Welsh Government Final Budget 2017-2018€¦ · 2017-18, the final Budget reflects movements...

Final Budget 2017-2018

Taking Wales Forward

December 2016

Welsh Government

© Crown copyright 2016, Welsh Government 30526, Digital ISBN 978-1-4734-8151-0

Mae'r ddogfen yma hefyd ar gael yn Gymraeg / This document is also available in Welsh.

gov.wales

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Contents 1. Introduction 2. Changes between draft and final Budget

3. Outline assessment of the impact of changes

between the draft and final Budgets

4. Welsh Government final Budget allocations for 2017-18

5. Main Expenditure Group spending plans

Annex A – Reconciliation between Administrative Budget and Resource Allocations in the annual Budget motion

Annex B – Glossary

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Chapter 1 - Introduction

1.1 The Welsh Government has tabled the final Budget for 2017-18 in accordance with Standing Order 20. The final Budget reflects changes to spending plans published in the draft Budget on 18 October.

1.2 This year’s budget process has been undertaken against the backdrop of unprecedented levels of uncertainty, following the outcome of the European Union referendum but also relating to the fiscal outlook, which presents a number of challenges. This has inevitably had an impact on our budget preparations, including the time available to undertake our planning for this year’s budget. While it was our ambition to provide longer-term financial certainty for our partners and stakeholders, the lack of clarity ahead of the publication of the UK Government’s Autumn Statement about the revenue resources available to Wales beyond 2017-18 made it impossible to realise this ambition. For this reason, we have developed a one-year revenue budget. There has been a greater degree of certainty about future capital budgets, allowing us to publish four-year capital plans, covering the period for which we have a capital settlement.

1.3 The backdrop of fiscal uncertainty has had an impact on the timetable for the publication and scrutiny of the draft and final Budgets. However, with the agreement of the National Assembly, we have been able to publish the final Budget before Christmas. In its report about the draft Budget, the Finance Committee recognised our budget preparations have been framed in uncertainty. In this context we welcome the constructive spirit of the committee’s recommendations and will respond to the Finance Committee’s report about the draft Budget 2017-18 in due course.

UK Autumn Statement

1.4 Following publication of the draft Budget, the UK Government

announced its Autumn Statement, which resulted in changes to the funding available to Wales.

1.5 The UK Government responded to our calls for more infrastructure investment – Wales received £442m in additional capital over five years (2016-17 to 2020-21). While this additional investment is welcome, it does not address the decline in our capital budgets which we have seen in recent years. Our capital budget will be 21% lower in real terms by the end of the decade compared to 2009-10.

1.6 Wales received a derisory amount of additional revenue funding in the Autumn Statement – £35.8m over the four-year period 2016-17 to 2019-20. Of this, £20m (£13.7m in 2017-18 and £6.2m in 2018-19) related to the recent announcement by the UK Government that it would be distributing a population share of the anticipated revenues from the apprenticeship levy (which is a slightly different basis from which the original settlement was calculated).

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1.7 Importantly, the UK Government is still to announce how it will make

£3.5bn of cuts in 2019-20 – these could have a significant impact on the Welsh budget in the future, thereby perpetuating fiscal uncertainty. However, as the Chancellor did not make any cuts in 2017-18, there is scope to make a small number of additional revenue allocations.

1.8 The changes between the draft and final Budgets are set out in chapter two.

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Chapter 2 - Changes between the draft and final Budgets 2.1 An overview of the changes between the draft and final Budgets is

provided below. Technical adjustments

2.2 There have been a small number of technical adjustments between the draft and final Budgets:

The Invest to Save scheme is administered through the Central Services and Administration (CSA) MEG and is reset each year. Following agreement of spend and repayments for the scheme in 2017-18, the final Budget reflects movements between MEGs as set out below.

