United Kingdom

Description

The Cabinet plays a powerful role in determining the shape of the annual budget. The role of the House of Commons in the preparation of the budget is limited and there is no separate budget committee, which is highly unusual in the OECD. Instead, there is one select committee for each government department “to examine expenditure, administration and policy of principle government departments”. The public accounts committee focuses on ex post budget outcomes, not ex ante budget projections.

In contrast to many other countries, the main estimates are generally presented to Parliament after the beginning of the fiscal year. The House of Commons routinely authorises spending for the first few months of the upcoming financial year 4-5 months before the start of the new financial year. The House of Commons may only reduce a particular item of expenditure. The approved budget is, in practice, extremely close to the main estimates presented by the government in the budget speech.

Timing

• The timetable for the preparation of revenue and expenditure estimates, and the fiscal strategy is at the discretion of the Cabinet and HM Treasury.
• Cabinet approves the budget shortly before the Chancellor’s budget day speech in March/April.
• The Chancellor of the Exchequer gives his/her budget speech and outlines the government’s fiscal policy strategy to Parliament. Tax measures may take effect on the night of the budget speech.
• The fiscal year starts April 1
• A Finance Bill is submitted to the House of Commons. The bill is scrutinised in committee, where both the government and the opposition parties may propose amendments and new clauses.
• The expenditure of individual departments is scrutinised by the relevant departmental select committee, but this is not mandatory.
• The Liaison Committee of the House of Commons decides on which select committee reports should be discussed in plenary session.
• The House of Commons adopts a resolution approving the main estimates and any revised estimates.
• The debate on expenditure estimates in the House of Commons is to be concluded by August 5.
• The draft Appropriation Act is formally approved.
• The Finance Bill passes to the House of Lords for debate only.

Availability of forward looking information

• Next year’s overall budget for development co-operation is available usually in March, when the Chancellor of the Exchequer presents the Budget.
• Forward information of the budget framework over the medium term is contained in the Spending Reviews. The 2010 Comprehensive Spending Review covers departmental allocations for financial years up to 2014-15.

Forward information on planned annual expenditure in the UK partner countries is published in DFID’s Annual  Departmental Report.

Principal development agency – DFID

The Department for International Development (DFID) is the principal development agency of the UK government, responsible for managing Britain’s overseas aid programme. The department is headquartered in London and East Kilbride, Scotland.  The Secretary of State for International Development is a full member of the UK cabinet.

The legal basis for DFID’s work is the International Development Act 2002. The act allows the Secretary of State for International Development to provide aid for sustainable development and welfare where the aid is likely to contribute to reducing poverty. Under the act, British aid cannot be tied to British goods and services.

DFID’s budget supplies the vast majority of the UK’s ODA, both bilateral and multilateral.  The latest version of the UK’s Statistics on International Development (SID) document stated that DFIF supplied more than 85% of the UK’s overall spending on development.

Foreign & Commonwealth Office (FCO)

The main UK Government department, besides DFID, that is involved in ODA-related activities is the Foreign & Commonwealth Office (FCO).  Bilateral aid from the FCO includes aid disbursed through the activities of the British Council, the Chevening Scholarships programme and the Conflict Pool (the Conflict Pool is jointly funded by DFID, the FCO and the Ministry of defence and supports a range of ODA-eligible conflict prevention programmes).

The FCO is also responsible for the core contributions to a number of UN bodies.  Many of these contributions are, partially or wholly, allowable as multilateral ODA.

Commonwealth Development Corporation (CDC)

The CDC is a onganisation, set up by the UK government, which administers the UK’s ODA-eligible equity investments.  Its aim is to support poverty reduction through investment in businesses, principally in Sub-Saharan Africa and South Asia.

CDC provides a variable contribution to the UK’s bilateral ODA.  It accounted for 8% of UK bilateral ODA in 2009 and 10% in 2008.  However, in 2007, CDC actually reported a negative amount of ODA disbursements, due to the fact that the amount of investments realised in that year exceeded new investments made.

Department of Energy and Climate Change (DECC)

The budget of the DECC contributed 3% of the UK’s bialteral ODA in 2009.  This was almost entirely due to its contribution to the Environmental Transformation Fund (this has now been superceded by the International Climate Fund, which will also be included in the UK’s ODA).

Other Government Departments

Other UK departments contribute small amounts to the UK’s reported ODA, typically in the form of contributions to multilateral bodies who are on the DAC’s list of ODA-eligible multilateral recipients.  The departments concerned are:

• The Department of Business Innovation and Skills (BIS)
• The Department of Work and Pensions (DWP)
• The Department for Environment Food & Rural Affairs (DEFRA)

Additionally the UK Treasury reports the amount of tax foregone as a result of ‘gift aid’ donations to UK development charities as bilateral ODA.  This totalled $68million in 2009.

HM Treasury’s main budget site, with links to the complete set of budget documents can be found here: http://www.hm-treasury.gov.uk/2011budget.htm

Departmental budget estimates and ODA projections to financial year 2014-15 are contained in the documentation of the 2010 Comprehensive Spending Review.  Links the these documents can be found here: http://www.hm-treasury.gov.uk/spend_index.htm

Indicative budgets for specific recipient countries up to financial year 2014-15 are contained in the Technical Report which accompanied the UK’s 2011 Bilateral Aid Review.  A link to this document can be found here: http://www.dfid.gov.uk/Media-Room/News-Stories/2011/The-future-of-UK-aid/

Detailed historic information on UK ODA spending is in the latest version of DFID’s annual Statistics on International Development.  A link to this document can be found here: http://www.dfid.gov.uk/About-DFID/Finance-and-performance/Aid-Statistics/Statistic-on-International-Development-2010/