Public spending: a brief introduction

The government expects to spend £841 billion in 2019-20, the most it has ever spent either in cash terms or real terms. This briefing describes the different ways in which public spending is categorised, and presents statistics and commentary on recent spending in each category.

Types of spending

Public spending is planned under several intersecting sets of categories. The main ones are:

• Whether the spending can be planned long-term (this appears as Departmental Expenditure Limits or DEL) or is more demand-driven (Annual Managed Expenditure, AME);
• Whether the money is spent on assets (capital spending) or on things that are used up (current/resource spending);
• Whether the money is spent on a department’s governmental functions (programme spending) or on running the department itself (administration spending).

Each of these categories appears in departmental spending plans and accounts. The amounts going to each vary according to departmental responsibilities and central government priorities.

What does the government spend its money on?

Money is spent on a very wide range of areas, but social protection, health and education are consistently the areas receiving the largest amounts. In 2018-19, social protection accounted for £275 billion of total spending, health £153 billion, and education £89 billion. Most areas have seen reductions in spending over the past few years.

Who spends the money?

Government departments each have their own budgets, which vary in size in line with the spending needs associated with their responsibilities. The departments with the largest budgets are consistently the Department for Work and Pensions, the Department of Health and Social Care and the Department for Education, which taken together account for over half of the total 2019-20 planned spending.

Departments spend both centrally and by funding public bodies, which are used when spending needs a degree of operational or constitutional separation from government. The largest such bodies in terms of the amount of funding they receive are NHS England and the Education and Skills Funding Agency.

Where is the money spent?

69% of all geographically-identifiable public spending in 2017-18 was in England, with Scotland, Wales and Northern Ireland seeing 8%, 4% and 3% respectively. Some also goes to the EU – the UK’s net contribution in 2018-19 was £11.2 billion – and some is spent abroad as part of the international development budget.

How does the UK’s spending compare with other countries?

In per-person terms, the UK’s public spending is similar to that of Australia or Japan. The UK is far from unusual in its spending among developed economies, either in the amount that it spends per person or relative to the size of its economy – its spending as a percentage of GDP is fairly typical amongst OECD members.