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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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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
3
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?
