Revised Government spending plans for 2019/20

One of Parliament’s longest standing functions is the consideration and authorisation of the government’s spending plans, requiring the government to obtain parliamentary consent before spending public money.

A previous library briefing paper set out details of the initial spending plans of the government for the current financial year. As is usual, the government has now published its proposals to amend those plans, in the Supplementary Estimates, which require the approval of Parliament in order to come into effect.

Backbench members can normally submit bids to the House’s Backbench Business Committee for debates on public spending – known as Estimates day debates – on each occasion Estimates are presented to Parliament. Following the December 2019 General Election, however, the Backbench Business Committee has not been formed in time to allow for bids and hence any debates. Instead there will be a single “roll-up” motion, which cannot be amended, to agree all the Supplementary Estimates. The next Estimates day debates are expected to take place in July 2020.

Overall, in this year’s Supplementary Estimates, the government proposes to increase Departmental Expenditure Limits for day-to-day spending by £18.671 billion (+5.3%) and reduce investment spending by £712.6 million (-1.0%), compared to the Main Estimates. There are also changes to Annually Managed Expenditure totals and the total cash sought to cover all of these costs.

Unusually, there has not been an official forecast of public spending for 2019-20 from the Office for Budget Responsibility (OBR) for some time. This is because the usual autumn Budget did not take place, due to the timing of the General Election. Spending included in the Supplementary Estimates has already been agreed internally within government by HM Treasury, before being published and presented, and in the majority of cases will come from within the existing Treasury Reserve. The overall impact on public spending forecasts, and other developments since last March, will not, however, be known until the Office for Budget Responsibility publishes its latest forecasts, alongside the spring Budget, on 11 March 2020.

Among notable changes proposed in the Supplementary Estimates are:

• £2 billion extra for health – an extra £1 billion for day to day spending and another £1.2 billion for capital investment;
• £1.4 billion to deliver an “ambitious” industrial strategy;
• Extra funding for transport: to cover costs associated with the collapse of Thomas Cook, unplanned VAT charges for Highways England and a £0.9 billion loan for Crossrail, offset against £1.7 billion of in year savings due to slippage on High Speed 2;
• further funding for EU exit costs incurred or planned, particularly by HMRC, DEFRA, Home Office and DfT;
• higher education: £12.7 billion of estimated additional long-term costs of student loans- a result of both the annual revision to cost estimates and the uplifting of the salary repayment threshold;
• Savings of £2.1 billion on housing and communities capital spending and financial transactions, including £1 billion of savings on a budget set aside for flexibility for “market conditions”, not now needed.

As well as these changes there are many switches of funding between budgets within Departmental spending limits, between day-to-day spending and capital spending, and between departments. Further details of the most notable ones are given in the annex to this briefing paper.