Table 2.1: Invest to Save movements between draft and final Budget

2017-181

MEG 2017-18 Revenue

£m

2017-18 Capital

£m

Health, Wellbeing and Sport -9.0 0.08

Environment and Rural Affairs -2.5 -0.04

Economy and Infrastructure 0.1 0.02

Education 2.2 0

Central Services and Administration 9.2 3.0

In the draft Budget 2017-18, we based spending plans for the Wales Audit Office on the assumption of rolling forward 2016-17 budgets on a cash flat basis, In the final Budget, we are making adjustments to reflect the estimates laid for the Wales Audit Office. As a result, there is a marginal decrease in revenue required, offset by a small increase in capital. A corresponding adjustment has been made to reserves.

As part of the Budget agreement with Plaid Cymru, the draft Budget provided £0.5m of additional revenue for Safer Routes to Schools. It has been agreed this funding will be allocated via the Safer Routes to Communities capital grant scheme. An adjustment is being made in the final Budget to exchange the funding from revenue to capital within the Economy and Infrastructure MEG.

1 The total Invest to Save Capital Budget is £5.6 million. The difference between the transfers

from other main Expenditure Groups and the Invest to Save Capital Budget is the repayment of investments from outside organisations.

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Allocations from Reserves 2.3 Following the Autumn Statement, discussions have been ongoing to

determine the best use of the additional funding available to Wales. In considering areas for additional investment, we have reflected on issues raised and feedback during the scrutiny of the draft Budget. We have also continued discussions with Plaid Cymru, through the Finance Liaison Committee.

2.4 As a result, £46m of revenue and £337m of capital is being allocated in

the final Budget. The impact of this additional funding in each MEG is detailed below.

2.5 Health, Wellbeing and Sport

An additional £10m of revenue funding for social services.

An additional £1.7m of revenue funding to provide financial support for people affected by NHS-supplied contaminated blood.

£41.5m of additional capital funding over four years to improve health estate and accelerate innovation.

2.6 Local Government

As announced this month, an additional £10m of revenue funding will be available in 2017-18 to help high street retailers, pubs and restaurants with their business rates. The extra £10m will be targeted at high-street ratepayers, including those who have seen their rates increase significantly as a result of the 2017 revaluation undertaken by the independent Valuation Office Agency. The Welsh Government and Plaid Cymru have agreed the targeted rate relief scheme will be provided through a special grant and the scheme will be in place by April 1 2017. This is in addition to the £10m transitional rate relief scheme announced in the draft Budget.

An additional £6m of revenue funding to support homelessness prevention.

2.7 Communities and Children

An extra £53.4m capital funding to accelerate our commitment to deliver 20,000 affordable homes over this Assembly term.

An additional £50m capital funding for regeneration. 2.8 Economy and Infrastructure

An additional £15.5m of revenue funding for apprenticeships - in 2017-18, this includes £0.5m of revenue funding to police and crime

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commissioners to ensure that they are not disadvantaged as a result of the apprenticeship levy - we will continue to call on the UK Government to meet their needs.

An additional £83m of capital funding over four years to support road and transport schemes. This includes funding to accelerate the delivery of the A483 Llandeilo bypass and £15m for the Local Transport Network Fund, both of which are part of the Budget agreement with Plaid Cymru.

An extra £16m of capital funding over four years to build growth and prosperity.

2.9 Education

An additional £3.2m of revenue funding in 2017-18 to support our ambition to ensure everyone has an opportunity to achieve their full potential.

2.10 Environment and Rural Affairs

An additional £40m of capital funding over four years for energy efficiency measures.

An additional £33m of capital funding over four years for flood alleviation measures.

An additional £20m of capital funding to support rural communities.

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Chapter 3 – Outline assessment of the impact of changes between the draft and final Budgets 3.1 The Welsh Government’s Strategic Integrated Impact Assessment set

out the impacts of the spending plans published in the draft Budget 2017-18. In this chapter, we provide an outline assessment of the impact of changes between the draft and final Budgets.

3.2 The Wellbeing of Future Generations (Wales) Act has enshrined in law

our commitment to develop policy and make decisions in ways which will impact on the long-term good of our country. Taking Wales Forward sets out the four areas where we can have the biggest impact. We have set out below the ways in which the additional funding provided as part of the final Budget helps move us towards a prosperous, resilient, healthier and more equal future – a Wales which will be globally responsible, with cohesive communities and a thriving Welsh language.

