Annex A to Chapter 6

Public Expenditure Analyses

This annex includes a number of more detailed analyses of expenditure. It also explains the conventions used in presenting the figures throughout Chapter 6.

Rounding conventions

6A.1 For tables presenting the new plans the following conventions apply:

Future years: Departments' spending totals within the Control Total are rounded to the nearest £10 million (except for non-cyclical social security in 1996-97 and 1997-98, which is rounded to £50 million). The Control Total and spending sector totals (except financing requirements of the nationalised industries), items outside the Control Total, and projections of capital spending are rounded to the nearest £100 million.

1994-95: The rounding conventions adopted for future years also apply to figures for 1994-95, to reflect their provisional nature.

6A.2 For tables which show the Control Total and GGE in real terms, all figures are rounded to the nearest £100 million. Projections of capital spending in real terms are also rounded to the nearest £100 million.

6A.3 Changes and totals in the tables are based on unrounded figures. They may therefore differ from the changes and sums of the rounded figures.

6A.4 Some figures may be subject to detailed amendment before the publication of the Statistical Supplement early in 1995.

Calculation of changes previous plans and projections

6A.5 Changes from previous plans are differences from the plans and projections for 1994-95 to 1996-97 in the February 1994 Statistical Supplement after account is taken of classification changes and transfers and switches between departments.

6A.6 The most significant such item included in this Report is a switch from the Ministry of Defence and the Foreign Office to the Cabinet Office as a result of the creation of a single intelligence Vote.

6A.7 There is only one material classification change affecting the aggregate figures. Reflecting the changed national accounting treatment introduced in the 1994 "Blue Book", British Nuclear Fuels Limited is treated from 1992-93 as a public corporation. This classification change also affects the PSBR. There are a few minor classification changes but none which affect the Control Total by more than £25 million in any year: none of these affects the PSBR.

Real terms figures

6A.8 Figures in real terms are cash levels adjusted to 1993-94 price levels by excluding the effects of general inflation as measured by the GDP deflator. The deflator series used is adjusted to remove the distortion caused by the abolition of domestic rates. A description of the method of adjustment was set out in Annex C to Chapter 1 of the 1990 Autumn Statement.

Measurement of capital spending

6A.9 The main analysis set out in Table 6.4 shows the expenditure components of the public sector's capital account, on national accounting definitions, measured net of estimated depreciation. The figures include: (i) gross domestic fixed capital formation, ie expenditure on fixed assets - schools, hospitals, roads, computers, plant and machinery etc. This is measured net of receipts from sales of fixed assets (eg council houses and surplus land); (ii) grants in support of capital spending by the private sector; (iii) the value of the physical increase in stocks (for central government, primarily agricultural commodity stocks); less (iv) estimates of depreciation on the public sector's stock of fixed assets. These are based on the national accounts series produced by the Central Statistical Office (eg in Table 14.3 of the Blue Book), together with projections by the Treasury.

Central government expenditure

6A.10 This includes the financing requirements of trading funds and public corporations other than the nationalised industries. Cyclical social security spending is excluded from the measure of central government spending within the Control Total.

Central government support for local authorities

6A.11 This includes such items as mandatory student awards and community charge benefit which are administered by local authorities but all or most of the cost of which is paid by central government.

Local authority self-financed expenditure

6A.12 Local authority self-financed expenditure is the difference between total local authority expenditure, including debt interest but net of capital receipts, and central government support to local authorities.

Allowance for shortfall

6A.13 Tables setting out the estimated outturn for the Control Total in 1994-95 include an allowance for the difference between the overall assessment of likely outturn and the sum of the other components shown.

Adjustments

6A.14 The accounting adjustments include various items within general government expenditure but outside the Control Total (other than central government debt interest and cyclical social security, which are shown separately). The larger items are non-trading capital consumption, refunds of VAT, teachers' and NHS pensions increase payments, the difference between civil service and armed forces pensions payments and accruing superannuation liability charges, the debt remuneration element of NHS Trusts' charges to health authorities, and the spending of the proceeds of the National Lottery. The net market and overseas borrowing of nationalised industries and other public corporations is on the other hand within the Control Total but outside general government expenditure such that net repayments add to the magnitude of the accounting adjustments. Debt interest paid from local authorities to central government reduces the accounting adjustments. This is removed to avoid double counting between local government debt interest payments (which are shown inside local authority expenditure) and central government debt interest. Fuller details of the national accounting adjustments are given in the Statistical Supplement. 

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Reviewed 1 October 1996