Annex A to Chapter 5 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 5.

Rounding conventions

5A.1 For tables presenting the new plans the following conventions apply:

5A.2 For tables which show the Control Total and GGE(X) 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.

5A.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.

5A.4 Some figures may be subject to detailed amendment before the publication of Public Expenditure Statistical Analyses in 1997.

Assumptions for planning public expenditure

5A.5 The economic assumptions used in the public expenditure plans are set out below. The assumptions that underlay the 1995 Budget are also shown. The assumptions for the GDP deflator in 1996-97 and 1997-98 are consistent with the short-term forecast described in Chapter 3. Those for later years, and all other figures, are assumptions not forecasts.

Economic assumptions for public expenditure
Percentage changes on a year earlier unless otherwise stated
 1996-971997-981998-991999-00
GDP deflator1996 Budget2 1/2 222
1995 Budget2 3/4 2 1/2 2 1/4  
Retail prices index(1)
(September)		1996 Budget2.12 1/2 2 
1995 Budget2 1/4 2  
Rossi index(1)
(September)		1996 Budget2.62 1/4 2 
1995 Budget2 1/4 2  
Average earnings1996 Budget3 3/4 4  
1995 Budget4   
GB unemployment (millions)1996 Budget1.981.81.71.6
1995 Budget2.12.12.1 
(1) Used for projecting social security expenditure in the following financial year.

Calculation of changes from previous plans and projections

5A.6 Changes from previous plans are differences from the plans and projections for 1996-97 to 1998-99 in the last year's FSBR after account is taken of classification changes and transfers and switches between departments.

5A.7 The most significant such items included in this Report are the transfer of provision for the administration of the Jobseeker's Allowance from Social Security to Education and Employment, and the creation of the Local Authority Capital Challenge Fund under DOE - Local Government with provision previously allocated to other Departments.

5A.8 There are a few classification changes affecting the aggregates figures. Receipts from fees for driving licences and visas are now treated as reducing the Control Total. The Control Total now includes accruing superannuation liability charges for the Royal Ulster Constabulary rather than pensions paid. There are more minor classification changes but none which affect the Control Total by more than £10million in any year.

Real terms figures

5A.9 Figures in real terms are cash levels adjusted to 1995-96 price levels by excluding the effects of general inflation as measured by the GDP deflator.

Measurement of capital spending

5A.10 The main analysis set out in Table 5.4 shows the expenditure components of the public sector's capital account, on national accounting definitions but excluding industries which have been privatised or are planned to be privatised before 31 March 2000. These differ from the Control Total measure in a number of respects described in paragraph 5A.16, the main one being the treatment of VAT refunds. The figures include:

5A.11 Estimates of depreciation of the public sector's stocks of fixed assets are based on the national accounts series produced by the Office for National Statistics (in Table14.3 of the Blue Book), together with projections by the Treasury.

GGE(X)

5A.12 The Government's objective to reduce public expenditure as a share of national income over time is expressed in terms of general government expenditure, which is the combined expenditure of central and local government, with three adjustments. GGE is adjusted to exclude privatisation proceeds (ie the objective is set gross of these receipts), expenditure out of the proceeds of the National Lottery is excluded, and receipts of interest and dividends from public corporations and the private sector are netted off. The resulting measure is referred to as GGE(X).

Central government expenditure

5A.13 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.

Local authority self-financed expenditure

5A.14 Local authority self-financed expenditure is the difference between total local authority expenditure, including gross debt interest but net of capital receipts, and central government support to local authorities (ie AEF, specific grants and credit approvals).

Central government net debt interest

5A.15 Central government debt interest is shown net of receipts of interest and dividends from outside general government.

Accounting adjustments

5A.16 The accounting adjustments include various items within GGE(X) 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 (£3.3 billion in 1995-96), refunds of VAT (£4.0 billion), teachers' and NHS pensions increase payments (£1.4 billion), the difference between Civil Service and armed forces pensions payments and accruing superannuation liability charges (£1.9 billion), and the debt remuneration element of NHS Trusts' charges to health authorities (£1.2 billion). The net market and overseas borrowing of nationalised industries and other public corporations is, on the other hand, within the Control Total but outside GGE(X) such that net repayments add to the magnitude of the accounting adjustments (£1.9billion in 1995-96). Debt interest paid from local authorities to central government reduces the accounting adjustments (by £3.6billion in 1995-96). 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. Local authority receipts of interest and dividends (£0.6billion) are netted off here. Fuller details of the national accounting adjustments are given in the Public Expenditure Statistical Analyses.