PROSPEROUS AND SECURE 3.3 Prosperity brings security to individuals, families and communities. The

additional allocations made in the final Budget support policies which will enable businesses to thrive. The targeted non-domestic rates relief scheme will support business owners and their employees and have a positive impact on the Welsh economy. Similarly, the additional funding for apprenticeships will accelerate skills development in areas with short-term and long-term apprenticeship needs, strengthening the ability to meet future skills requirements in key sectors and provide people with the skills they need to secure and remain in employment.

3.4 Fostering conditions for sustainable growth underpins our ambitions for a

prosperous and secure Wales. Our investment in the environment and rural affairs supports our ambitions for successful and sustainable rural communities.

3.5 Allocating capital funding to support communities mitigates reductions in

areas of the draft Budget and means we can focus on some of Wales’ most disadvantaged communities, while also supporting wider government ambitions, such as the work of the Ministerial Taskforce for the South Wales Valleys; the Metro and the city deals. This provides a clear and purposeful vision to support the economic regeneration and wellbeing of communities throughout Wales.

3.6 A safe, affordable and secure home is an important determinant of

health and wellbeing; poor or insecure housing can cause physical illness and be a source of stress and anxiety. Improving the energy efficiency of homes helps tackle fuel poverty and improves health and wellbeing by enabling households to heat their homes at a more affordable cost. Homelessness or the threat of becoming homeless can have a significant negative impact on people. Preventing homelessness contributes to people’s health and wellbeing. Addressing the security

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and safety of the physical community environment is also key to improving and sustaining wellbeing.

HEALTHY AND ACTIVE

3.7 The final Budget provides additional capital funding for the health estate,

which will support the provision of care where it is needed most. This programme of investment will provide for the provision of services on a more sustainable footing. This will help to contribute to a healthier Wales – modern healthcare facilities are compatible with the future delivery of the health and wellbeing agenda.

3.8 In line with our commitment to supporting people with the greatest need

when they need it most, and equipping services to respond to the challenge of rising costs and demand, the final Budget provides additional funding to support sustainable social services. This recognises the pressures on service delivery, the strong link between poor health and deprivation and the impact social care has on the most disadvantaged, whether through reasons of old age, disability or the safeguarding of children.

3.9 Investing in innovation in healthcare offers opportunities to explore how

we can improve care for people in Wales; invest in the future of healthcare and manage increasing demands for and costs of healthcare.

AMBITIOUS AND LEARNING

3.10 Education is one of the most important investments we can make to

improve the life chances of children. The additional investment in the final Budget will support work to continue the transformation of the education sector and help to ensure investment goes beyond learning in the classroom to support the wider family environment.

3.11 Building on lessons learned from improvement schemes means we can

take what works and spread best practice across Wales to make sustainable changes to the Welsh education system.

UNITED AND CONNECTED 3.12 Transport plays a critical role in improving Wales’ economic

competitiveness and provides enhanced access to jobs and services. This allows people to access the opportunities they need to live healthy, sustainable and fulfilling lives. Our transport and infrastructure programmes are a key lever to build resilience in the built and natural environments to meet current and future needs.

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Chapter 4 - Welsh Government Final Budget Allocations for 2017-18

4.1 The changes described in chapter two are reflected in the revised spending plans set out in this chapter, together with the Main Expenditure Group spending plans in chapter five. The detailed changes to our budget proposals between publication of the draft and final budgets 2017-18 are set out in the final Budget 2017-18 MEG Action Tables, which are published together with this explanatory note.

