spend for Blythe House 7m LIBOR funding for Road World Cycling championship, Rugby League World Cup and Bletchley Park (2016 Autumn Statement commitment) 47m Various income and underspend (see next slide for details) 4m Funds carried forward into future years ( Budget Exchange ) from Cathedral renovations and the Listed Place of worship roof repair fund 289m increase in Resource DEL

22 Details of changes in 2016/17 DCMS Resource DEL budget: CULTURE, MEDIA AND SPORT + 28m: New Money from the Treasury + 26m Net transfers to/from other Departments including: - 47m due to: for listed Places of Worship scheme (grant scheme for repairs and alterations) from DIT for the Great Campaign (promoting UK abroad) - for Museums and Galleries to access their self-generated reserves from Cabinet Office for cyber security Income as Olympic Legacy programme is allowed to keep GLA receipts - for Life Chances (helping disadvantaged young people engage with culture) Return of business case funding from the London Concert Hall (current government no longer following a Spending Review commitment) Underspend against (ring-fenced) OCS budget -

23 millions Changes to 2016/17 DCMS Capital DEL budget: Capital DEL (Departmental Expenditure Limits) (in nominal terms) 1,400 1,200 CULTURE, MEDIA AND SPORT 8% reduction in Capital DEL: 30m 1, Reduction sought now Budget proposed in / / / / / / / / / /20 Changes in Capital DEL: Previous years Budget reduction sought Planned future budget 34.5m 32m 22m New money from the Treasury for Museum Freedoms 3m LIBOR funding for Bletchley Park, Brooklands Museum and British Mercantile Marine Memorial Collection (2016 Autumn Statement commitment) 3m Transfer from Capital to Resource DEL Funds carried forward into future years ( Budget Exchange ): 18.3m from Broadband Delivery UK 13.8m from Blythe House Transfers from BDUK to the devolved regions for Superfast Broadband: 21m to Scotland 1.1m to Northern Ireland 10m Surrendered to the Treasury due to underspend in the 700MHz spectrum 30m reduction in Capital DEL

24 Education

25 millions Changes to 2016/17 DfE Resource DEL budget: Resource DEL (Departmental Expenditure Limits) (in nominal terms) 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, / / / / / / / /20 Previous years Planned future budget Note: Resource DEL includes funding for Academies Budget increase sought Increase sought now Budget proposed in 2016 Restated due to added functions Changes in Resource DEL (see next slide for details): 9,414m Transfer from BIS for added functions and responsibilities 11,001m Additional student loan loss estimates arising from latest macroeconomic forecasts (funded by Treasury) 170m Transfer from Resource to Capital This is for academies capital spending but it does not appear as an increase there 283m Surrendered to the Treasury, including 70m for Budget Exchange 36% increase in Resource DEL: 19,951m 11m Net transfer to/from other Departments EDUCATION 19,951m increase in Resource DEL

26 What is the new money in DfE s Resource DEL budget for? Machinery of Government changes: 9,414m grant and direct funding for staff and day to day running costs of services transferring from BIS: Revised economic forecasts: 11,001m from the Treasury to cover revisions to the costs of student loans impairments (changes in the estimated value of the amount of student loans which are not expected to be repaid) EDUCATION Increases in the levels of estimated impairments are split between Resource DEL and Resource AME. Most impairments are charged to Resource DEL, but up to 1/30 of the changes due to previously inaccurate forecasts can be charged initially to Resource AME. This helps avoid DFE being hit by large unforeseen costs to its Resource DEL within a single year which it is unable to manage. Many of these costs arise from factors outside DFE's control (eg revised inflation and economic forecasts). Budgets for student loan impairments are ring fenced. The so-called RAB charge is the total estimated costs of these impairments, adjusted to present day values. Offset against some new savings: 32m: Miscellaneous other savings Overall Resource DEL Savings: 7m: A cost reduction in the contract for marking test scripts (Standards and Testing Agency) 158m Lower than forecast spending on HE maintenance loans 267m Education Funding Agency budgets (as a result of in year planning exercise to re-allocate budgets according to need for year olds)

27 millions Changes to 2016/17 DfE Capital DEL budget: Capital DEL (Departmental Expenditure Limits) (in nominal terms) 7,000 6,000 5,000 4,000 Increase sought now 12.5% increase in Capital DEL: 712m EDUCATION 3,000 2,000 Budget proposed in , / / / / / / / /20 Previous years Budget increase sought Planned future budget Restated due to added functions Note: Capital DEL includes funding for Academies 170m transfer from Resource to Capital does not appear in Capital budget! Changes in Capital DEL (see next slide for details): 367m Transfer from BIS for added functions and responsibilities 339m New money from the Treasury for the costs of Aggregator Vehicle plc (an arms length body). 6m 712m increase in Transfer from BEIS for Salix energy efficiency projects in schools Capital DEL

28 What is the new money in DfE s Capital DEL budget for? Machinery of Government changes: 367m from BIS to cover the costs of spending on purchase, creation or enhancement of assets (or grants to support such spending), less the sale of assets: Other changes: 339m from the Treasury for the costs of Aggregator Vehicle plc (an arms length body). EDUCATION Aggregator Vehicle plc provides financing for schools under the Priority School Building Programme. DFE says this is not a real cost, but a change in way spending is measured. Aggregator Vehicle plc is now classed as a public body by the Office for National Statistics. Reallocations of funding within the totals: 39m reduction due to lower than expected exceptional finance support loans (FE) 14m reduction due to lower than expected professional and career development loans An extra 21m for student loans

