What are Estimates? What are the Government's spending plans?

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What are Estimates?

Estimates are the Government's spending plans which are presented to Parliament for approval every year. Government requests to Parliament for funds for departments are made in at least two and sometimes as many as four stages throughout the year in a process known as the 'Estimates Cycle'.

Consideration of Estimates happens at least once a year (between April and July, with respect to the Main Estimates), but more usually twice (between February-March with respect to the Supplementary Estimates). Select Committees can scrutinise each departmental Estimate, and MPs collectively debate and scrutinise them on Estimates days.

Once the Estimates have been debated, the House of Commons must consider a Supply motion. If the House approves the motion, then the Supply Resolution that results paves the way for a Supply and Appropriation Bill. Once this Bill is passed, it legally authorises the expenditure as set out in the Estimates.

Each Government department produces its own annual Estimate, and HM Treasury compiles and publishes them together in a single Estimates report for presentation to Parliament.

Treasury rules define the spending categories contained in the Estimates. Each departmental Estimate is made up of three key parts.

The ambit

This is the high-level description of what the money will be spent on in each department. If a department spends money outside the scope of the ‘ambit’ approved by Parliament, then that spending is unauthorised and therefore illegal. In such circumstances a department will require a Statement of Excess to provide retrospective approval for the spending.

Departmental expenditure limits (DELs)

These cover net spending, subject to the limits set out in the Spending Review process, in areas of activity that departments can generally forecast and over which they are therefore expected to exercise control. In each annual Estimate, the DELs are divided into two sub-categories:

Resource DEL, or current ‘day-to-day' spending: this includes, for example, costs for staff, purchasing goods and services, rents, maintenance and other administrative costs, depreciation and the sale of assets.
Capital DEL, or investment spending: this includes capital grants, loans, and the purchase, disposal or improvement of major assets.

Annually managed expenditure (AME)

This covers net spending in areas that are less predictable and therefore more difficult for departments to forecast and control:

Resource AME: this includes benefits, state pensions, and other welfare costs, as well as provision for liabilities.
Capital AME: this includes areas such as student loans.
Generally, departments cannot switch funds from DEL to AME, or from resource to capital spending categories, once the Estimate has been approved. However, within each category, a breakdown of proposed spending is provided, and this does not bind the government. Here, the government can vire money from one heading area to another, provided that neither the ambit nor the overall spending limit is breached.

In this collection

What are Estimates?

Rishi Sunak at the Despatch Box. ©UK Parliament

What is the Estimates cycle?

Select Committee session. ©UK Parliament

How does Parliament debate Government spending plans?

Suella Braverman at the Despatch Box. ©UK Parliament

How does Parliament approve Government spending plans?

House of Commons in 1833. ©National Gallery

Why does Parliament approve Government spending?

What is a Money Bill?

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