Annex 1: Reasons for differences between
departmental budgets, Estimates and accounts |
(A) Boundary issues: income and expenditure
1. "Non-voted expenditure": some expenditure
which appears in budgets and accounts is not in Estimates because
it has standing legislative authorisation and therefore does not
need annual authorisation by Parliament (e.g. judges' salaries
and expenditure from funds such as the National Insurance Fund).
2. Different treatment of income in budgets, Estimates
and accounts: budgets and accounts are generally net of income
(though not necessarily in exactly the same way), whereas retention
of that income requires parliamentary authority (as "appropriations-in-aid")
and Estimates therefore limit both net expenditure and income
and thereby also gross income.
3. "Departmental Unallocated Provision":
sums not yet allocated to a specific purpose are included in budgets
but cannot be included in Estimates until a purpose is determined,
when authorisation is requested through a Supplementary Estimate.
4. "Prior-period adjustments": if a change
in accounting policy or an error affects the Department's accounts
for an earlier period, Parliament authorises the necessary changes
through the Estimate for the current year, whereas the budgets
and accounts are simply corrected for the year concerned.
(B) Boundary issues: different treatment of
5. NDPBs and other bodies within central government:
NDPBs' expenditure is included in the parent Departments' budgets,
but only the grant-in-aid paid to them appears in Estimates and
accounts. The same applies to some other bodies, such as the BBC.
6. Aspects of the finance of some public corporations:
capital grants to and equity withdrawals from them appear as capital
expenditure in budgets but as resource expenditure in accounts;
and their market borrowings are in budgets but not in Estimates
7. NHS Trusts: the revenue and capital expenditure
of some types of Trust are in budgets but not in Estimates or
8. Devolved administrations: the cash block grants
to the devolved administrations are not in the budgets of the
relevant UK Departments (the Ministry of Justice and the Northern
Ireland Office), but are in their Estimates and accounts.
(C) Policy issues
9. Capital grants: these are treated as resource
expenditure in Estimates and accounts, but as capital expenditure
in budgets in order to comply with National Accounts definitions
which focus on the (capital) end-purpose of the grants.
10. "Supported capital expenditure": this
support for local authorities is to cover the authorities' borrowing
costs, and is in central government budgets but not in Estimates
11. "Near-cash" and "non-cash"
items: in budgets, the resource budget DEL is split into near-cash
items, such administration costs and programme costs, and non-cash
items, such as depreciation and cost of capital charges, because
near-cash items count towards the fiscal rules. However, the distinction
is not recognised in Estimates or accounts. This different treatment
means that certain financial transactions are dealt with differently
under each framework, including provisions (e.g. pension liabilities),
depreciation, cost of capital charges and impairments.