29 DfE: Annually Managed Expenditure: Resource AME (Annually Managed Expenditure) (in nominal terms) - 1,452m from BIS This covers: Interest payments received from (mainly HE) students (a benefit, not a cost) Student loans impairments - those in excess of a target set by Treasury In , the provision for Student loan impairments charged to Resource AME has increased by 222m due to impacts of revised inflation forecasts since Main Estimates. This affects both the levels of loan interest payable and of impairments. EDUCATION After the transfer of functions from BIS, DfE now has an additional budget Annually Managed Expenditure (AME) AME covers demand-led spending outside the spending limits, which is reforecast each year by the OBR. AME also covers provisions for large liabilities in reality payable over many years. A provision scores against AME once it is payable and unavoidable, even if the cost is not payable for some time (sometimes years) Capital AME (Annually Managed Expenditure) (in nominal terms) Within Capital AME, an extra 1,166m is forecast extra contingency sought for loans to be paid out in the last quarter of the year This covers: Student loans made Less repayments made in year + 13,646m from BIS

30 EDUCATION Average spending per head in 2014/15, 2015/16 and 2016/17: 5-16 funding 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, DfE has not given data for y.o. for 2016/17 0 Early years budget 5-16 year olds Pupil premium Free School Meal Primary Pupil premium Free School Meal Secondary Pupil premium service children Pupil premium local authority care/post-lac children year olds There is a wide variation between actual spending per head in different areas of England. DFE is currently consulting on the detailed design of a new funding formula

31 Environment, Food and Rural Affairs

32 millions Changes to 2016/17 DEFRA Resource DEL budget: Resource DEL (Departmental Expenditure Limits) (in nominal terms) 2,500 2,000 Reduction sought now ENVIRONMENT, FOOD AND RURAL AFFAIRS 0.7% reduction in Resource DEL: 13m 1,500 1,000 Budget proposed in / / / / / / / / / /20 Previous years Budget reduction sought Planned future budget Changes in Resource DEL: This has been fairly common practice within the Department as identifying the resource /capital split of projects is difficult at the beginning of the year 5m 3.3m 16.3m 5m 13m reduction in Resource DEL New money from the Treasury for Environmental Agency (EA) following the 2015 winter floods Transfers from other Departments Transfer from Resource to Capital (largely within the Environment Agency) Part of budget for Voluntary Exit Scheme moved back to the HMT as Budget Exchange Defra will be able to claim this back next year

33 millions Changes to 2016/17 DEFRA Capital DEL budget: Capital DEL (Departmental Expenditure Limits) (in nominal terms) Increase sought now ENVIRONMENT, FOOD AND RURAL AFFAIRS 10% increase in Capital DEL: 61m Budget proposed in / / / / / / / / / /20 Previous years Budget increase sought Planned future budget Changes in Capital DEL: 40.5m New money from the Treasury for Environmental Agency (EA) following the 2015 winter floods 7.6m New money from the Treasury for Flood Resilience work announced at the Autumn Statement 16.3m Transfer from Resource to Capital (largely within the Environment Agency) 3m Transfer to Cabinet Office for shared service software 61m increase in Capital DEL

34 ENVIRONMENT, FOOD AND RURAL AFFAIRS Changes in Resource Annually Managed Expenditure (AME): AME is spent on unpredictable or difficult to control items, and is usually demand-led (welfare, tax credits etc) Provisions (money set aside for an event that may occur in future) are initially recognised in AME 483% increase ( 407.7m): DEFRA budget m CAP disallowance provision m (this follows findings of the EC audit of the Basic Payments Service (BPS) and compliance decisions for 2015 and 2016) Other provisions. + 50m (this includes the the Rural Payments Authority for BPS and SPS payments, and the EA s closed pension scheme) Potential property impairments m Potential impact of foreign exchange rates on EU income..+ 13m Flood Re s budget m (forecasts for spending for first year of operation were conducted on a conservative basis, so spending is likely to be lower) New DEFRA Resource AME: 492m EC audit relates to the CAP system. Since 2005 Defra has incurred 661m in disallowance penalties, and the Defra Annual Report and Accounts were qualified in respect of a 66m irregularity as a result of disallowance. Defra and the RPA anticipate further risk of error and disallowance because of the greater complexity and higher penalties of the new CAP scheme.

35 ENVIRONMENT, FOOD AND RURAL AFFAIRS Flooding: background Key findings and recommendations from EFRA Committee Inquiry into Future Flood Prevention (October 2016): Flood risk management structures are fragmented and ineffective: catchment scale approaches, which use a range of natural flood management measures across a river catchment area, are under-encouraged Proposal of a new governance model, which includes a new National Floods Commissioner for England to promote adoption of catchment measures on a wider scale Flood risk communication should be simplified Resilience to flooding must be improved, with greater liability for unsatisfactory developers. The Report also indicated current planned maintenance spending will be inadequate in the medium-term.

36 Flooding: funding structure ENVIRONMENT, FOOD AND RURAL AFFAIRS 2016/17 Central Government funding for Flood and Coastal Erosion Risk Management (FCERM): 735.6m Source: In addition to Central Government funds, the Environment Agency raises funding through: Local sources such as levies on local authorities. Other non-government sources such as drainage charges and levies paid to internal drainage boards. The Environment Agency Long-term Investment Scenarios suggests that around 900m a year would be required by the s to achieve optimum investment plans.

37 millions Flooding: planned spending Expenditure on Flood and Coastal Erosion Risk Management, Resource and Capital (real terms) ENVIRONMENT, FOOD AND RURAL AFFAIRS Future resource budgets only currently contain agreed flood defence maintenance funding; further increases in resource budgets will be confirmed annually partly reflecting the approach of topping-up after unpredictable flood events / / / / / / / /20 Capital Resource Average total spend per Parliament (RHS) Additional funding planned since the 2015 Spending Review: 200m additional capital investment following 2015/16 winter floods 700m ( 140m for maintenance) for flood defence and resilience, in the March 2016 Budget Capital spending plans reflect the six-year funding commitment of 2.3bn from 2015 Spending Review, following Defra s 2014 Investment Plan. Sources: In addition, DCLG is getting 27.2m from the Treasury for coastal Communities (potentially for flood defence and/or maintenance)

38 Exiting the EU

39 millions millions 2016/17 DExEU budget Resource DEL (Departmental Expenditure Limits) (in nominal terms) EXITING THE EU 4.7m European and Global Issues Secretariat transferred from the Cabinet Office 2.8m Europe Directorate transferred from the FCO 41.4m New money from the Treasury 48.9m 2016/17 Resource DEL Capital DEL (Departmental Expenditure Limits) (in nominal terms) / / / /20 Current budget Planned future budget / / / /20 Current budget Planned future budget Spending started mid-way in the financial year (department was set up in July)

