Main Estimate 2016/17 Select Committee Memorandum April 2016 1
Contents Introduction... 3 Format of Main Estimates... 3 Structural Changes to the Estimate... 3 Summary Control Totals... 3 Departmental Expenditure Limit... 4 Background: Spending Review 2015... 4 Changes to DEL... 6 Annually Managed Expenditure... 8 Net Cash Requirement... 13 Provisions... 13 Contingent Liabilities... 13 Departmental Accounting Officer... 13 Annex A: Summary of Changes in Estimate... 15 Annex B: Summary Analysis by Estimate Section Heading Resource... 16 Annex C: Departmental Expenditure Limit 2011/12 to 2016/17... 18 Annex D: Transfers with Other Government Departments in Main Estimate 2016/17... 19 Annex E: Outline of changes in Annually Managed Expenditure provision included within the 2016/17 Main Estimate... 20 Annex F: Key Terms... 22 Distribution list... 23 2
Introduction 1. This memorandum gives the Select Committee more information about the content of the Main Estimate for the Department for Work and Pensions for 2016/17; provides information about the Department s key priorities, and outlines the departmental budget control totals given at the spending review settlement for Spending Review 2015 and at Budget 2016. Format of Main Estimates 2. Each Main Estimate is produced in a standard format and consists of an introduction, Part I, Part II and Part III. 3. Part I of each Main Estimate states the funding sought for Resource DEL, Capital DEL, Resource AME, Capital AME, Non Budget Expenditure, and the net cash requirement for the current financial year. It also contains the ambit, which is the formal description of all the expenditure and income to be financed from the Estimate. 4. Part II contains two tables. The first table shows the subhead details within each budgetary limit and provides a comparison to the amounts for the previous year. The second table provides reconciliation between the net resource total and the net cash requirement. 5. Part III contains a number of notes and additional disclosures. Structural Changes to the Estimate 6. Since the Supplementary Estimate 2015/16, there have been no changes to the structure of the Estimate. Summary Control Totals 7. The Main Estimate provision is summarised in Table 1 below. Table 1 Main Estimate Departmental Budgets Description Main Estimate 2016/17 m Supplementary Estimate 2015/16 m Increase / (Decrease) m DEL Resource 6,264.8 6,507.8 (243.0) Of which DEL Admin 941.1 1,058.5 (117.4) DEL Capital 306.7 226.8 79.9 Total DEL 6,571.5 6,734.6 (163.1) AME Resource 173,571.6 174,888.1 (1,316.5) AME Capital 0 (100.0) 100.0 Total AME 173,571.6 174,788.1 (1,216.5) Voted Non Budget 2,266.7 2,420.1 (153.5) Net cash Requirement 82,098 83,465.3 (1,367.4) *May not sum due to rounding 3
8. Annex A provides an overview of all the amounts at control total levels. Annex B shows an analysis by Estimate Section Heading. More detailed explanations for each amount are included in the following paragraphs. Departmental Expenditure Limit 9. The DEL is based on the Department s Spending Review 2015 settlement. Subsequent transactions impacting DEL are covered in the sections below and at Annex B. A summary of DEL compared to spending for the last 5 years is also provided at Annex C. Background: Spending Review 2015 10. The Spending Review 2015 (SR15) settlement plans to deliver DEL reductions of 22.1% against baseline funding by 2019-20, which exceeds the average level of savings across Government of 19%. Funding provided at Summer Budget, Autumn Statement 2015, and Budget 2016 is in addition to the SR settlement. 11. The spending review settlement invests in the department s plan for transformation making it smaller and more efficient. This is underpinned by the continued rollout of Universal Credit, which remains a fundamental reform priority of this government. 