Table 4.1 – Allocation of the Wales DEL

MAIN EXPENDITURE GROUPS (MEGs)

£000s

2017-18

Draft Budget

Changes

2017-18

Final Budget

Departmental Expenditure Limits (DEL)

Health, Well-being and Sport2 7,282,012 9,229 7,291,241

Local Government 3,405,374 16,000 3,421,374

Communities and Children 708,773 20,000 728,773

Economy and Infrastructure 1,300,679 22,591 1,323,270

Education 1,591,712 5,436 1,597,148

Environment and Rural Affairs 368,369 15,458 383,827

Central Services and Administration 296,046 9,186 305,232

Total Allocation to Welsh Government MEGs

14,952,965 97,900 15,050,865

Resource Reserves

Fiscal Resource DEL 221,887 -22,377 199,510

Non-Fiscal Resource DEL

109,682 0 109,682

Capital Reserves

General Capital DEL 108,144 17,553 125,697

Financial Transactions DEL

0 1,193 1,193

Borrowing -20,000 0 -20,000

Assembly Commission 52,545 0 52,545

Public Services Ombudsman for Wales 4,520 0 4,520

Auditor General for Wales 6,928 -22 6,906

Direct Charges to the Welsh Consolidated Fund

707 -5 702

Total Expenditure within the Wales DEL Budget

15,437,378 94,242 15,531,620

2 This figure excludes the additional £118.4m allocated to the Health, Well-being and Sport MEG in 2016-17, which will be reflected in the Second Supplementary Budget 2016-17.

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Table 4.2 – Changes to the Welsh Government Fiscal Resource DEL


£000s

Revised Baseline

2017-18 Draft Budget

Changes 2017-18

Final Budget

Health, Well-being and Sport

6,582,427 6,845,840 2,651 6,848,491

Local Government3

DEL 3,333,148 3,261,856 16,000 3,277,856

NDR 977,000 1,059,000 0 1,059,000

Total 4,310,148 4,320,856 16,000 4,336,856

Communities and Children

358,468 370,568 0 370,568

Economy and Infrastructure

582,947 592,069 15,065 607,134

Education 1,333,098 1,383,860 5,436 1,389,296

Environment and Rural Affairs

275,037 271,511 -2,501 269,010

Central Services and Administration

268,390 268,526 9,249 277,775


12,733,515 12,994,230 45,900 13,040,130

3 For the purposes of showing the total spending envelope available to Local Government,

this figure includes the income generated from non-domestic rates.

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Table 4.3 – Changes to the Welsh Government Non Fiscal Resource DEL


£000s

Revised Baseline

2017-18 Draft Budget

Changes 2017-18

Final Budget

Health, Well-being and Sport

170,779 190,779 0 190,779

Local Government 400 400 0 400


0 500 0 500


115,898 195,898 0 195,898

Education 106,931 107,039 0 107,039


3,340 13,086 0 13,086


16,000 16,000 0 16,000


413,348 523,702 0 523,702

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Table 4.4 – Changes to the Welsh Government Capital DEL – General Capital (excluding Financial Transactions capital)

Main Expenditure Groups (MEGs)

£000s

2017-18 Draft

Budget October

2016

2017-18 Changes

2017-18 Final

Budget December

2016

2018-19 Draft

Budget October

2016

2018-19 Changes

2018-19 Final

Budget December

2016

Health, Wellbeing and Sport 245,393 6,578 251,971 250,289 10,000 260,289

Local Government 143,118 0 143,118 143,118 0 143,118

Communities and Children 221,773 20,000 241,773 191,062 43,400 234,462

Economy and Infrastructure 464,107 7,526 471,633 292,347 12,000 304,347

Education 100,813 0 100,813 128,061 0 128,061


83,772 17,959 101,731 55,061 25,000 80,061


11,520 -63 11,457 11,520 0 11,520

Total Allocation to MEGs 1,270,496 52,000 1,322,496 1,071,458 90,400 1,161,858

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Table 4.4 continued – Changes to the Welsh Government Capital DEL – General Capital (excluding Financial Transactions capital)


£000s

2019-20 Draft

Budget October

2016

2019-20 Changes

2019-20 Final

Budget December

2016

2020-21 Draft

Budget October

2016

2020-21 Changes

2020-21 Final

Budget December

2016

Health, Wellbeing and Sport 265,283 10,000 275,283 265,333 15,000 280,333

Local Government 143,118 0 143,118 143,118 0 143,118

Communities and Children 165,511 15,000 180,511 160,179 25,000 185,179

Economy and Infrastructure 310,793 31,500 342,293 402,783 48,500 451,283

Education 135,745 0 135,745 143,890 0 143,890


56,754 25,000 81,754 50,878 25,000 75,878


11,520 0 11,520 11,520 0 11,520

Total Allocation to MEGs 1,088,724 81,500 1,170,224 1,177,701 113,500 1,291,201

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Table 4.5 – Changes to the Welsh Government Capital DEL – Financial Transactions4


