Revised Government spending plans for 2020/21

What are Estimates?

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. These are presented to Parliament in documents known as “Estimates”. A previous Library briefing paper set out details of the government’s initial spending plans (published in May 2020 in Main Estimates 2020-21) for the current financial year.

What are Supplementary Estimates?

As is usual, the government has now published its proposals to amend those plans, in “Supplementary” Estimates, which require the approval of Parliament in order to come into effect.

In the extraordinary circumstances of the coronavirus pandemic, Parliament agreed (via the Contingencies Act 2020) to expand, temporarily, the size of the government’s Contingencies Fund. This has allowed government departments to access loans from the fund where they have needed to. These loans will now have to be repaid from funds sought, along with other increases, in Supplementary Estimates.

The 2020-21 Supplementary Estimates were published on 22 February 2021. They show the changes to this financial year’s budgets which the government is seeking for each department, divided into separate limits for current, day-to-day spending (also known as Resource) – on staff and other running costs, on goods and services and grants; and capital (investment) spending – covering purchase and sale of assets, loans and capital grants.

Changes are further divided into spending subject to fixed limits, based broadly on the plans outlined for 2020-21 in the 2019 Spending Round, known as Departmental Expenditure Limits; and less predictable and more demand led spending, known as Annually Managed Expenditure.

Changes to the cash block grants proposed to Scotland, Wales and Northern Ireland are also included under a separate heading.

As is usual, all these changes these will be put to Parliament for approval in early March, and if Parliament is content will be given legal effect by a new Supply and Appropriation Act before the end of the financial year, allowing access to additional funds approved.

What has changed since earlier this year?

Spending is rising significantly. This is primarily, but not exclusively, as a result of the coronavirus pandemic. The Main Estimates, published last May, included some known additional spending planned, but many further changes have been announced since then as the pandemic has developed. While these may have been funded with the help of advances from the government’s Contingencies Fund, the formal request for additional funds is only being made now, through Supplementary Estimates. Advances will be repaid to the Contingencies Fund once Parliament agrees the Supplementary Estimates.

The current situation has led to unprecedented interventions from government with significant spending implications. Alongside additional spending on health and social care and other public services, an array of support arrangements and schemes have been announced for individuals and businesses, to be paid and accounted for by a range of departments – from Business, Energy and Industrial Strategy (BEIS), Her Majesty’s Revenue and Customs (HMRC), Department for Work and Pensions (DWP), the Ministry of Housing, Communities and Local Government (MHCLG) and others.

Notable spending increases proposed in the Supplementary Estimates include extra funding, mainly as a result of the Covid-19 pandemic for:

• health: £61.4 billion;
• employment: £69.8 billion;
• business £9.9 billion;
• public transport operators: £9.4 billion;
• English local authorities: £2.7 billion;
• schools: £2.6 billion;
• cultural and heritage sector: £2.6 billion;
• courts, prison, immigration, passport and criminal justice services: £2.2 billion;
• employment programmes £0.9 billion;
• Scotland £6.5 billion;
• Wales £3.9 billion;
• Northern Ireland £2.2 billion; and
• state pension and benefits: £7.7 billion (some of which is a safety margin).

There also some savings, not related to Covid-19 including:

• Overseas Development Assistance: over £1 billion in total savings as a result of the government’s decision to reduce the UK’s ODA funding from 0.7% to 0.5% of gross national income;
• £1 billion savings for HS2 due to reprofiling of spend which was planned for 2020-21 into future years; and
• £2.4 billion in help to buy savings, affordable housing and other capital savings on housing programmes, some of which are carried forward to next financial year.

Parliament’s role in considering Estimates

Before the latest Supplementary Estimates can be approved, Estimates day debates will take place on the floor of the House of Commons. Any backbench member was able to bid for a topic for one of these debates, which should be linked to the spending, or an aspect of spending, contained in the Supplementary Estimate of a department or other body. The Backbench Business Committee considered bids for debates at a meeting on 1 March. A day of debates on the Supplementary Estimates is expected around 10 March 2021.

The Estimates which have been selected for debate on this occasion are:

• Department for Digital, Culture, Media and Sport: debate entitled “The spending of the Department for Digital, Culture, Media and Sport and support for the DCMS Sectors during the Covid-19 recovery”
• Cabinet Office: debate entitled “The spending of the Cabinet Office insofar as it relates to the 26th Conference of Parties to the UN Framework Convention on Climate Change (COP26)”

Following the debates, the House will be invited to agree motions on those Estimates selected for debate. Members may agree or reject these motions, or suggest amendments reducing expenditure. There is a further ‘roll up motion’ covering the remaining Estimates, which members may accept or reject. Under the ‘Crown prerogative’, only Government can propose spending, so amendments to increase spending are not permitted.

Once motions have been authorised, a Supply and Appropriation bill is presented. Unlike most bills there is no committee stage, and as with other financial legislation the House of Lords’ role is purely formal. On receiving Royal Assent, departments will be able to draw upon the agreed funds set out in the Act for the purposes Parliament has authorised, and advances from the Contingencies Fund will be repaid.

Spending on Covid-19

The Excel file downloadable from this page contains figures showing the additional funding proposed by the Government in Supply Estimates for 2020-21 to deal with Covid-19 and its consequences, including measures to support individuals and businesses, as analysed by the House of Commons Scrutiny Unit.

The Supplementary Estimates indicate total spending on Covid-19 in 2020-21 of £283 billion, of which £165 billion is new in these Estimates. Actual spending may turn out to be higher or lower, as other funding may also be redirected towards Covid-19 consequences, or actual Covid-19 spend may turn out to be lower than thought. There are also elements of estimation in terms of how much spend is attributable to Covid-19 (e.g. benefits) and how much is general spending. 

The labels given to individual items on the list are generally those provided by the Government, in the Estimates memoranda.