12. The department has been provided with capital investment to deliver technology reforms. This will result in a reduction of the overall technology spend by 29% in 2019-20 whilst at the same time investing in information security. SR15 Ringfenced Funding 13. The majority of funding provided at SR15 is without ringfences, however a few items remain and these are detailed below. With the exception of Depreciation and Official Development Assistance these ringfences are temporary and will be removed once the policies are developed and a business case signed off by HM Treasury. Depreciation 14. Depreciation continues to be ringfenced, as a non-cash expense. The total amount of depreciation funded for 2016/17 is 195m, of which 116m is within Administration. Official Development Assistance 15. The government published its strategy for Official Development Assistance, UK Aid: tackling global challenges in the national interest, on 23 November 2015. This sets out how the government will make UK aid more effective in its crosscutting objectives to tackle global challenges, reduce poverty, and service the national interest. 4
16. Within the department s settlement is 4m per year relating to Official Development Assistance for the International Labour Organisation. This is ringfenced within the RDEL budget and any underspends will be formally returned at the Supplementary Estimate each year for redistribution across government. Youth Obligation 17. The Youth Obligation was introduced at the Summer Budget 2015, with 17m funding in 2016/17. 18. Under the Youth Obligation, 18-21 year olds in the all-work-related requirements group will have to participate in an intensive regime of support from the first day of their claim. If they remain unemployed after 6 months they will have to take an apprenticeship, traineeship or sector based work academy place, or a 3 month mandatory work placement. 19. Funding for the Youth Obligation has been placed in a temporary ringfence until HM Treasury has approved the detailed policy design and delivery plan. Summer Budget 2015 Employment Support Allowance 20. Summer Budget 2015 announced that new claimants of Employment and Support Allowance (ESA) who are placed in the Work Related Activity Group will receive the same rate of benefit as those claiming Jobseeker s Allowance. 21. New funding was made available for additional support to help new ESA claimants take steps back to work. 22. Funding begins in 2017/18 therefore does not affect the Main Estimate, but work will continue throughout the year to ensure the detailed policy design is approved by Treasury, at which point the ringfence will be removed. Health and Work Programme 23. The new Health and Work Programme is being funded from 2017/18. 24. This will replace the Work Programme and Work Choice once the current contracts have come to an end. The programme will support Jobseeker s Allowance or Universal Credit full conditionality for claimants with health conditions and disabilities. It will be a contracted out programme with national coverage and a payment by results element. 25. Funding begins in 2017/18 therefore does not affect the Main Estimate, but work will continue throughout the year to ensure the detailed policy design is approved by Treasury, at which point the ringfence will be removed. 5
Changes to DEL 26. A summary of the Main Estimate DEL budgets for 2016/17 are shown in Table 2 below. Table 2 Changes to Departmental DEL Increase /(Decrease) in DEL Provision Paragraph Reference 28-29 Resource m Capital m Total SR15 Funding Settlement for 2016/17 6,239.0 303.0 6,542.0 Budget Exchange (agreed at Supplementary Estimate 2015/16) Main Estimate 2016/17 Opening Position m 25.0 0.0 25.0 6,264.0 303.0 6,567.0 30 Final Depreciation Settlement 14.0 0.0 14.0 31 32 Re-categorisation of Research and Development Expenditure Net transfers with other government departments (3.7) 3.7 0.0 (14.5) 0.0 (14.5) 33-36 Budget 2016 Additional Funding 5.0 0.0 5.0 Totals may not sum due to rounding. Budget Exchange Main Estimate 2016/17 Closing Position 6,264.8 306.7 6,571.5 Movement 0.8 3.7 4.5 27. Budget exchange is the mechanism whereby HM Treasury allow for funding to be moved from one year to the next. A situation arose at the Supplementary Estimate 2015/16 which led to HM Treasury agreeing a budget exchange of 25m DEL Resource funding from 2015/16 to 2016/17. This related to a credit which had been received from a supplier in the 2015/16 financial year. However, the supplier had started legal action to reclaim some or the entire amount. This legal action will not be resolved until 2016/17. 28. To protect the Department from the risk of having to repay this HM Treasury allowed the credit to be budget-exchanged to the following year where it can be matched to any required repayment. This is on the agreement that the funding can only be used in this particular circumstance if it is needed. If it is not required it will be returned to HM Treasury following the outcome of the legal action. This therefore forms a further ringfence in addition to those set out at Spending Review 2015. 6
