Public Expenditure

UK PUBLIC EXPENDITURE SYSTEM

Central Expenditure DivisionDepartment of Finance & Personnel

Northern Ireland Public Expenditure System

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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

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Presentation Overview

Objective

To provide an overview of the key elements of the Northern Ireland Public Expenditure System

Explain

- UK Public Expenditure System- NI Public Expenditure System

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UK Public Expenditure Structure

UK Public Expenditure System

Funding Devolved Administrations

Priorities and Budget Process

Estimates

Monitoring

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UK Public Expenditure StructureTotal Managed Expenditure

(TME)

Departmental Expenditure Limits

(DEL)

Annually Managed Expenditure

(AME)

Resource Budget

Capital Budget

Resource Budget

Capital Budget

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UK Government’s approach to public expenditure is underpinned by the setting of the Fiscal Rules and the Code for Fiscal Stability:

Golden Rule

Sustainability Investment Rule

HM Treasury Fiscal Rules

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National Spending Review Process:

Replaced the annual Public Expenditure Surveys

Biennial reviews

Sets firm plans for 3 years ahead

UK Public Expenditure System

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Spending Review Coverage

05/0604/0503/0402/0301/0200/0199/00

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

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Development of proposals

HM Treasury proposals considered by Cabinet Committee

Final decisions taken by Cabinet and announced by the Chancellor

National Spending Review

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The Chancellor announces:

UK National Expenditure

Resource and Capital DEL allocations to Whitehall departments

Allocations for the Devolved Administrations – Scotland, Wales & Northern Ireland (determined by the Barnett Formula)

Outcome of National Spending Review

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Worked example of theBarnett Formula

* differs for each English programme, e.g MOD = 0 because it is a UK wide programme.

Change in Comparable English Programm

e

Comparability %*

NI Population

%

VAT Adjustme

nt

X X X

Example: Department of Health

+ £100 million

0.995 0.0342 0.975X X X

= £3.32 million

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Funding Sources for Devolved Functions in Northern Ireland

Funding available from the application of the Barnett

formula

Peace

Borrowing (Reinvestment

& Reform Initiative)Regional

Rates

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Priorities and Budget Process - Basis Basis of Public Expenditure system in

Northern Ireland:

Good Friday Agreement Strand 1, paragraph 20

NI Act 1998 Sections 63 & 64 Executive right of initiative

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Preparation of Priorities & Budget

Strategic Context & Key Priorities for NIGuidance Issued to Departments

Pre-consultation with key stakeholdersPreparation of Draft Priorities &

BudgetPublic Consultation

Publication of Revised Priorities & Budget

Jun

eS

ept

Nov

Dec

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Public Service Agreements 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.

DRD – Road Service

By 2015 reduce journey times on the Key Transport Corridors by 2.5% compared to 2001.

DEL – DETI – DSD

During period 2005-08 increase the percentage of NI working age who are economically active and increase the NI employment rate

(taking into account the economic cycle)

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Strategic Priorities:

Economic Growth High quality public services Public sector reform A society based on partnership,

equality, inclusion and mutual respect

Priorities and Budget 2005

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Northern Ireland Allocations for 2005-06 to 2007-08

2005-06

2006-07

2007-08

Departmental Expenditure Limit (DEL)

7,692.6

8,192.0

8,568.9

Annually Managed Expenditure (AME)

6,832.9

7,008.5

7,286.7

Total Managed Expenditure

14,525.5

15,200.5

15,855.6

£millions

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Departments Expenditure: Current Expenditure 2006-07 and 2007-08

Regional Development

5%

Education21%

Employment & Learning

9%

Social Development

7%

Other13% Health

45%

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Departments Expenditure: Investment 2006-07 and 2007-08

Regional Development

28%

Education25%

Employment & Learning

5%Social

Development12%

Other15%

Health 15%

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In Year Monitoring Traditionally 4 monitoring rounds a year

Assess current and future expenditure plans against plans agreed in the Budget

Opportunity to surrender resources and bid for additional resources

Recycles spare resources to urgent and unforeseen problems

End of Year Flexibility (EYF)

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Main Estimates

Reflect departmental Budget outcomeApprove areas of spending on which

resources and cash may be used (Ambit)

Detailed Spending Plans – functional lines

Includes DEL and AME items

Votes the overall cash requirement

Base for system of physical cash control

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Changes to Estimates

Changes in provision from Main Estimates called Supplementary Estimates

Follow on from in-year monitoring movements

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Cash

HM Treasury

NIO

NI Consolidated Fund

Departments

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Investment Strategy for NI10 year plan for up to £16 billion of capital projects from 2005-2015

“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”

Major programmes of work planned in the areas of education, transport, health, water, waste water and waste, housing, arts and sports

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Summary

UK Public Expenditure System

Funding Devolved Administrations

Priorities and Budget Process

Estimates

Monitoring

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NI Public Expenditure System

Useful websites:www.dfpni.gov.uk

www.pfgbudgetni.gov.uk

www.hm-treasury.gov.uk

www.sibni.org

Questions?