40 DExEU supports the Prime Minister to deliver the Government s objective of exiting the EU, including: the negotiation of the UK s future relationship with the EU Working very closely with the UK s devolved administrations, Parliament, and a wide range of other interested parties on what the approach to those negotiations should be Key Responsibilities Leading and co-ordinating cross-government work to seize the opportunities and ensure a smooth process of exit on the best possible terms Main Priorities of DExEU: EXITING THE EU Ensuring the government is able to take initial decisions on UK s withdrawal on the basis of the best possible advice Strengthening capability across government in preparation for the work ahead Reaching out to stakeholders in order to understand and capture their views Establishing the department and setting it up to succeed The policy work to support the UK s negotiations to leave the EU and to establish the future relationship between the EU and the UK Conducting the negotiations in support of the Prime Minister including supporting bilateral discussions on EU exit with other European countries

41 Foreign and Commonwealth Office

42 millions Changes to 2016/17 FCO Resource DEL budget: Resource DEL (Departmental Expenditure Limits) (in nominal terms) 2,500 2,000 1,500 Increase sought now Budget proposed in 2016 FOREIGN AND COMMONWEALTH OFFICE 2% increase in Resource DEL: 43m 1, / / / / / / / / / /20 Previous years Budget increase sought Planned future budget Note: planned future budget excludes peacekeeping and CSSF Changes in Resource DEL (see next slide for details): 89.9m 42.2m 1.4m 3.6m 2.8m 43m increase in Resource DEL Additional funds from the Treasury Money returned to the Treasury Net transfers from/to other Departments Transfer from Resource to Capital Funding and responsibility for Europe Directorate transferred to DExEU

43 What is FCO requesting new money for? What are major transfers between Departments? 89.9m of new money from the Treasury for following activities: FOREIGN AND COMMONWEALTH OFFICE (Main movements identified only) 42.2m returned to Treasury: 34m from the CSSF to cover the cost of the EU s Common Foreign and Security Policy (CFSP) which is paid centrally rather than by the FCO 1.4m net transfers from/to other Departments include: m net transfers to other Departments through Conflict, Stability and Security Fund (CSSF) 8.2m from the FCO s Foreign Currency Mechanism, because, over the year as a whole, sterling was stronger than in the FCO baseline year of As a result of the fall in sterling during the year, the amount returned is smaller than in previous years Net transfer from other departments for use of FCO overseas platform From Department for IT to the British Council for Great Campaign From the Security and Intelligence Agencies for cyber protection 14.2m 3.7m 3.1m m 15.8m from DfID (including 14.3m from DfID Emergency Fund) 21.1m to MoD 7.4m to National Crime Agency 4.8m to Home Office 2.7m to DfT, DH, DEFRA, HMRC

44 millions Changes to 2016/17 FCO Capital DEL budget: FOREIGN AND COMMONWEALTH OFFICE Capital DEL (Departmental Expenditure Limits) (in nominal terms) Reduction sought now Budget proposed in / / / / / / / / / /20 37% reduction in Capital DEL: 36m Previous years Budget reduction sought Planned future budget Changes in Capital DEL: 3.6m Transfer from Resource to Capital 33m Income from asset disposals banked at the Treasury. This can be used in future years by the FCO for asset purchases. (FCO uses income from asset disposals to fund its asset acquisitions) 10m 3.8m Repayment of capital claim (Additional funds that Treasury gave the previous year that the FCO has to pay back) Transfer from other Departments (Main one: 2.5m from DfID for Kathmandu) 36m reduction in Capital DEL

45 Health

46 millions Changes to 2016/17 DH Resource DEL budget: Resource DEL (Departmental Expenditure Limits) (in nominal terms) 140, , ,000 80,000 Increase sought now 1.1% increase in Resource DEL: 1,282m HEALTH 60,000 Budget proposed in ,000 20, / / / / / / / / / /20 Previous years Budget increase sought Planned future budget Transfers from capital to resource are NOT NORMALLY ALLOWED. Possible concerns that investment budgets are being raided to fund NHS running costs. This is the third year that some of the NHS capital budget (investment) has been diverted to running costs (resource) (see next slide). Changes in Resource DEL: 81.3m Transfers from other Departments 1,200m Transfer from Capital to Resource 1,282m increase in Resource DEL

47 millions millions Changes to 2016/17 DH Capital DEL budget: Capital DEL (Departmental Expenditure Limits) (in nominal terms) 7,000 6,000 5,000 4,000 Reduction sought now 21% reduction in Capital DEL: 1,194m HEALTH 3,000 2,000 Budget proposed in , / / / / / / / / / /20 Previous years Budget reduction sought Planned future budget Transfers from Capital to Resource budgets over the last 3 years: 7,000 6,000 5,000 4,000 3,000 2,000 1, , m Transfers from other Departments 1,200m Transfer from Capital to Resource 1,194m reduction in Capital DEL Transfer to Resource Budget Remaining Capital Budget

48 billions NHS England: Spending Review Target 2015 Spending Review: the Government made a commitment that spending on the NHS in England would increase by 10bn between 2014/15 and 2020/21 in 2020/21 prices (this is equivalent to 9.5bn in 2015/16 prices) England budget HEALTH It is included within the Department of Health; it does not have a separate estimate This increase comes partly from the squeeze of the remaining DH budget over the next 4 years: DH budget Additional Treasury Funding In the Health Select Committee s report, Impact of the Spending Review on Health and Social Care, the Committee noted that the total health budget would rise by 4.5 billion in real terms by 2020 taking as the base year. NHS England Remaining DH budget Source: Health Committee report, Impact of the Spending Review on Health and Social Care