£000s

2017-18 Final

Budget December

2016

2018-19 Final

Budget December

2016

2019-20 Final

Budget December

2016

2020-21 Final

Budget December

2016

Health, Wellbeing and Sport

0 0 0 0

Local Government 0 0 0 0


115,932 98,748 73,067 44,700


48,605 17,920 32,700 8,000

Education 0 0 0 0


0 6,180 0 2,000


0 0 0 0

Total Allocation to MEGs

164,537 122,848 105,767 54,700

4 No changes from figures published in draft Budget 2017-18.

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Table 4.6 – Welsh Government AME Budget


£000s

Final Budget 2017-18

Resource Capital

Health, Well-being and Sport 166,500 0

Local Government 1,059,000 0

Communities and Children 31,389 0

Economy and Infrastructure 112,065 0

Education -90,054 491,871

Environment and Rural Affairs 2,400 0

Central Services and Administration 2,828 0

Total Welsh Government AME Budget 1,284,128 491,871

Assembly Commission 1,200 0

Public Services Ombudsman for Wales -272 0

Total Welsh AME Budget 1,285,056 491,871

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Chapter 5 - Main Expenditure Group Spending Plans Table 5.1 – Year on year changes Resource DEL

Resource DEL Budget

£000s

2016-17 2017-18

First Supplementary

Budget5 2016-17

Final Budget Plans

Year on Year % Change

Year on Year % Change (Real) 6

Health, Wellbeing and Sport7

6,861,371 7,039,270 2.6% 1.1%

Local Government8

DEL 3,333,635 3,278,256 -1.7% -3.1%

NDR 977,000 1,059,000 8.4% 6.8%

Total 4,310,635 4,337,256 0.6% -0.8%


357,631 371,068 3.8% 2.3%


712,793 803,032 12.7% 11.0%

Education 1,445,445 1,496,335 3.5% 2.0%


278,600 282,096 1.3% -0.2%


309,537 293,775 -5.1% -6.4%

Total Resource DEL [Excluding NDR]

13,299,012 13,563,832 2.0% 0.5%

5 The First Supplementary Budget 2016-17 was approved by the National Assembly for Wales in July

2016. 6 The year on year real terms changes are calculated using the GDP deflator, a broad measure of general inflation in the domestic economy. It is assumed that the GDP deflator will increase by 1.45% in 2017-18, in line with the Office for Budget Responsibility’s Economic and Fiscal Outlook published alongside the Autumn Statement in November 2016. 7 For the purposes of showing an accurate year on year comparison, the Health, Well-being and Sport

MEG Resource Allocations figures include the additional £118.4m allocated to the Health, Well-being and Sport MEG in 2016-17, which will be reflected in the Second Supplementary Budget 2016-17. 8 For the purposes of showing the total spending envelope available to Local Government, this figure

includes the income generated from non-domestic rates

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Table 5.2 – Capital DEL – Year on Year cash percentage change (£000).

Capital DEL Budget

2016-17 2017-18 2018-19 2019-20 2020-21

First Supplementary

Budget June 20169

Final Budget

2016 Plans

% change

New Plans

% change

New Plans

% change

New Plans

% change


268,685 251,971 -6.2% 260,289 3.3% 275,283 5.8% 280,333 1.8%

Local Government 143,118 143,118 0.0% 143,118 0.0% 143,118 0.0% 143,118 0.0%


328,012 357,705 9.1% 333,210 -6.8% 253,578 -23.9% 229,879 -9.3%


387,602 520,238 34.2% 322,267 -38.1% 374,993 16.4% 459,283 22.5%

Education 132,747 100,813 -24.1% 128,061 27.0% 135,745 6.0% 143,890 6.0%


94,200 101,731 8.0% 86,241 -15.2% 81,754 -5.2% 77,878 -4.7%


11,520 11,457 -0.5% 11,520 0.6% 11,520 0.0% 11,520 0.0%

Total Capital DEL 1,365,884 1,487,033 8.9% 1,284,706 -13.6% 1,275,991 -0.7% 1,345,901 5.5%