Allowance for shortfall

5A.17 Tables setting out the estimated outturn for the Control Total in 1996-97 include an allowance for the difference between the overall assessment of likely outturn and the sum of the other components shown.

Functional analysis of GGE(X)

5A.18 Chart 1.2 provides an analysis of GGE(X) by function for 1997-98. Because this is based on assumptions about the pattern of expenditure in Scotland, Wales and Northern Ireland and by local authorities, the figures can only be regarded as accurate to the nearest £1 billion. At this degree of rounding one cannot make accurate comparisons with spending by function in previous years. Receipts from the sales of MOD married quarters and of student loans are shown as reducing "other expenditure" rather than Defence and Education.

Table 5A.1 Public expenditure, 1963-64 to 1999-2000
Control Total(1)GGE(X)General government expenditureMoney GDP(2)Adjusted GDP deflator
Real terms(3)Real terms(3)
£billion£billionAnnual growth rate (per cent)£billion£billionAnnual growth rate (per cent)Per cent of GDP(2)£billion£billionIndex (1995-96=100)Annual growth rate (per cent)
1963-64 10.9124.5 35 1/2 11.330.88.8 
1964-6511.8128.73.435 12.333.69.24.5
1965-6613.1136.35.936 1/2 13.636.09.64.8
1966-6714.5144.66.138 15.138.210.04.2
1967-6816.8163.212.941 1/2 17.540.510.32.9
1968-6917.5161.8-0.840 18.243.810.85.1
1969-7018.5162.70.539 1/4 19.347.111.45.2
1970-7120.7167.93.239 1/2 21.652.212.38.2
1971-7223.3173.13.140 24.458.213.49.1
1972-7326.4181.54.839 3/4 27.666.414.58.2
1973-7430.5196.38.141 1/2 32.073.715.56.9
1974-7541.0220.712.546 3/4 42.987.818.619.6
1975-7651.6221.30.347 1/4 53.8109.223.325.4
1976-7757.0215.5-2.644 3/4 59.6127.726.513.5
1977-7861.7205.1-4.841 1/2 63.9148.630.113.6
1978-7972.0215.55.142 1/4 75.0170.633.411.2
1979-8087.0222.93.442 1/2 90.0204.939.016.7
1980-81104.8227.01.844 3/4 108.6233.546.218.3
1981-82116.3229.81.245 1/2 120.5256.350.69.7
1982-83127.8235.72.645 1/2 132.7280.754.27.1
1983-84136.5240.82.144 3/4 140.4304.456.74.6
1984-85126.0211.4 147.9247.82.945 1/4 150.8326.259.65.0
1985-86129.5206.0-2.6154.9246.4-0.643 1/4 158.5358.462.95.5
1986-87136.0210.01.9163.3252.12.342 1/4 164.6385.764.83.0
1987-88148.6217.83.7172.9253.50.540 1/2 173.5427.068.25.3
1988-89156.0214.4-1.6180.7248.3-2.038 179.8475.572.86.7
1989-90175.1224.94.9198.0254.42.438 1/4 200.9517.077.97.0
1990-91193.5230.22.4217.2258.41.639 218.1556.684.18.0
1991-92213.2238.33.5238.5266.73.241 236.2581.289.56.4
1992-93231.7248.54.3263.5282.66.043 1/2 260.4606.893.24.2
1993-94240.7251.01.0277.0288.82.243 1/4 276.6639.795.92.9
1994-95247.9254.01.2288.3295.32.342 1/2 287.0676.897.61.8
1995-96255.2255.20.5299.7299.71.542 1/4 303.0708.5100.02.4
1996-97260.6254.3-0.3307.4299.90.141 1/4 308.5746.0102.52.5
1997-98266.5254.90.2314.7301.00.340 319.0787.0104.62.0
1998-99273.7256.60.7322.2302.10.439 327.2826.0106.62.0
1999-00280.9258.20.6330.6304.00.638 1/4 336.3864.0108.82.0

(1) Figures for the Control Total are only available on a consistent basis for the years shown. Figures are estimated outturn for 1996-97 and plans from 1997-98 onwards.

(2) An adjusted series for money GDP is used in the calculation of the ratio for the years up to 1989-90. This has been constructed to remove the distortion caused by the abolition of domestic rates.

(3) Cash figures adjusted to price levels of 1995-96.

Table 5A.2 Control Total in Real Terms: plans and outturn(1)
£ billion
1991-921992-931993-941994-951995-961996-971997-981998-991999-2000
1991 Survey242.6253.6259.7265.5Plans
Outturn
1992 Survey241.5254.2259.3261.4264.8
1993 Survey245.9258.7263.3260.2263.3265.6
1994 Survey239.8251.0254.2257.7256.3256.9259.2
1995 Survey239.0249.5252.0255.0255.5253.2254.6255.9
1996 Survey238.3248.5251.0254.0255.2254.3(2)254.9256.6258.2

(1) 1995-96 prices. Figures for the Control Total in previous Surveys have been adjusted for all subsequent classification changes.