49 Other notable changes: HEALTH Each year the Department is allocated a share of National Insurance contributions. Before the supplementary estimate, HMRC tells the Department the accurate figure and then the Department claims the additional income as non voted income. However it is supposed to refund the Treasury with an equivalent sum so that the NIC change doesn t affect its overall spending limit. In , the Department did not refund the Treasury and was only able to meet its DEL total because of this failure to refund the Treasury. However in they have refunded the Treasury the amount they received in income, 1,127m. Changes in Resource Annually Managed Expenditure (AME): 113% increase ( 8,561m) DH budget ,590m The NHS Litigation Authority ,004m (Changes in values of some long term cases) Changes in discount rates m (The discount rate affects how costs which are projected into the future are valued in today s money) The NHS Litigation Authority together with the Government Actuarial Department changed their methodology for valuing long term provisions for this year. This exercise was a response to the NAO audit. It is a technical accounting change which means that the accounts in the summer will more accurately reflect the Department s position New DH Resource AME: 16,150m

50 Ageing population: Over the next 20 years: Pressures HEALTH Rise in long-term conditions: Estimated increase in the number of people with long-term conditions: 39% increase in 65+ population 15m 18m % increase in 85+ population Source: Health Select Committee Managing the care of people with long term conditions p. 3 Budget deficits in : 66% of NHS trusts and foundation trusts were in deficit Delays and Missed targets: Delayed days: In the 12 months to November 2016: 2.12m delayed days due to delayed transfer of care 22% higher compared to previous 12 months Source: King s Fund Demography Waiting list for Treatment: 3.3m 3.7m Nov 2015 Oct 2016 Rise in delays: 15%: Target: 92% to wait less than 18 weeks where the NHS was partly responsible Currently: 92% have been waiting for 35%: where Social Care was less than 19.2 weeks partly responsible Source: Library Briefing Paper NHS Indicators January bn: net deficit of NHS trusts and NHS foundation trusts (Source: National Audit Office Health and Social Care Integration (2017) p. 7) This target has been missed every month since March 2016

51 Home Office

52 millions Changes to 2016/17 HO Resource DEL budget: Resource DEL (Departmental Expenditure Limits) (in nominal terms) 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - Reduction sought now Budget proposed in / / / / / / / / /20 0.4% reduction in Resource DEL: 42m HOME OFFICE Previous years Budget reduction sought Planned future budget Changes in Resource DEL: This includes: 25m from SIA to strengthen national cyber security 12.2m from FCO to fund CSSF projects, mainly in Western Balkans, Pakistan and Africa 2.6 from DCLG to cover unauthorised tax charge associated with the Firefighters pension scheme. 42m Transfers from other Departments to HO 109m Transfers from HO to other Departments This includes: 56.8m to DH for the Immigration Health surcharge. An additional 10.7m also goes to the devolved administrations. 12.4m to the NCA for CSSF projects 15m to FCO (for which a Reserve claim is made) 25m New money from the Treasury, including: 15m to meet HO contribution to the FCO overseas platform costs 10m to cover a shortfall in ringfenced funding Immigration Health Surcharge is an additional fee that is applied to visa charges in order to help fund the NHS ; this income is collected by HO and then transferred to the NHS and devolved administrations. 42m reduction in Resource DEL

53 millions Changes to 2016/17 HO Capital DEL budget: Capital DEL (Departmental Expenditure Limits) (in nominal terms) / / / / / / / / / /20 Changes in Capital DEL: Increase sought now Previous years Budget increase sought Planned future budget Budget proposed in % increase in Capital DEL: 4.5m HOME OFFICE 5m Transfer from the National Crime Agency (NCA) to meet a funding shortfall 1m Transfer from SIA to strengthen national cyber security 1.5m Transfer to DfT for Future Aviation Security Solutions R&D 4.5m increase in Capital DEL Movements within Capital DEL: 22.2m capital spending is being transferred from Crime, Policing and Fire group to ALBs.

54 HOME OFFICE Significant switches within Resource DEL: A transfer of spending away from Border Force ( 53.9m reduction) and towards Enablers ( 73.3m increase) Enablers is the central Home Office and administration function This is due to the consolidation of the accounting treatment of Border Force assets it should not represent any less cash spending on the Border Force function. Admin spending is increasing by 16.4m in Enablers, offset by reductions in almost all other sections Security and Counter Terrorism spending has increased as a result of the National Cyber funding. However, its total funding is only 6.2m higher, despite a 25m transfer in, as other spending has been re-allocated. Changes in Resource Annually Managed Expenditure (AME): AME is (usually) demand-led spending and difficult to control, so it is not included in spending limits 15.3% increase ( 328m): HO budget ,145m Police and fire pensions m (change in forecasts) Provision for the Forensic Science Service pension scheme m PFI related provision m New HO Resource AME: 2,473m

55 International Development

56 millions Changes to 2016/17 DfID Resource DEL budget: Resource DEL (Departmental Expenditure Limits) (in nominal terms) 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Increase sought now Budget proposed in / / / / / / / / / /20 1% increase in Resource DEL: 79m INTERNATIONAL DEVELOPMENT EU attributed aid has increased by 45% from 381m to 551m This increase has been funded through reducing other parts of DFID's budget. EU attributed aid is the share of the EU budget spent on development aid that is attributed to the UK. Previous years Budget increase sought Planned future budget Changes in Resource DEL: Transfers from capital to resource are NOT NORMALLY ALLOWED. Possible concerns that investment budgets are being raided to fund DfID running costs. 89.4m Transfer from Capital to Resource 10.7m Net transfers to/from other Departments, including 14.38m transfer to FCO for Home Office activities relating to Migration crisis 78.7m increase in Resource DEL

57 millions Changes to 2016/17 DfID Capital DEL budget: Capital DEL (Departmental Expenditure Limits) (in nominal terms) 4,000 3,500 Increase sought now INTERNATIONAL DEVELOPMENT 0.5% increase in Capital DEL: 13m 3,000 2,500 2,000 1,500 1,000 Budget proposed in / / / / / / / / / /20 Changes in Capital DEL: Previous years Budget increase sought Planned future budget 102m Net transfers to/from other Departments, including 100m from Treasury to cover DFID taking over responsibility for the capital contributions to the Asian Infrastructure Investment Bank 89m Transfer from Capital to Resource 13m increase in Capital DEL