Final Depreciation Settlement 29. At the time of the Spending Review 2015 (SR15) statement it was not possible to agree final depreciation amounts, as this was to be based on final capital allocations. SR15 included a nominal amount for depreciation based on 2015/16 forecasts. The department submitted final depreciation estimates in January 2016, which resulted in an additional 14m depreciation funding being granted. This increases the total funding for depreciation to 195m. Research and Development Costs 30. An update to the European System of Accounts has led HM Treasury to instruct all departments to record Research and Development expenditure as Capital. This was previously categorised as Resource. For the Department, the effect is to move 3.7m of expenditure for Health and Safety Executive from Resource to Capital. Funding Transferred between the Department for Work and Pensions and Other Government Departments 31. The net impact of transfers between the Department and other government departments is a reduction in the Department s overall funds of 14.5m. A full breakdown of these transfers is given in Annex D. This includes one Machinery of Government change, which accounts for the movement of responsibility for Pension Wise to HM Treasury with effect from 1 April 2016. As Pension Wise is fully funded by levy, the net effect on the funding for the Department is nil. The other two transfers represent the movement of funding to other departments which are delivering elements of the Universal Credit implementation. Budget 2016 Measures 32. On 18 March 2016 the Chancellor of the Exchequer announced the Budget for 2016. For the Department this included additional funding, as detailed in Table 3 below. Table 3 Budget Measures Additional DEL Funding Resource Capital Total m m m Support for the Low-Income Self-Employed 0.5 0.0 0.5 ESA-PIP Presenting Officers 4.5 0.0 4.5 Total 5.0 0.0 5.0 Support for the Low-Income Self-Employed 33. Self-employment has been broadly rising since 2010, and made an important contribution to the growth of employment in the previous parliament. However, there are some self-employed people who are struggling to make a good living from self-employment. This package will ensure the right structures are in place to support productive self-employment. 7
34. Additional funding of 0.5m has been provided in 2016/17. Implementation will follow a tiered approach: starting with a light-touch cross-government awareness campaign on how Working Tax Credit (WTC) claimants could improve their business, and incomes, and signposting them to existing business support. This will reach around 100,000 claimants per year from Autumn 2016; referring a smaller subset of WTC claimants who are likely to benefit from face-to-face support from Jobcentre Plus advisors on a trial basis from late 2016, with a view to national roll out if successful; and, for those on Universal Credit already in the early stages of their business and wanting more support, access to mentoring support offered on the New Enterprise Allowance. ESA-PIP Presenting Officers 35. This measure will increase the number and deployment of Presenting Officers (POs) at Personal Independent Payment and Employment Support Allowance Tribunals. POs assist the Tribunal in understanding the grounds of the appeal, the Department s case and all relevant evidence. This measure will support the Tribunal in making effective decisions and is expected to reduce the number of decisions overturned. Additional funding of 4.5m has been provided in 2016/17 and this measure will take effect from winter 2016. Annually Managed Expenditure 36. AME included within the Main Estimate is consistent with the forecasts used by the Office for Budget Responsibility to inform the Budget 2016 and approved by HM Treasury. The forecasts take account of latest actual expenditure and current economic assumptions. Table 4 Changes in AME Provision Increase /(Decrease) in AME Provision 2015/16 Forecast as at the Supplementary Estimate 2015/16 2016/17 Forecast as at the Main Estimate 2016/17 Resource m Capital m Total m 174,888.1 (100.0) 174,788.1 173,571.6 0.0 173,571.6 Variance (1,316.5) 100.0 (1,216.5) 37. Annex E shows all of the movements in AME provision included within the Main Estimate. This shows the difference between the forecast for 2015/16 used at the Supplementary Estimate 2015/16 and the 2016/17 forecast used at the Main Estimate 2016/17. Notable variations are explained in the paragraphs below. 8
