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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”.

Estimates typically take place twice per financial year:

  • April to June: Main Estimates (initial departmental spending plans)
  • February to March: Supplementary Estimates (revised final departmental spending plans)

What are Supplementary Estimates?

Supplementary Estimates show the changes to this financial year’s budgets which the Government is seeking for each department. They are 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 2023/24 in the 2021 Spending Review, known as Departmental Expenditure Limits; and less predictable and more demand led spending, known as Annually Managed Expenditure.

The 2023/24 Supplementary Estimates were published on 27 February 2024. The Home Office has provided a 2023-24 Home Office Supplementary Estimate (PDF) explaining the key drivers of spending changes since the Main Estimates.

As is usual, all these changes will be put to Parliament for approval in 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.

The Estimates process

The 2021 Spending Review settlement provided annual departmental expenditure limits, known as ‘DELs’, over a three-year period (from 2022-23 to 2024-25). Departments are expected to manage their annual budgets within the confines of their DEL.

Every year in May/June, departments submit their Main Estimate (spending plans for the year). Estimates are the means of obtaining authorisation from Parliament for these spending plans. They provide an overview of departmental expenditure plans to allow parliamentary scrutiny before being given legal effect through the Supply and Appropriation Act. The Main Estimate should not exceed the DEL set out in the Spending Review.

The Permanent Secretary as Accounting Officer is responsible for the content of the Main Estimate and that it complies with Treasury guidelines, including:

  • Ensuring that the content of Estimates is complete, accurate and consistent with parliamentary and Treasury requirements, and
  • Ensuring that Estimates are consistent with their best forecasts of requirements.

Since 2021, pressures on the asylum system have increased and the Home Office has been unable to stay within its expenditure limit, prompting requests for additional funding from the Reserves at the Supplementary Estimate (updated spending plans, usually released in February).

Treasury guidance on Reserve drawdowns

Departments are expected to manage their DEL budgets so as to stay within them. If pressures arise in one part of a DEL, departments should respond by:

  • managing the pressures down;
  • using their departmental unallocated provision; 
  • re-prioritising and making offsetting savings elsewhere in the budget;
  • deferring spending elsewhere in the budget; and
  • transferring provision from resource DEL to capital DEL (if the pressure is in capital DEL).

Exceptionally, a department may seek support from the Reserve.

The Reserve can only be used for genuinely unforeseen, unaffordable and unavoidable pressures, or certain special cases of expenditure that would otherwise be difficult to manage, as agreed with the Chief Secretary.

The drawdown of funding from the Reserve is subject to an assessment of need, realism and affordability at the time at which the funds are released. The final draw down of Reserve claims approved by the Chief Secretary will therefore be decided, and voted on, at Supplementary Estimates when such an assessment can most easily be made.

Missing asylum expenditure from the Main Estimate

In May 2023 the Home Office submitted its Main Estimate excluding an asylum budget that reflected the department’s ‘best forecast of requirements’. The Main Estimate memorandum explained that funding would be “finalised in-year and transferred at this year’s Supplementary Estimates”. The Home Affairs Committee points out that this means Parliament has limited ability to scrutinise planned asylum spending until near the end of the financial year after it has been spent.

On 28 June 2023 the Chair wrote to the Permanent Secretary concerned about this lack of transparency and issued a reminder that the Estimate should reflect the department’s best forecast for requirements. The reply received on 31 July 2023 (PDF) contained the following explanation:

The asylum system forecasts have moved very substantially since the Spending Review with higher volumes of arrivals. In previous years, HM Treasury has only considered additional Reserve funding for asylum costs at Supplementary Estimates. This is due to the fact that a significant share of asylum costs is driven by extremely volatile forecasts which are refined as the year goes on.

In February 2024 the Permanent Secretary wrote to the Chairs of the Home Affairs and Public Accounts committees (PDF) explaining that the £4 billion claim on the reserves in the Supplementary estimate was “within the forecast range of costs that we anticipated before the start of the financial year”.

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