58 International Trade

59 2016/17 DIT s Resource DEL budget: The Department for international Trade took over UKTI s budget: INTERNATIONAL TRADE Resource DEL (Departmental Expenditure Limits) (in nominal terms) Machinery of government changes DIT also transferred 4.3m from admin to programme spending within its Resource DEL budget 317m UKTI Resource DEL budget 11m Transfer from BEIS for added responsibility for the Trade Policy Group (including 168 staff and associated programmes) 11m Transfer from BEIS 8.7m New money from the Treasury to cover the first phase of trade promotion and new department transition costs This covers: Assisting DIT in building its corporate function, including transferring staff across. Export control licensing 35m Transfer from Cabinet Office for added responsibility for the Great Campaign 20m Transfers to British Council and DCMS for the GREAT Campaign 3.6m Net transfers to/from other Departments 3.5m Transfer from Resource to Capital 354m New Resource DEL This includes: 4.7m to FCO for using the overseas platform 0.4m from Treasury and Cabinet Office for Cyber Security and Foreign exchange Transfers from FCO relating to allowances ( 1m), Rio House ( 0.5m), King Charles Street ( 0.7m) Transfers to FCO including Prosperity Fund ( 1.6m), King Charles Street ( 0.9m)

60 millions INTERNATIONAL TRADE 2016/17 DIT s Capital DEL budget: Capital DEL (Departmental Expenditure Limits) (in nominal terms) 3m 3.15m 3.5m 0.2m 9.8m UKTI Capital DEL budget Transfer from BEIS for an IT system for the Export Control Unit Transfer from Resource to Capital Budget (see previous slide) Transfer from DCMS for Rio House New DIT Capital DEL budget DIT s planned Resource and Capital DEL budgets (nominal terms): Resource Capital

61 Defence

62 millions Changes to 2016/17 MoD s Resource DEL budget: Resource DEL (Departmental Expenditure Limits) (in nominal terms) 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Increase sought now Budget proposed in / / / / / / / / / /20 1% increase in Resource DEL: 349m DEFENCE Resource AME (Annually Managed Expenditure) in nominal terms: 39% increase ( 491m) 341 for pension liabilities 150 due to change to Discounting Rates for Post- Employment Benefits and General Provisions Previous years Budget increase sought Planned future budget Changes in Resource DEL: 724m 200m 490m 75m 349m increase in Resource DEL New money from the Treasury, including: 350m for impairments on the MoD estate 250m for Operations and Peacekeeping Spending re-profiled from future years (referred to as an Autumn Statement Adjustment ) Transfer from Resource to Capital DEL budget Net transfers to/from other Departments, including: 71m to SIA for CYBER National Offensive Cyber Programme 21m from FCO/CSSF

63 millions Changes to 2016/17 MoD s Capital DEL budget: Capital DEL (Departmental Expenditure Limits) (in nominal terms) 12,000 Increase sought now 10,000 8% increase in Capital DEL: 626m DEFENCE 8,000 6,000 4,000 Budget proposed in , / / / / / / / / / /20 Previous years Budget increase sought Planned future budget Changes in Capital DEL: 121m 490m 15m New money from the Treasury largely for Operations and Peacekeeping ( 120m) Transfer from Resource to Capital DEL budget Net transfers to/from other Departments; mainly 15m from SIA for CYBER National Offensive Cyber Programme 626m increase in Capital DEL

64 Major switches within the budget (excluding Operations): DEFENCE 490m 43m Transfer from Resource to Capital DEL budget due to an imbalance in budget Switch within Resource DEL from programme to admin spending due to additional costs of superannuation through the SCAPE discount rate change Superannuation contributions adjusted for past experience (SCAPE) - this is the discount rate used to calculate the present value of future pension payments. Decreasing the rate, as occurred at the March Budget, increases the size of this liability. As a result the contributions of current employees increase to cover this cost (although as the schemes are unfunded this is notional). Big cuts in civilian personnel costs, increases in infrastructure and equipment: Resource DEL: Civilian personnel costs Despite the SCAPE admin increases 20% reduction ( 440m) Capital DEL: Single Use Military Equipment 18% increase ( 710m) Inventory consumption (munitions, fuel, clothing) 24% reduction ( 386m) R & D 12% reduction ( 218m) Equipment support costs (charges for machinery, transport) 7% increase ( 429m) Partially offset by higher R&D spending in RDEL Resource Infrastructure costs (property management, IT) 8% increase ( 300m)

65 Operations and Peacekeeping: DEFENCE 250m in Resource and 120m in Capital DEL budgets has been requested from the Treasury Reserve for Operations. Due to the unpredictable nature of conflict these claims against the Reserve are a common feature of Operational spending Operations and Peacekeeping spending ( m) The majority of the Reserve claim has been for operations against Daesh; this accounts for virtually all capital spending Counter Daesh Afghanistan Wider Gulf Cabinet Officer Transfer Deployed Military Activity Pool (DMAP) EU counter migrant smugglers Total DEL in Main Estimate Reserve Claim

66 DEFENCE NATO 2% Target The Government has committed to meeting the NATO target of defence spending of at least 2% of GDP. A further target is that 20% of this expenditure is invested in new equipment, including R&D. Defence expenditure - NATO definition, (% of GDP) The latest NATO data for 2016 has expected UK defence expenditure of 2.21% of GDP: However, the International Institute for Strategic Studies has suggested the figure may be below 2% e United Kingdom United States NATO - Total NATO - Europe The Defence Committee Report Shifting the goalposts? Defence expenditure and the 2% pledge identified that whilst in-year additional Operations costs were included, there were several elements of spending that might not usually be considered as defence spending: Elements of cyber security spending Elements of CSSF relating to peacekeeping activities Military and MOD civil service pensions The increased spending in 2016/17 Estimate may help meet the NATO target for 2017 Significant increase in SUME and a reduction in R&D would also contribute overall to the 20% target for spending on new equipment. However, the reduced R&D may run counter to the spirit of this target. Overall increases in spending may be smaller than changes in GDP growth, which has continued to be higher than expected forecasts to be updated at the March Budget 1