38. Benefit expenditure is demand-led, therefore all Supplementary Estimate figures include a margin to guard against the possibility of overspend. Consequently Supplementary Estimate figures are generally an over-estimate of actual spending. Annual uprating of benefits in April leads to increased spending from year to year, all other things being equal. Background 39. Compared to the latest forecast for 2015/16, overall the Department AME benefit expenditure is forecast to increase by 2.1 billion (1.2%) in 2016/17 to 172.5 billion. This cash increase is more than accounted for by a 2.4 billion increase in contributory State Pension expenditure. With most other benefits being frozen because of the Consumer Price Index being negative in September 2015, almost all of the year-on-year changes in spending on individual benefits are caseload effects. 40. Underlying this relatively small net change are larger changes which reflect the roll-out of new benefits: Personal Independence Payment is replacing Disability Living Allowance claims for working age people; Employment and Support Allowance is replacing Incapacity Benefit, Severe Disablement Allowance and Income Support for incapacity cases; and Employment and Support Allowance in turn is being replaced by Universal Credit, along with Jobseeker s Allowance, Income Support, Housing Benefit for working age people, and tax credits administered by HM Revenue and Customs. 41. Table 5 below shows the main areas of change in spending between 2015/16 and 2016/17, as at Budget 2016. This illustrates year-on-year changes better than in the 2016 Supplementary Estimate, which includes a margin on each line to guard against the risk that the in-year forecast proves to be an under-estimate. 42. The most obvious example of this is in Cold Weather Payments, where the forecast used in the Main Estimate is the average of outturn over the previous ten years, but where the Supplementary Estimate necessarily caters for the possibility that a severe cold snap could result in considerable expenditure. 43. Similarly, comparisons with the 2015 Main Estimate do not provide a current view of year-on-year changes. This is because 2015/16 outturn differs from the Budget 2015 forecast on which the 2015 Main Estimate was based. However, both Main and Supplementary Estimate figures for 2015/16 are shown at Table 6, alongside the 2016/17 Main Estimate figures. 9
Table 5 the Department for Work and Pensions Benefit Expenditure in 2015/16 and 2016/17 million Latest forecast 2015/16 Main Estimate 2016/17 Year-on-year Change Severe Disablement Allowance 464 189-275 -59.2% Industrial Injuries benefits 896 892-5 -0.5% Universal Credit 482 1,795 1,312 271.7% Jobseeker's Allowance 2,332 1,825-507 -22.3% Employment and Support Allowance 14,349 14,489 140 0.9% Income Support (incapacity) 221 37-185 -83.5% Income Support (not incapacity) 2,424 2,281-143 -5.7% Financial Assistance Scheme (benefits only) 209 214 5 2.5% Pension Credit 6,078 5,751-328 -5.4% Attendance Allowance 5,488 5,534 46 0.8% Personal Independence Payments 2,989 5,006 2,017 67.1% Disability Living Allowance 13,222 11,391-1,831-13.8% Carer's Allowance 2,554 2,744 190 7.2% Housing Benefit 23,713 22,908-805 -3.4% Statutory Maternity Pay 2,347 2,379 32 1.4% Incapacity Benefit 68 12-56 -81.8% Maternity Allowance 443 455 12 2.7% State Pension 89,175 91,580 2,405 2.7% Bereavement benefits 568 554-15 -2.6% Winter Fuel Payments 2,080 2,059-21 -1.0% Cold Weather Payments 27 129 102 380.2% Other benefits 263 262-1 -0.3% Total of the above 170,391 172,486 2,095 1.2% Figures as presented may not sum, as a result of rounding to millions. Table 6 Main and Supplementary Estimates, 2015/16 and 2016/17 million Main Estimate 2015/16 Supplementary Estimate 2015/16 Main Estimate 2016/17 Change between Main Estimates Severe Disablement Allowance 507 457 189-317 -62.6% Industrial Injuries benefits 905 904 892-14 -1.5% Universal Credit 557 529 1,792 1,235 221.5% Jobseeker's Allowance 2,098 2,352 1,813-285 -13.6% Employment and Support Allowance 13,954 14,356 14,489 529 3.8% 10