(2) Estimated.

Table 5A.3 GGE(X): plans and outturn(1)
Per cent of GDP
1991-921992-931993-941994-951995-961996-971997-981998-991999-2000
1991 Survey40 3/4 41 1/4 4140 1/2 Plans
Outturn
1992 Survey41 1/4 444544 1/4 43 1/2
1993 Survey41 1/4 43 3/4 44 1/4 4342 1/2 41 3/4
1994 Survey4143 1/2 43 1/2 4341 3/4 4140
1995 Survey4143 1/2 43 1/2 42 3/4 4240 1/2 39 3/4 38 3/4
1996 Survey4143 1/2 43 1/4 42 1/2 42 1/4 41 1/4 (2)403938 1/4

(1) Figures for GGE in previous Surveys have been adjusted for subsequent classification changes and forecasts of general government interest and dividend receipts subtracted.

(2) Estimated.

Table 5A.4 Control Total by department(1)
£ million
OutturnEstimated outturnNew plansYear on year increase
1991-921992-931993-941994-951995-961996-971997-981998-991999-001997-981998-991999-00
Defence (excluding sale of married quarters)22 91322 91022 75722 56221 51722 13021 81022 24022 800-320440560
sale of married quarters     -940-700  2407000
Foreign Office1 1031 2421 2441 2631 3391 1001 0801 0801 100-10020
Overseas Development1 9942 1262 2352 3852 3712 3402 2202 3202 350-13011030
Agriculture, Fisheries and Food 
- excluding BSE2 1602 2032 9502 4352 7782 8702 8802 8302 84010-5010
- expenditure on BSE     1 540 730 580 490-810-140-90
Trade and industry
- Programmes		2 7162 8112 7362 8103 2203 2503 0703 0503 000-190-20-50
Trade and Industry - Nat Inds1 7021 3001 278 577 247-520-20-180-240 500-160-60
ECGD215 117-60-26 16 30 100-30-20-10-30
Transport5 3616 5685 9735 9894 4404 8705 1904 6004 320320-590 -280
DOE - Local government(2)28 35631 17529 37829 91330 29531 32031 38031 74031 630 60 370-110
DOE - Other9 34610 37110 2849 6358 9558 3807 6007 6406 960-78040-680
Home Office5 4915 7945 9366 2296 4556 5506 7806 8106 940 230 30 130
Legal departments2 0012 3342 4152 5852 6882 7302 7102 7502 660 -20 40 -90
Education and Employment(3)9 92010 76213 61614 36414 50514 81013 95014 01014 040 -860 60 30
National Heritage 9161 0401 0121 0161 0631 020 920 960 950-90 40 -10
Health25 54428 21329 77331 58532 93033 97034 94035 38036 120 970 430 740
of which NHS25 35427 97128 95130 58131 98233 18034 37035 15035 890 1 190 780 740
Social Security(4)54 59861 13167 09269 46772 66576 92079 74082 95086 2002 8203 200 3 250
Scotland11 72312 72313 58014 08214 30314 59014 33014 42014 490 -260 90 70
Wales5 3095 9916 2956 5506 7246 8206 9006 8806 900 70 -20 20
Northern Ireland6 0416 6067 1087 4267 7098 1908 2208 2608 360 40 30 110
Chancellor's departments3 5023 4783 3933 3293 2983 2703 1703 2003 220-11030 20
Cabinet Office 3081 0131 056 9671 2131 330 1 080 1 080 1 090-250-10 10
European Communities 7051 9021 8831 3473 2451 4002 2502 3902 790850 140 400
Local authority self-financed expenditure11 2679 8558 79611 46013 20413 30013 70013 70014 300500-100 700
Allowance for shortfall     -600   600  
Reserve      2 5005 0007 5002 5002 5002 500
Control Total213 192231 665240 730247 949255 181260 600266 500273 700280 9005 8007 2007 200

(1) For definitions, rounding and other conventions, see notes on page 118. See Annex B for the composition of each departmental grouping.

(2) Includes payments of Revenue Support Grant and National Non-domestic Rates to English local authorities. These finance, at local authorities' discretion, a range of local services, including education, social services and environmental services.

(3) Does not include local authority Total Standard Spending on education.

(4) Excluding cyclical social security.

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[Prepared November 1996]