What are ‘Estimates’ and why are they important (even during an England World Cup match?)
While some took their seats for an evening of football on Tuesday (July 3), MPs sat for five votes in the Commons on the Estimates – or Government departments’ spending plans – right on kick-off.
The unpopular timing of the debate and the votes gave the Estimates rare media attention. Here we explain what they are and discuss Parliament’s role in approving them.
What are the Estimates?
The Estimates are documents setting out Government departments’ spending plans for the year. They show how much the Government plans to spend, and what on. Parliament must then approve the spending plans through the Estimates process.
‘Obscure’ they may be to some, but approving Estimates is a fundamental part of the role of Parliament going back many centuries. The Estimates process is the means by which the House of Commons can exert its authority over the spending of public money raised through taxation.
How much control can Parliament exercise over the Estimates?
Not a great deal. MPs are not allowed to increase Estimates, but may vote against a department’s Estimate or for a reduction; this is usually a notional reduction of £1,000.
The House of Commons signed away its right to initiate spending in 1706, to safeguard public revenue being frittered away by MPs exposed to pressure by their constituents. But, as the Lords cannot amend Money Bills, meaningful parliamentary scrutiny of the Estimates must take place within the House of Commons.
How often does Parliament use its powers over the Estimates?
Rarely. The last example of a Government defeat over Estimates took place almost a full century ago in 1921, when the Government was defeated over an increase in travelling expenses for Members. Prior to that, in 1919 MPs voted against alterations of the Chancellor’s second bathroom. Although these amendments may appear trivial, Parliament played a significant role in the interwar period in restraining Government spending and reducing Government debt.
Perhaps a key reason why Parliament hasn’t used its limited powers more regularly, is that voting against the Estimates is thought to be fatal to the Government. There is a widespread belief that a vote against the Estimates would see the Government fall – it is seen as a confidence issue. However, it has been argued by some experts, such as Dr. Paul Einzig in The Control of the Purse, Progress and Decline of Parliament’s Financial Control, that this belief “has no foundation in British constitutional practice”.
What happens in other countries?
Westminster-style parliaments often have less legislative control over public spending. Parliaments abroad exercise quite different levels of control over their budgets:
- The US is the most notable example where its legislature, the Congress, exercises a decisive influence over the budget.
- In Germany, the Bundestag makes hundreds of amendments to the executive budget proposal each year, which often serve to reduce spending.
- In Sweden, the Swedish Parliament fixes the aggregate level of spending and revenues and then focuses on the allocation of the approved spending total between and within ‘expenditure areas’, such as justice.
Does parliamentary oversight of budget setting lead to better outcomes?
Not necessarily. The US Congress is very active in the budget process, but the US still has a large fiscal deficit.
The UK Parliament spends more time scrutinising spending that has already happened, rather than spending plans. Experts point out that Parliament has good access to financial information and a strong focus on audit findings, enabled by the Public Accounts Committee and the National Audit Office.
However, sound parliamentary scrutiny of spending after it has occurred does not render scrutiny of spending plans meaningless. Parliamentarians themselves have criticised the lack of interest shown by the House of Commons to Estimates.
In 2017, the Chair of the Procedure Committee, Charles Walker OBE MP stated: “In the financial year 2016/17 the House authorised Government expenditure of £638.6 billion over three Estimates days, with barely a mention of the sums which were formally under consideration.” Following Tuesday’s debate, Kirsty Blackman MP pointed out the Estimates Day debates are “our only chance to vote on UK government spending. It’s not really obscure”.
Can we expect Parliament’s role to change?
This year some changes have been made to the way the Estimates are debated, giving MPs more influence. Back-bench MPs can now bid for Estimate Day debates with topics that focus on spending. Previously the topics for these debates – which precede MPs’ votes on the Estimates – were picked by Select Committees, which chose topics related to Select Committee reports, that were often only tangentially related to finances or the Estimates.
There are other signs of increasing interest in financial scrutiny in Parliament. The Public Administration and Constitutional Affairs Committee has made recommendations to the Treasury on improving financial accounts.
Allowing backbench Members to bid for Estimate Day debates may, in time, lead to greater engagement with the House of Commons on Estimates and make them less “obscure” for MPs.
Aruni Muthumala is a Senior Economist in the Scrutiny Unit.