Income Support (incapacity) 219 219 37-183 -83.4% Income Support (not incapacity) 2,585 2,397 2,281-300 -11.6% Pension Credit 6,162 6,102 5,751-412 -6.7% Financial Assistance Scheme (benefits only) 205 201 214 9 4.3% Attendance Allowance 5,500 5,530 5,534 35 0.6% Personal Independence Payments 2,357 3,001 5,006 2,639 112.0% Disability Living Allowance 12,985 13,240 11,391-1,593-12.3% Carer's Allowance 2,457 2,531 2,744 280 11.4% Housing Benefit 23,785 24,082 22,908-877 -3.7% Statutory Maternity Pay 2,272 2,532 2,379 107 4.7% Incapacity Benefit 19 65 12-6 -33.1% Maternity Allowance 443 442 455 12 2.8% State Pension 89,656 89,412 91,581 1,924 2.1% Bereavement benefits 534 572 554 20 3.7% Winter Fuel Payments 2,092 2,082 2,059-33 -1.6% Cold Weather Payments 127 350 129 2 1.3% Other benefits 259 276 262 3 1.2% Total of the above 169,678 171,636 172,486 2,808 1.6% Figures as presented may not sum, as a result of rounding to millions. Main changes in spending Incapacity benefits 44. The table below shows the net change in incapacity benefits spending 1. Employment and Support Allowance (ESA) caseload is growing as ESA continues to replace Incapacity Benefit, Severe Disability Allowance, and Income Support (incapacity). The equalisation of the state pension age increases volumes of older claimants on the benefit. 45. The autumn 2010 measure to limit Work-Related Activity Group claims for contributory ESA to one year means the ESA income-related caseload is being boosted by claims from people whose contributory ESA claim has been timelimited. 46. The lone parent obligation results in an increasing volume of the ex-income support lone parents caseload increasing the income-related caseload. However, overall spending is falling as total caseloads fall and incapacity cases on Universal Credit begin to pick up. 1 Employment and Support Allowance, Incapacity Benefit, Severe Disablement Allowance and Income Support (incapacity). 11
Table 7 Incapacity benefits million Latest forecast 2015/16 Main Estimate 2016/17 Year-on-year change Incapacity benefits 15,102 14,721-381 -2.6% Disability and carer benefits 47. Spending on Personal Independence Payment (PIP) is increasing as they replace Disability Living Allowance (DLA) for working age people. Budget 2016 increased estimated success rates (the proportion of claims that are successful) and average awards for reassessed DLA claimants on PIP, adding money to the PIP estimate, but not reducing the DLA estimate. 48. Spending on Carer s Allowance is increasing largely as a result of increases in qualifying benefits, particularly through successful PIP claims, leading to a greater number of people becoming entitled to the benefit. There is also a small caseload-driven increase in Attendance Allowance. Table 8 Disability and carer benefits million Latest forecast 2015/16 Main Estimate 2016/17 Year-on-year change Disability and carer benefits 24,251 24,659 407 1.7% Pensioner benefits 49. State Pension more than accounts for the net increase in spending in 2016/17. Although the caseload is broadly flat, influenced by the equalisation of the State Pension age, and additional pensions are frozen because Consumer Price Index was negative in September 2015, the basic State Pension is being uprated by 2.9%, in line with the triple lock. 50. State Pension age equalisation has a more significant effect on Pension Credit, where the fall in caseload is only partially offset by uprating at 2.9%. Winter Fuel Payments expenditure is also set to fall slightly. Table 9 Pensioner benefits 2 million Latest forecast 2015/16 Main Estimate 2016/17 Year-on-year change Pensioner benefits 98,173 100,242 2,069 2.1% 2 State Pension (contributory and non-contributory), Pension Credit, Winter Fuel Payments, TV licences for the over-75s, contributory Christmas Bonus. Does not include other benefits paid to both pensioners and non-pensioners, such as Housing Benefit. 12