67 Justice

68 millions Changes to 2016/17 MoJ Resource DEL budget: Resource DEL (Departmental Expenditure Limits) (in nominal terms) 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Increase sought now 2010/ / / / / / / / / /20 Previous years Budget increase sought Planned future budget Budget proposed in % increase in Resource DEL: 296m JUSTICE Changes in Resource DEL: 130m 136m 38m 8.5m 296m increase in Resource DEL Transferred from BEIS as responsibility for Offender Learning and Skills Service moves to MoJ New money from the Treasury for a shortfall in probate incomes New money from the Treasury for final liabilities for the O Brien Litigation in relation to fee paid judges

69 millions Changes to 2016/17 MoJ Capital DEL budget: Capital DEL (Departmental Expenditure Limits) (in nominal terms) Reduction sought now 2010/ / / / / / / / / /20 Previous years Budget reduction sought Planned future budget Budget proposed in % reduction in Capital DEL: 196m JUSTICE Changes in Capital DEL: 8m Sale of Courts to DCLG for social housing 204m Budget Exchange as a result of changes in the Prison Reform and Courts Programme capital profiling 196m reduction in Capital DEL

70 JUSTICE Significant Switches: The Estimate subheads used by MoJ have a central function named MoJ HQ (for policy, corporate service and associated offices), and then separate lines for major functions such as the National Offender Management Service, and HM Courts and Tribunals. Changes in Resource AME: Increase of 392m (150%) In the Main Estimate MoJ intentionally centralised much of the departmental spending (including for depreciation) and income in MoJ HQ. Almost all movements between Estimate subheads now seem to reflect this re-organisation, or the centre re-distributing previously held funds. Resource AME (Annually Managed Expenditure): Changes to Resource AME: MoJ budget.. 261m Impairment of the MoJ Estate m (due to potential Prison and Court Closure announcements) Impairment of the MoJ Estate and Capital m Change in the provision for Pensions and Work in Progress in LAA.+ 37m New MoJ Resource AME: 653m

71 Transport

72 millions Changes to 2016/17 DfT Resource DEL budget: Resource DEL (Departmental Expenditure Limits) (in nominal terms) 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Reduction sought now 2010/ / / / / / / / / /20 Previous years Budget reduction sought Planned future budget Budget proposed in % reduction in Resource DEL: 86m TRANSPORT Changes in Resource DEL (see next slide for details): 159m New money from the Treasury to cover the costs of depreciation 84m Transfer from Resource DEL to Resource AME budget 6m Net transfers to/from other Departments 95m Transfer from Resource to Capital DEL budget 60m Funds returned to the Treasury to be used in future years ( Budget Exchange ) 86m reduction in Resource DEL

73 Details of changes to 2016/17 DfT Resource DEL budget: TRANSPORT 159m To cover depreciation for roads In road surveys, the Highways Agency found that there was more damage to the roads than expected so that they have had to record an extra loss. Additionally, the Department has spent more money on constructing roads and this means the cost of their deterioration is higher. Also inflation has had an effect on the cost of the damage to roads. 60m Funds carried forward into future years ( Budget Exchange ) 50m: general underspend across DfT 10m: development funding for the East West Rail line carried forward into m Transfer from Resource DEL to Resource AME budget Network Rail issued inflation linked bonds in the past. The transfer reflects change in the value of the interest payments on those bonds (Network Rail from was consolidated into DFT) However, only 73m (out of 84m) is visible as an increase in AME. The Department has not explained what the 11 million difference between the two figures is

74 millions Changes to 2016/17 DfT Capital DEL budget: Capital DEL (Departmental Expenditure Limits) (in nominal terms) 12,000 10,000 8,000 6,000 4,000 Increase sought now 1% increase in Capital DEL: 52m TRANSPORT 2,000 0 Budget proposed in / / / / / / / / / /20 Previous years Budget increase sought Planned future budget Changes in Capital DEL: 15.5m 27.5m 6m 40m 95m 52m increase in Capital DEL New money from the Treasury: 12m for Personal Injury Claims 3m for liability for Air Travel Trust Fund Funds surrendered to the Treasury (due to changes in Pensions Provision for British Transport Police) Net transfers to/from other Departments, including - 4.5m transaction between High Speed Rail and Network Rail Funds returned to the Treasury to be used in the future ( Budget Exchange ) due to underspend in Highways England Transfer from Resource to Capital DEL budget

75 Rises in contingent liabilities: TRANSPORT A contingent liability is a potential liability that may occur, depending on the outcome of an uncertain future event. It is recorded in the accounting records if the contingency is probable and the amount of the liability can be reasonably estimated. Channel Tunnel Act 1987 s. 23, 26 & 27 Liability should Eurotunnel concession be terminated increased to 100m Estimate based on new information HS1 Ltd debt Thameslink Rolling Stock assurances to Siemens, Network Rail and London Underground increased from 3,045m to 3,095m This is linked to HS1 s debt and fluctuates in line with that value increased from 1,701m to 2,892m Estimate based on new information Inter City Rolling Stock contingent liability increased from 50m to 299m Estimate based on new information Other Contingent liabilities including legal claims increased from 87.4m to 682m Due to increase in new claims arising from several transport policy areas

76 Work and Pensions

77 millions Changes to 2016/17 DWP Resource AME budget are very small: Resource AME budget is used for paying pensions, benefits, etc. Resource AME (Annually Managed Expenditure) (in nominal terms) 200, , ,000 80,000 Increase sought now 0.6% increase in Resource AME: 1,037m Budget proposed in 2016 WORK AND PENSIONS Changes largely due to (routine) revised forecasts of benefits spending: Forecast increases for: Employment and Support Allowance: +3.7% Personal Independent Payments +6% Disability Living Allowance +2.1% 40, / / / / / / / / / /20 Previous years Budget increase sought Planned future budget Housing Benefit: +1.3% Offset by forecast reductions for: Statutory Maternity Pay -9.6% The government actuary forecasts lower spending than previously expected

