Select Committee on Northern Ireland Affairs Minutes of Evidence

Supplementary Memorandum submitted by the Northern Ireland Office

  At the oral session on 28 June, I undertook to respond in writing to the Committee on a number of items. These are as follows:

Q38:  "If as is widely rumoured the UK Government announces substantial additional funding for the railways will this automatically lead to an increase in the corresponding financial provision available to the Assembly of Northern Ireland?"

  Part of any changes announced for the railways in England and Wales can read across to Northern Ireland under the population-based Barnett formula. Increases in DETR's transport budget determined in the 2000 Spending Review lead to consequential increases for Northern Ireland through the normal workings of Barnett. The detailed arrangements are set out in the updated Statement of Funding Policy published on 18 July 2000.

  There are three factors used to determine changes in each devolved administration's spending allocation in a spending review:

    —  The quantity of the change in planned spending in departments of the UK Government.

    —  The extent to which the relevant UK departmental programme is comparable with the services carried out by each devolved administration.

    —  Each country's population as a proportion of England, England and Wales or GB as appropriate.


Q9:  "What classes of expenditure are included within departmental expenditure limits and in annually managed expenditure respectively? What criteria are employed to decide what falls into each category?"

  The Treasury sets firm three-year spending plans which can be controlled by departments. The annual total for each year constitutes the departmental expenditure limit—DEL. The Treasury reviews on an annual basis those spending items which are not subject to the same degree of control by departments (annually managed expenditure—AME). In essence therefore a DEL contains all the expenditure which a department can directly control even through some of it may be demand-led. It excludes large volatile elements which could not sensibly be planned for over a three-year period. AME will therefore consist of all other spending which cannot reasonably be subject to firm three-year limits.

  The Northern Ireland Office has only two items apart from resource budgeting consequentials which fall within AME—Police Pensions and European Peace and Reconciliation Receipts.

  Ministers have agreed that in the context of the 2000 Spending Review resource budgeting consequentials ie the big non-cash elements of resource budgets—depreciation, cost of capital charges, etc will be put into AME rather than DEL. This will allow departments to acquire some experience in forecasting such volatile items so that by the time the 2002 Spending Review they will be sufficiently experienced to allow these items to be transferred into DEL for future funding purposes.

19 July 2000

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