Other income-related benefits 51. Jobseeker s Allowance (JSA), Income Support and Housing Benefit (HB) (as well as income-based Employment and Support Allowance, mentioned above) are gradually being replaced by Universal Credit, which is therefore rising as the legacy benefits fall. In addition, HB spend is falling as caseloads and social sector rents fall, and JSA spend is reflecting the continued fall in JSA caseload. Other working age benefits 52. Both Industrial Injuries and Bereavement Benefits are slightly lower in 2016/17, in line with lower caseloads. By contrast, maternity benefits are growing, with Statutory Maternity Pay expenditure being driven by higher earnings and Maternity Allowance expenditure by a higher caseload. Net Cash Requirement 53. The voted Net Cash Requirement included within the Main Estimate is 82,098m. This is in accordance with the approved Departmental Expenditure Limit and Annually Managed Expenditure budgets, adjusted for non-cash items and forecast working capital movements. Provisions 54. We recognise provisions in accordance with IAS37 (Provisions, Contingent Liabilities, and Contingent Assets). They are valued using the best estimate of expenditure required to settle the obligation. Where the effect of the time value of money is significant we discount the estimated risk adjusted cash flows using the real rate set by HMT. Contingent Liabilities 55. As with provisions we disclose contingent liabilities in accordance with IAS37. For some statutory and non statutory contingent liabilities the likelihood of transfer or economic benefit is remote. However, we still disclose some of these for parliamentary reporting and accountability, where this is needed under the requirements of public money. 56. Where the time value of money is material we state contingent liabilities that we have to disclose under IAS37 at discounted amounts and separately note the amount reported to Parliament. Where we do not have to disclose contingent liabilities under IAS37, we state the amounts reported to Parliament. Departmental Accounting Officer 57. This memorandum has been prepared with reference to the guidance in the Estimates Manual provided by HM Treasury and available on the House of Commons and Scrutiny Unit Website. 13
58. The Departmental Accounting Officer has personal responsibility for the content in the memorandum and formal approval of the memorandum has therefore been obtained prior to submission to the Select Committee. 14
Annex A: Summary of Changes in Estimate Budgetary Limit Supplementary Estimate 2015/16 Main Estimate 2016/17 Increase / (Decrease) m m m Resource Departmental Expenditure Limit 6,507.8 6,264.8 (243.0) Voted 5,948.5 5,839.4 (109.0) Non-Voted 559.3 425.4 (133.9) Administration 1,058.5 941.1 (117.4) Capital Departmental Expenditure Limit 226.8 306.7 79.9 Voted 181.6 261.7 80.1 Non-Voted 45.3 45.0 (0.3) Total Departmental Expenditure Limit 6,734.6 6,571.5 (163.1) Resource Annually Managed Expenditure 174,888.1 173,571.6 (1,316.5) Voted 76,996.1 73,512.6 (3,483.6) Non-Voted 97,892.0 100,059.0 2,167.0 Capital Annually Managed Expenditure (100.0) 0.0 100.0 Voted 0.0 0.0 0.0 Non-Voted (100.0) 0.0 100.0 Total Annually Managed Expenditure 174,788.1 173,571.6 (1,216.5) Voted Non-Budget 2,420.1 2,266.7 (153.5) Figures as presented may not sum, as a result of rounding to millions. 15
Annex B: Summary Analysis by Estimate Section Heading Resource Section Ref 2 Section Description Supplementary Estimate 2015/16 Main Estimate 2016/17 Increase / (Decrease) Spending in Departmental Expenditure Limits m m m % Voted expenditure 5,948.5 5,839.4 (109.0) (1.8) A Operational Delivery 1,804.0 1,737.2 (66.7) (3.7) B Health and Safety Executive (Net) 140.9 132.0 (8.9) (6.3) C European Social Fund 23.6 0.0 (23.6) (100.0) D Executive Arms Length Bodies (Net) 137.5 93.1 (44.5) (32.3) E Employment Programmes 770.2 581.5 (188.7) (24.5) F Support for Local Authorities 324.3 305.3 (18.9) (5.8) G Other Programmes (26.5) (22.5) 4.0 (15.1) H Other Benefits 163.7 169.6 5.9 3.6 I Departmental operating costs 2,610.7 2,843.2 232.5 8.9 Unallocated provision 0.0 0.0 0.0 0.0 Non-voted expenditure 559.3 425.4 (133.9) (23.9) J National Insurance Fund 525.6 391.7 (133.9) (25.5) K Expenditure incurred by the Social Fund 33.7 33.7 0.0 0.0 - Consolidated Fund Extra Receipts 0.0 0.0 0.0 0.0 Total Spending in Departmental Expenditure Limit 6,507.8 