9 Includes General Capital Funding for local government adjustment made in Draft Budget 2017-18

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Table 5.3 – Capital DEL – Year on Year percentage change – Real terms (£000) 10

Capital DEL Budget

2016-17 2017-18 2018-19 2019-20 2020-21

First Supplementary

Budget June 2016

Final Budget

2016 Plans

% change (Real)

New Plans

% change (Real)

New Plans

% change (Real)

New Plans

% change (Real)


268,685 251,971 -7.6% 260,289 1.2% 275,283 3.9% 280,333 -0.1%

Local Government 143,118 143,118 -1.4% 143,118 -2.1% 143,118 -1.8% 143,118 -1.9%


328,012 357,705 7.5% 333,210 -8.8% 253,578 -25.3% 229,879 -11.1%


387,602 520,238 32.3% 322,267 -39.3% 374,993 14.3% 459,283 20.2%

Education 132,747 100,813 -25.1% 128,061 24.4% 135,745 4.1% 143,890 4.0%


94,200 101,731 6.5% 86,241 -17.0% 81,754 -6.9% 77,878 -6.5%


11,520 11,457 -2.0% 11,520 -1.5% 11,520 -1.8% 11,520 -1.9%

Total Capital DEL 1,365,884 1,487,033 7.3% 1,284,706 -15.4% 1,275,991 -2.5% 1,345,901 3.5%

10 The year on year real terms changes are calculated using the GDP deflator, a broad measure of general inflation in the domestic economy. It is assumed

that the GDP deflator will increase by 1.45% in 2017-18, 2.12% in 2018-19, 1.82% in 2019-20 and 1.92% in 2020-21, in line with the Office for Budget Responsibility’s Economic and Fiscal Outlook published alongside the Autumn Statement in November 2016.

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Annex A – Reconciliation between Administrative Budget and Resource Allocations in the Annual Budget Motion

Health, Wellbeing and Sport MEG

£000s

DEL 2017-18

Resource 7,039,270

Capital 251,971

AME

Resource 166,500

Capital 0

Total Managed Expenditure 7,457,741

Reconciliation to Resources

Resource Consumption of WGSBs and NHS bodies -46,539

National Insurance Fund Receipts collection costs -906

Resources requested 7,410,296

Local Government MEG

£000s

DEL 2017-18

Resource 3,278,256

Capital 143,118

AME

Resource 1,059,000

Capital 0



National Non Domestic Rates payable (and collection costs) -1,064,172

Supported Borrowing -88,800

Resource Consumption of WGSBs -400


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Communities and Children MEG

£000s

DEL 2017-18

Resource 371,068

Capital 357,705

AME

Resource 31,389

Capital 0

Total Managed Expenditure 760,162



Resources requested 759,662

Economy and Infrastructure MEG

£000s

DEL 2017-18

Resource 803,032

Capital 520,238

AME

Resource 112,065

Capital 0



Resource Consumption of WGSBs -5,502

Direct Charges on the Welsh Consolidated Fund -1,745

PFI -8,483


Education MEG

£000s

DEL 2017-18

Resource 1,496,335

Capital 100,813

AME

Resource -90,054

Capital 491,871





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Environment and Rural Affairs MEG

£000s

DEL 2017-18

Resource 282,096

Capital 101,731

AME

Resource 2,400

Capital 0



Resource Consumption of WGSBs -12,400


Central Services and Administration MEG

£000s

DEL 2017-18

Resource 293,775

Capital 11,457

AME

Resource 2,828

Capital 0




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Annex B – Glossary

Action Within each Spending Programme Area (SPA), budgets are allocated to a number of sub-programmes known as Actions. Tables showing budgets at Action level are available at: www.wales.gov.uk/budget

Ambits Descriptions of the specific purposes for which Welsh Ministers are authorised by the National Assembly for Wales to spend resources. Ambit Descriptions and resource limits are contained within the Annual Budget Motion. Ambits correspond to MEGs.