78 millions Changes to 2016/17 DWP Resource DEL budget are very small: WORK AND PENSIONS Resource DEL budget is used for admin, running costs, staff costs, etc. Resource DEL (Departmental Expenditure Limits) (in nominal terms) 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Reduction sought now 2010/ / / / / / / / / /20 Previous years Budget reduction sought Planned future budget Budget proposed in % reduction in Resource DEL: 4m Changes in Resource DEL: 2.5m 2.1m 6.3m 2m transferred from Department of Health for Syrian vulnerable persons resettlement scheme goes to Scotland for Fit to Work Service moves to HMRC as responsibility for the Government Gateway transfers there. Its customers already account for the majority of transactions Other transfers 4m reduction in Resource DEL

79 millions DWP: Challenges Historical trends in welfare spending Despite the increase in spending on welfare in nominal terms, in real terms it has been broadly flat since WORK AND PENSIONS Summer Budget 2015: Benefits savings planned over Parliament include: 200,000 As a share of GDP, welfare spending has fallen down to its precrisis levels. Source: OBR Welfare trends report, October 2016, p.6 Share of state pensions in overall DWP s AME (benefits) spending continues to grow, despite pension age rises: The biggest saving Freezing working age benefits in cash terms for four years (the biggest saving) Reducing taper rates, income thresholds and income rise disregards (later partly reversed for tax credits, but not for Universal Credit) Limiting tax credits to two children (new claims) Removing family elements from tax credits and Universal Credit Reducing Employment and Support Allowance in some cases Reducing the household benefits cap 160, ,000 80,000 40,000 47% 53% 56% Pensions The smallest saving Other payments Removing automatic housing benefit entitlement for 18-21s estimated

80 Treasury and HMRC

81 millions millions Changes in HMT budgets Changes in HMRC budgets HM TREASURY Major changes in budget of HM Treasury in 2016/17 Estimates: Departmental Expenditure Limits Budgets: (in nominal terms) Resource: Capital : July 2016 planned budget 82 July 2016 planned budget 1%% reduction February 2017 proposed budget 95% reduction 4.5 February 2017 proposed budget Resource DEL changes due to: Reserve claims: Oil and gas decommissioning m Financial management reform m Bank Mellat legal reforms...+ 6m Hinkley Point guarantee m Net transfers from other departments m MOG transfer to the CO m (Infrastructure UK) Depreciation m Total changes: - 2.1m Capital DEL changes due to: Reserve claims PF2 projects m Asian Infrastructure Investment Bank m Transfer to DFID for Asian Infrastructure Investment Bank m Total changes: m 49,825m increase (from - 695m in July 2016 to 49,130m in February 2017) 1,364m reduction (from - 3,563m in July 2016 to 4,927m in February 2017) Annually Managed Expenditure: (in nominal terms) Resource: Largely due to change in the value of Bank of England Asset Purchase Facility Fund (BEAPFF) (+ 50,000m) Capital: Receipts from sale of Lloyds shares

82 HMRC Major changes in budget of HMRC in 2016/17 Estimates: Departmental Expenditure Limits Budgets: (in nominal terms) Resource annually Managed Expenditure: (in nominal terms) Resource DEL changes due to: 2016 Autumn Statement m (including 6.9m for National Savings and Investments) 2015 Spending Review m (confirmation of balance of funding) Net transfers from other Departments...+ 8m (including 6.9m from MoJ for Accelerated Payments) Machinery of Government changes m (Government Gateway transferred from DWP) Transfer from Resource to Capital DEL m Depreciation and Impairments m (Changes in the asset delivery schedule) Increase of Expenditure m (to offset the income below) Income from other departments for IT projects HMRC carries out m Capital DEL changes due to: 2016 Autumn Statement m (including 7.5m for National Savings and Investments) 2015 Spending Review m (confirmation of balance of funding) Transfer from Resource to Capital DEL m Increase of Expenditure m (to offset the income below) Income m (Increase in contributions agreed in the contract to partially offset against fit out costs incurred by HMRC for Croydon Regional Centre) Total reduction: 21m (0.5%) Total increase: 99m (41%) Total increase: 216m (0.5%) + 74m for child benefit (Accounting adjustment) - 49m for Payments in lieu of tax relief (reduction in stakeholder pensions/gift aid relief on donations) - 8m for Tax-free Childcare - 520m for Personal tax credit (Accounting adjustment) +719m for other reliefs and allowances (Mainly R&D reliefs)

83 Scotland

84 millions Barnett Formula List of all departments Changes to 2016/17 Scotland s Resource DEL budget: Resource DEL (Departmental Expenditure Limits) (in nominal terms) 30,000 4,900m Block grant adjustment for Scottish Rate of Income Tax that UK Government now collects on behalf of Scotland 600m Block grant adjustment for Stamp duty land tax/landfill tax. These taxes are collected directly by the Scottish Government 0.2% increase in Resource DEL: 44m SCOTLAND 25,000 20,000 15,000 10,000 5, / / / / / / / / / /20 Block Grant Scottish rate of income tax Landfill tax Budget increase sought Planned future budget Changes in Resource DEL: 0.7m Barnett Consequential (2016 Autumn Statement) 91.3m Funds carried forward from previous years ( Budget Exchange ) 11.8m Net transfer from other Departments, including: 5.6m from HO for Immigration Health surcharge; 2.1m from DWP Fit for Work 10.7m New money from the Treasury for: 5m for Burrell Renaissance Project 5.7m for Coastal Communities Fund 4.6m Other movements, including: 1.6m for fire pension scheme 2m for additional funds for immigration health surcharge 75m Reduction in forecast student loans (non-cash) 44m increase in Resource DEL