6,264.8 (243.0) (3.7) Section Ref 2 Section Description Supplementary Estimate 2015/16 Main Estimate 2016/17 Increase / (Decrease) Spending in Annually Managed Expenditure m m m % Voted expenditure 76,996.1 73,512.6 (3,483.6) (4.5) Expenditure in scope of the 71,986.3 68,750.6 (3,235.7) (4.5) L Welfare Severe Disablement Cap Allowance 456.8 189.3 (267.5) (58.6) M Industrial Injuries Benefits Scheme 903.9 891.6 (12.2) (1.4) N Universal Credit 40.2 706.7 666.4 1,656.8 O Employment and Support Allowance 9,900.2 9,903.5 3.3 0.0 P Income Support 2,616.0 2,317.7 (298.3) (11.4) Q Pension Credit 6,102.3 5,750.5 (351.8) (5.8) R Financial Assistance Scheme 2,801.9 415.9 (2,386.0) (85.2) S Attendance Allowance 5,529.8 5,534.2 4.4 0.1 T Personal Independence Payment 3,004.7 5,006.1 2,001.4 66.6 U Disability Living Allowance 13,239.8 11,390.5 (1,849.4) (14.0) V Carer's Allowance 2,530.9 2,744.3 213.4 8.4 16
W Housing Benefit 22,294.3 21,488.6 (805.7) (3.6) X Statutory Maternity Pay 2,532.0 2,379.4 (152.6) (6.0) Y Non-contributory Christmas Bonus 33.3 32.3 (1.1) (3.2) Expenditure outside scope of the 5,009.9 4,762.0 (247.9) (4.9) Z Welfare Jobseekers Cap Allowance 2,009.6 1,517.0 (492.6) (24.5) AA Universal Credit 488.8 1,088.2 599.4 122.6 AB TV Licences for the over 75s 625.6 630.7 5.1 0.8 AC Housing Benefit 1,787.5 1,419.2 (368.3) (20.6) AD Other Benefits 107.2 98.6 (8.6) (8.0) AE Other Expenditure (8.6) 7.7 16.3 (189.2) AF Other Expenditure EALBs (Net) (0.3) 0.5 0.8 0.0 Section Ref 2 Section Description Supplementary Estimate 2015/16 Main Estimate 2016/17 3 Increase / (Decrease) m m m % Non-voted expenditure 97,892.0 100,059.0 2,167.0 2.2 Expenditure in scope of the Welfare Cap 8,137.4 8,169.8 32.4 0.4 AG Incapacity Benefit 64.8 11.4 (53.4) (82.4) AH Employment and Support Allowance 4,456.3 4,585.9 129.6 2.9 AI Expenditure incurred by the Social Fund 2,473.7 2,438.5 (35.2) (1.4) AJ Maternity Allowance 441.9 455.1 13.2 3.0 AK Bereavement benefits 572.2 554.5 (17.7) (3.1) AL Other Contributory Benefits 128.5 124.4 (4.1) (3.2) Expenditure outside of the Welfare Cap 89,754.6 91,889.2 2,134.6 2.4 AM Jobseekers Allowance 342.5 308.0 (34.5) (10.1) AN State Pension 89,412.1 91,581.2 2,169.1 2.4 - Other Contributory Benefits 0.0 0.0 0.0 0.0 - Consolidated Fund Extra Receipts 0.0 0.0 0.0 0.0 Total spending in Annually Managed Expenditure 174,888.1 173,571.6 (1,316.5) (0.8) Non-Budget spending Voted expenditure 2,420.1 2,266.7 (153.5) (6.3) AO Cash paid in to the Social Fund 2,420.1 2,266.7 (153.5) (6.3) Total Non-budget spending 2,420.1 2,266.7 (153.5) (6.3) Total for Estimate 183,816.0 182,103.0 (1,713.0) (0.9) 1. Figures as presented may not sum, as a result of rounding. 2. Section letters refer to individual sections within the Estimate to assist in cross-referencing. 3. Percentage change not applicable as not compared on a like for like basis. 17
Annex C: Departmental Expenditure Limit 2011/12 to 2016/17 Administration Limit Outturn Variance m m m 2011/12 Outturn 1,426 1,333 93 2012/13 Outturn 1,252 1,180 72 2013/14 Outturn 1,276 1,091 185 2014/15 Outturn 1,208 894 314 2015/16 Supplementary Estimate 1,058 2016/17 Main Estimate 941 Resource 2011/12 Outturn 7,636 7,488 148 2012/13 Outturn 7,523 7,366 157 2013/14 Outturn 7,401 7,359 42 2014/15 Outturn 7,217 7,152 65 2015/16 Supplementary Estimate 6,508 2016/17 Main Estimate 6,265 Capital 2011/12 Outturn 311 280 31 2012/13 Outturn 427 375 52 2013/14 Outturn 199 186 13 2014/15 Outturn 281 249 32 2015/16 Supplementary Estimate 227 2016/17 Main Estimate 307 1. 2011/12 figures published in the Department for Work and Pensions 2011/12 Annual Report and Accounts. 2. 2012/13 figures published in the Department for Work and Pensions 2012/13 Annual Report and Accounts. 3. 2013/14 figures published in the Department for Work and Pensions 2013/14 Annual Report and Accounts. 4. 2014/15 figures published in the Department for Work and Pensions 2014/15 Annual Report and Accounts. 5. 2015/16 figures published in the Central Government Supply Estimates 2015/16. 6. Figures as presented may not sum, as a result of rounding. 7. Detailed explanations of the variance between outturn and funding are provided in the latest published set of the Department s Annual Report and Accounts 2014/15. 18
