Public Expenditure


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Department of Finance and Personnel presentation on how money is distributed to government departments and the rules which govern how it can spent by each department.

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  • Public Expenditure

    1. 1. UK PUBLIC EXPENDITURE SYSTEM Central Expenditure Division Department of Finance & Personnel
    2. 2. Central Finance Group Supply 3 Supply 2 Supply 1 Strategic Policy Division Rating Policy Division European Division Central Expenditure Division Accountability & Accountancy Services Division Account NI Central Finance Group
    3. 3. Presentation Overview <ul><li>Objective </li></ul><ul><ul><ul><li>To provide an overview of the key elements of the Northern Ireland Public Expenditure System </li></ul></ul></ul><ul><ul><ul><li>Explain </li></ul></ul></ul><ul><ul><ul><li>- UK Public Expenditure System </li></ul></ul></ul><ul><ul><ul><li>- NI Public Expenditure System </li></ul></ul></ul>
    4. 4. UK Public Expenditure Structure UK Public Expenditure System Funding Devolved Administrations Priorities and Budget Process Estimates Monitoring
    5. 5. UK Public Expenditure Structure Total Managed Expenditure (TME) Departmental Expenditure Limits (DEL) Annually Managed Expenditure (AME) Resource Budget Capital Budget Resource Budget Capital Budget
    6. 6. <ul><li>UK Government’s approach to public expenditure is underpinned by the setting of the Fiscal Rules and the Code for Fiscal Stability: </li></ul><ul><ul><li>Golden Rule </li></ul></ul><ul><ul><li>Sustainability Investment Rule </li></ul></ul>HM Treasury Fiscal Rules
    7. 7. <ul><li>National Spending Review Process: </li></ul><ul><ul><li>Replaced the annual Public Expenditure Surveys </li></ul></ul><ul><ul><li>Biennial reviews </li></ul></ul><ul><ul><li>Sets firm plans for 3 years ahead </li></ul></ul>UK Public Expenditure System
    8. 8. Spending Review Coverage 05/06 04/05 03/04 02/03 01/02 00/01 99/00 1998 Comprehensive Spending Review 06/07 07/08 Spending Review 2000 Spending Review 2002 Spending Review 2004 08/09 09/10 10/11 2007 Comprehensive Spending Review
    9. 9. <ul><li>Development of proposals </li></ul><ul><li>HM Treasury proposals considered by Cabinet Committee </li></ul><ul><li>Final decisions taken by Cabinet and announced by the Chancellor </li></ul>National Spending Review
    10. 10. Outcome of National Spending Review <ul><li>The Chancellor announces: </li></ul><ul><ul><ul><li>UK National Expenditure </li></ul></ul></ul><ul><ul><ul><li>Resource and Capital DEL allocations to Whitehall departments </li></ul></ul></ul><ul><ul><ul><li>Allocations for the Devolved Administrations – Scotland, Wales & Northern Ireland (determined by the Barnett Formula) </li></ul></ul></ul>
    11. 11. Worked example of the Barnett Formula * differs for each English programme, e.g MOD = 0 because it is a UK wide programme. Change in Comparable English Programme Comparability %* NI Population % VAT Adjustment X X X Example: Department of Health + £100 million 0.995 0.0342 0.975 X X X = £3.32 million
    12. 12. Funding Sources for Devolved Functions in Northern Ireland
    13. 13. Priorities and Budget Process - Basis <ul><li>Basis of Public Expenditure system in Northern Ireland: </li></ul><ul><ul><ul><li>Good Friday Agreement </li></ul></ul></ul><ul><ul><ul><ul><li>Strand 1, paragraph 20 </li></ul></ul></ul></ul><ul><ul><ul><li>NI Act 1998 </li></ul></ul></ul><ul><ul><ul><ul><li>Sections 63 & 64 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Executive right of initiative </li></ul></ul></ul></ul>
    14. 14. Preparation of Priorities & Budget Strategic Context & Key Priorities for NI Guidance Issued to Departments Pre-consultation with key stakeholders Preparation of Draft Priorities & Budget Public Consultation Publication of Revised Priorities & Budget June Sept Nov Dec
    15. 15. Public Service Agreements <ul><li>PSAs describe what a department will deliver in the form of measurable targets over the public expenditure review period in return for its resource budget. </li></ul><ul><ul><li>DRD – Road Service </li></ul></ul><ul><ul><li>By 2015 reduce journey times on the Key Transport Corridors by 2.5% compared to 2001. </li></ul></ul><ul><ul><li>DEL – DETI – DSD </li></ul></ul><ul><ul><li>During period 2005-08 increase the percentage of NI working age who are economically active and increase the NI employment rate </li></ul></ul><ul><ul><li>(taking into account the economic cycle) </li></ul></ul>
    16. 16. <ul><li>Strategic Priorities: </li></ul><ul><ul><li>Economic Growth </li></ul></ul><ul><ul><li>High quality public services </li></ul></ul><ul><ul><li>Public sector reform </li></ul></ul><ul><ul><li>A society based on partnership, equality, inclusion and mutual respect </li></ul></ul>Priorities and Budget 2005
    17. 17. Northern Ireland Allocations for 2005-06 to 2007-08 £millions
    18. 18. Departments Expenditure: Current Expenditure 2006-07 and 2007-08
    19. 19. Departments Expenditure: Investment 2006-07 and 2007-08
    20. 20. In Year Monitoring <ul><li>Traditionally 4 monitoring rounds a year </li></ul><ul><li>Assess current and future expenditure plans against plans agreed in the Budget </li></ul><ul><li>Opportunity to surrender resources and bid for additional resources </li></ul><ul><li>Recycles spare resources to urgent and unforeseen problems </li></ul><ul><li>End of Year Flexibility (EYF) </li></ul>
    21. 21. Main Estimates <ul><li>Reflect departmental Budget outcome </li></ul><ul><ul><ul><li>Approve areas of spending on which resources and cash may be used (Ambit) </li></ul></ul></ul><ul><ul><ul><li>Detailed Spending Plans – functional lines </li></ul></ul></ul><ul><ul><ul><li>Includes DEL and AME items </li></ul></ul></ul><ul><ul><ul><li>Votes the overall cash requirement </li></ul></ul></ul><ul><ul><ul><li>Base for system of physical cash control </li></ul></ul></ul>
    22. 22. Changes to Estimates <ul><ul><li>Changes in provision from Main Estimates called Supplementary Estimates </li></ul></ul><ul><ul><li>Follow on from in-year monitoring movements </li></ul></ul>
    23. 23. Cash HM Treasury NIO NI Consolidated Fund Departments
    24. 24. Investment Strategy for NI <ul><li>10 year plan for up to £16 billion of capital projects from 2005-2015 </li></ul><ul><li>“ Brings together the collective knowledge of all the relevant government departments to fashion a holistic vision for the future of the public infrastructure in Northern Ireland” </li></ul><ul><li>Major programmes of work planned in the areas of education, transport, health, water, waste water and waste, housing, arts and sports </li></ul>
    25. 25. Summary UK Public Expenditure System Funding Devolved Administrations Priorities and Budget Process Estimates Monitoring
    26. 26. NI Public Expenditure System <ul><li>Useful websites: </li></ul><ul><ul><li> </li></ul></ul><ul><ul><li> </li></ul></ul><ul><ul><li> </li></ul></ul><ul><ul><li> </li></ul></ul><ul><li>Questions? </li></ul>