Annually Managed Expenditure (AME)

Expenditure which cannot reasonably be subject to firm, multi-year limits in the same way as DEL and is therefore reviewed twice a year as part of the HM Treasury’s Budget and Pre-Budget Report processes. AME typically consists of programmes which are large, volatile or demand-led; for example the issue of student loans.

Budget Motion The means by which the National Assembly for Wales authorises Welsh Ministers to spend resources up to a specific level for specified purposes and to draw cash up to a specific limit from the Welsh Consolidated Fund.

Budget Exchange System

The system under which the Welsh Government is able to carry forward underspends, up to an agreed cap. The agreed cap is 0.6% of our Resource DEL budget and 1.5% of our Capital DEL budget.

Capital Expenditure that in the main results in a physical asset, for example a new building. The Welsh Government DEL and AME budgets have separate capital and resource limits.

Departmental Expenditure Limit (DEL)

The multi-year budget limit for the Welsh Government set by the HM Treasury. DEL is planned and controlled on a three year basis in Spending Reviews.

Depreciation The drop in value of an asset due to wear and tear, age and obsolescence. Under resource budgeting, depreciation is part of the Welsh Government’s DEL but is a non-fiscal resource DEL item.

Direct Charges on the Welsh Consolidated Fund

Expenditure which is legally required to be charged directly to the Welsh Consolidated Fund and therefore does not score against the budgets of the Welsh Government or any other body. Direct Charges include the remuneration of the

http://www.wales.gov.uk/budget

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Presiding Officer and Auditor General.

Financial Transactions

Financial transactions are not traditional capital grants and can only be used for loans and equity purposes. A proportion of the funding also has to be repaid to the Exchequer.

Fiscal Resource DEL (previously known as near-cash)

Accruals measures of transactions that normally turn into cash flows soon, for example, pay, current procurement, resource grants and subsidies.

Main Expenditure Group (MEG)

The Welsh Government DEL is divided into a number of Main Expenditure Groups. There are currently 7 MEGs: Health, Wellbeing and Sport; Local Government; Communities and Children; Economy and Infrastructure; Education; Environment and Rural Affairs; and Central Services and Administration.

Non-Fiscal Resource DEL (previously known as non-cash)

Accruals measures included in budgets to ensure they reflect the full economic cost of activities even though there is not a direct link to cash flows in the relevant period - for example, depreciation and provisions. Non-fiscal resource DEL cannot be used to fund fiscal resource DEL spending.

Receipts Some areas of Welsh Government activity generate income, for example, through the sale or rental of assets. These are represented in the budget as negative figures.

Resource Budgeting

The Welsh Government’s budget is set on a resource basis derived from accruals information. Accruals information measures resources as they are consumed rather than when the cash is paid. So, for example, resource budgeting includes a charge for depreciation, a measure of the consumption or wearing out of capital assets.

Resource (previously known as revenue)

Current expenditure, for example, funding for the pay of public sector workers and to purchase consumable goods and services.

Spending Programme Area (SPA)

Within each MEG, budgets are allocated to Spending Programme Areas according to the kind of services they will deliver.

Spending Review Every two or three years HM Treasury reviews expenditure for each UK Government Department and sets budgets for the forthcoming three years. Budgets for the devolved administrations are derived from these budgets via the Barnett formula, which is a mechanism used by HM Treasury to calculate public expenditure allocated to Wales to reflect changes in spending levels allocated to public

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services in England.

Total Managed Expenditure (TME)

The total Departmental Expenditure Limit plus Annually Managed Expenditure.

Welsh Consolidated Fund

The account into which the money voted by the UK Parliament for use by the Welsh Government, the Assembly Commission, the Auditor General, and the Public Services Ombudsman for Wales is paid.

WGSB Welsh Government Sponsored Body.

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