Annex D: Transfers with Other Government Departments in Main Estimate 2016/17 Para Estimate Section Increase / (Decrease) m Description 31 Departmental Operating Costs 31 Departmental Operating Costs (14.3) (0.3) Transfer to HMRC for the cost of delivery for the Universal Credit programme Transfer to BIS for the DWP contribution to the Futures Programme 31 Operational Delivery 0.0 Machinery of Government Transfer of Pension Wise from HMT (levy funded therefore net nil) (0.0) Administration Total (14.5) Resource Total 0.0 Capital Total (14.5) Total Net Transfers to OGD 1. Figures as presented may not sum, as a result of rounding. 19
Annex E: Outline of changes in Annually Managed Expenditure provision included within the 2016/17 Main Estimate Increase/ (Decrease) Voted: m Expenditure in scope of the Welfare Cap Severe Disablement Allowance (267.5) Industrial Injuries Benefits Scheme (12.2) Universal Credit 666.4 Employment and Support Allowance 3.3 Income Support (298.3) Pension Credit (351.8) Financial Assistance Scheme (2,386.0) Attendance Allowance 4.4 Personal Independence Payment 2,001.4 Disability Living Allowance (1,849.4) Carer's Allowance 213.4 Housing Benefit (805.7) Statutory Maternity Pay (152.6) Non-contributory Christmas Bonus (1.1) (3,235.7) Expenditure outside scope of Welfare Cap Jobseekers Allowance (492.6) Universal Credit 599.4 TV Licences for the over 75s 5.1 Housing Benefit (368.3) Other Benefits (8.6) Other Expenditure 16.3 Other Expenditure EALBs (Net) 0.8 (247.9) Total Voted Expenditure (3,483.6) Non Voted Expenditure in scope of the Welfare Cap Incapacity Benefit (53.4) Employment and Support Allowance 129.6 Expenditure incurred by the Social Fund (35.2) Maternity Allowance 13.2 Bereavement benefits (17.7) Other Contributory Benefits (4.1) 20
32.4 Expenditure outside scope of Welfare Cap Jobseekers Allowance (34.5) State Pension 2,169.1 Other Contributory Benefits 0.0 Consolidated Fund Extra Receipts 0.0 2,134.6 Total Non-Voted Expenditure 2,167.0 Total Expenditure (1,316.5) Figures as presented may not sum, as a result of rounding to millions. 21
Annex F: Key Terms Departmental Expenditure Limit (DEL) Spending within the Department s direct control which can therefore be planned over an extended period, such as the costs of its own administration, payments to third parties, e.g. within Employment Programmes, Housing Benefit administration subsidies to Local Authorities, and the European Social Fund. Annually Managed Expenditure (AME) In the Department for Work and Pensions, Annually Managed Expenditure is primarily demand led expenditure on social security and social assistance benefits. Annually Managed Expenditure spending does not fall within the Departmental Expenditure Limit. It is generally less predictable and controllable than expenditure in Departmental Expenditure Limit. Departmental Unallocated Provision (DUP) The Departmental Unallocated Provision contains funding set aside by HM Treasury to be accessed by Departments when certain criteria have been met. In the case of dual-key funding, this is conditional on funding being forecast as spent in year. Voted Funds Parliament consents in principle to the use of public funds through legislation to enable specified policies. It approves use of public resources to carry out those policies year by year as defined by the specific Ambits of the Department by voting on the published Parliamentary Supply Estimates in the House of Commons. Non-Voted Funds Although such expenditure appears in the departmental Estimate it is not voted by Parliament. It may nevertheless fall within the budget and/or accounts. This expenditure mainly relates to Contributory Benefits such as Contributory Retirement Pensions and Incapacity Benefit which are financed from the National Insurance Fund. Budget and Non-Budget Funds The term Budget and Non-Budget Funds apply to whether the funds impact the HM Treasury Budgetary Controls. Funds specified as Budget will impact HM Treasury controls whereas funds defined as Non-Budget will not impact HM Treasury controls. Items covered within this include Social Fund expenditure such as Cold Weather Payments. 22
Distribution list Secretary of State Ministers Special Advisers Permanent Secretary Jon Fundrey Phill Wells Stephen Lock Jessica Yuille Shaun Butcher Carol Murray Janine Mitchell Stephanie Hill 23