85 millions Barnett Formula List of all departments Changes to 2016/17 Scotland s Capital DEL budget: SCOTLAND Capital DEL (Departmental Expenditure Limits) (in nominal terms) 4,000 3,500 3,000 2,500 2,000 1,500 1, Increase sought now Budget proposed in / / / / / / / / /20 3.8% increase in Capital DEL: 121m Capital DEL Budget increase sought Planned future budget Changes in Capital DEL: 6.3m Barnett Consequential (2016 Autumn Statement) 74.4m Funds carried forward from previous years ( Budget Exchange ) 10.7m Glasgow city deal 25.7m Transfer from other Departments, including 21m from DCMS for digital super fast broadband 121m increase in Capital DEL

86 Wales

87 millions Barnett Formula List of all departments Changes to 2016/17 Wales Resource DEL budget: Resource DEL (Departmental Expenditure Limits) (in nominal terms) 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Increase sought now Budget proposed in / / / / / / / / /20 1.6% increase in Resource DEL: 219m WALES Resource AME (Annually Managed Expenditure) in nominal terms: Provisions have increased from 30m to 400m Block Grant Budget increase sought Planned future budget Changes in Resource DEL: 1.5m Barnett Consequential (2016 Autumn Statement) 131m Funds carried forward from previous years ( Budget Exchange ) 6m Net transfer from other Departments, including: 3.2m from HO for Immigration Health surcharge; 2.7m from BEIS for Energy Efficiency 155m New money from the Treasury for various projects, including: 150m for Student Loans (non-cash) 2.6m for Coastal Communities Fund 1.1m for Immigration Health surcharge 75m Transfer from Resource to Capital DEL budget 219m increase in Resource DEL

88 millions Barnett Formula List of all departments Changes to 2016/17 Wales Capital DEL budget: WALES Capital DEL (Departmental Expenditure Limits) (in nominal terms) 1,800 1,600 1,400 1,200 1, Increase sought now Budget proposed in / / / / / / / / /20 5.8% increase in Capital DEL: 90m Capital DEL Budget increase sought Planned future budget Changes in Capital DEL: 10m 5m 75m Funds carried forward from previous years ( Budget Exchange ) New money from the Treasury for: 4m for Structural Funds in West Wales; 1m for Pontormo Painting Transfer from Resource to Capital DEL budget 90m increase in Capital DEL

89 Northern Ireland

90 millions Barnett Formula List of all departments Changes to 2016/17 Northern Ireland s Resource DEL budget: NORTHERN IRELAND Resource DEL (Departmental Expenditure Limits) (in nominal terms) 12,000 10,000 8,000 6,000 4,000 2,000 0 Increase sought now Budget proposed in / / / / / / / / / /20 3% increase in Resource DEL: 325m Block Grant Budget increase sought Planned future budget Changes in Resource DEL: Transfers from capital to resource are NOT NORMALLY ALLOWED. Possible concerns that investment budgets are being raided to fund running costs. 0.2m Barnett Consequential (2016 Autumn Statement) 2.2m Air Passenger Duty (collected less than forecasted) 217m 3.4m 51m New money from the Treasury for various projects (see next slide) Net transfers to/from other Departments including: 3.7m to Northern Ireland Office for Stormont election 1.9m from HO for immigration health surcharge Transfer from Capital to Resource DEL 62m Funds carried forward from previous years ( Budget Exchange ) 325m increase in Resource DEL

91 Barnett Formula List of all departments What is new money from the Treasury in Resource DEL budget for? NORTHERN IRELAND Student loan impairments is not additional spending; it is likely to be a reduction in the estimate of the value of student loans being paid back. (Impairment is a permanent reduction in the value of an asset below its value recorded in the accounts.) (relates to making Northern Ireland s welfare system more affordable) (supporting shared and integrated education)

92 millions Barnett Formula List of all departments Changes to 2016/17 Northern Ireland s Capital DEL budget: NORTHERN IRELAND Capital DEL (Departmental Expenditure Limits) (in nominal terms) 1,400 1,200 1, Reduction sought now Budget proposed in / / / / / / / / /20 8% reduction in Capital DEL: 90m Capital DEL Budget reduction sought Planned future budget Changes in Capital DEL: 1.3m Barnett Consequential (2016 Autumn Statement) and DCMS reserve claim 11m 2.6m 51m Funds carried forward from previous years ( Budget Exchange ) New money from the Treasury for Shared Future Transfer from Capital to Resource DEL 55m Funds carried forward into future years (reprofiled financial transactions) 90m reduction in Capital DEL

93 Barnett Formula List of all departments Changes to 2016/17 Northern Ireland Office s budget: NORTHERN IRELAND Resource DEL (Departmental Expenditure Limits) in nominal terms: Capital DEL (Departmental Expenditure Limits) in nominal terms: NIO budget m Budget reclassification from resource to capital m (IT equipment) Transfer from other depts for Historical Institutional Abuse Inquiry m Net transfer to/from the NIE m (including 5.7m from NIE to fund March 2017 Assembly Election and 439k from NIO to NIE for institutional abuse inquiry) Budget exchange m (Funds carried over to future years: 0.3m - procurement delays in Home Protection Scheme; 0.07m from publication costs) Surrendered to Treasury m (non-cash budget cover) New NIO Resource DEL: 15% increase ( 4.2m) 31.6m In addition, there is a 1.3m reduction in anticipated Crown Solicitors Office income and expenditure in Resource DEL. However, this does not affect the budget. This is an accounting reclassification 65% increase ( 0.22m) NIO budget m Budget reclassification from resource to capital m (IT equipment) Transfer from other depts for Historical Institutional Abuse Inquiry m Transfer to the NIE m (for shared financial services) Budget exchange m (IT expenditure which has been delayed and will be carried forward into future years) New NIO Capital DEL: 0.56m Most of this is due to accounting reclassification Resource AME (Annually Managed Expenditure) in nominal terms: There is a 0.6m reduction in Resource AME (non-cash funding) for the NIO to reflect decreases in provisions for legacy legal cases. Potentially due to lower than expected pay-outs in legal cases

94 Devolved administrations: Block grant and the Barnett Formula Barnett Formula