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What about leaving Westminster altogether?In 2012, officials from both Houses reviewed the options for the long-term upkeep of the Palace. They suggested four alternative approaches. One, moving Parliament to a new purpose-built building, was ruled out by the House of Commons Commission and the House Committee of the House of Lords. No further analysis of this option has therefore been undertaken. An Independent Options Appraisal (IOA) was then commissioned to consider alternative delivery options for the Programme. A consortium led by Deloitte Real Estate considered rolling, partial and full decant against three potential outcomes from the minimum required to more ambitious improvements. It undertook detailed evaluation of five shortlisted scenarios and provided a summary of the likely capital expenditure of each of those five scenarios (see table 1).
Table 1: Total capital expenditure of shortlisted scenarios in the IOA(£bn, based on a P50 confidence level, at Q2 2014 prices as reported in September 2014)
1. Rolling decant
2. Partial decant
3. Full decant
A. ‘do minimum’ – like-for-like replacement of existing systems
B. make some improvements
C. more ambitious improvements
A decision for ParliamentThe two Houses established the Joint Committee on the Palace of Westminster, chaired by the then Leaders of the two Houses, to review how best to approach the R&R Programme. In September 2016, it concluded that:
- “a full decant of the Palace of Westminster presents the best option under which to deliver this work”;
- Temporary accommodation in Richmond House (Department of Health) would be ideal for the House of Commons and the Queen Elizabeth II Conference Centre would provide the best possible accommodation for the House of Lords
- The delivery of R&R should be overseen by a statutory Sponsor Board; and
- An arm’s-length Delivery Authority should be given responsibility for delivering the R&R Programme.
Is a total decant the only way?Some Members have argued against a full decant, to ensure that the Palace remains the home of Parliament throughout the works. In February 2017, the Public Accounts Committee took evidence from the R&R Programme and officials from other large-scale infrastructure projects. The Committee concluded that a full decant was the most economic, efficient and effective choice. It noted that delays in taking decisions added to the Programme’s costs. However, the Treasury Committee has argued that the assumptions and conclusions of Deloitte and the Joint Committee should be thoroughly scrutinised. It recommended that the House should not commit to an option or timetable until it has done so.
Where can I find out more?A series of FAQs have been developed which provides further details on the proposed restoration of the Palace, including what the works could mean for Members and staff. Further information is also contained in the executive summary of the Joint Committee report and on the Palace of Westminster Restoration and Renewal Programme website.
So, how much do we spend on welfare?In 2016-17 we’ll spend, across the UK, around £218.3 billion on welfare, according to DWP’s Benefit Caseload and Expenditure tables. That’s equivalent to around 11% of GDP or 28% of total managed expenditure.
And that includes…?All UK expenditure on social security benefits and tax credits. That means things like disability benefits, ESA and incapacity benefits, Housing Benefit, Jobseeker’s Allowance, Universal Credit and the State Pension. It also covers Child and Working Tax Credits and Child Benefit. While the former are all administered by either the Department for Work and Pensions (in Great Britain) or the Department for Communities (in Northern Ireland), tax credits and Child Benefit are administered by Her Majesty’s Revenue and Customs (across the UK).
… so that’s mostly spending on the unemployed, right?No. In 2016-17 spending on Jobseeker’s Allowance (JSA”) and Income Support (working-age non-incapacity) will be around 2.2% of total welfare expenditure. Expenditure on Employment Support Allowance (ESA), for people assessed as being too disabled or ill to work – and other incapacity benefits will be around 6.8% of total spending. Other benefits make up a much larger proportion of welfare spending – take a look at the chart below. expenditure-chart
Oh. So which are the three largest sources of welfare spending?The State Pension is the largest single source of welfare spending, making up around 42% of total expenditure in 2016-17. The State Pension has been the largest single source of expenditure in every year since 1996-97 (and has always been so), when it comprised 36% of total spending. By 2020-21, the State Pension is forecast to make up around 45% of welfare spending. HMRC tax credits will make up around 13% of expenditure in 2016-17, equivalent to about £28.5 billion. Housing Benefit is the third largest source of expenditure, making up around 11% of total spending.
But hasn’t the Government been making cuts to welfare?Yes – at Budget 2010 the Government promised to “tackle welfare dependency and unaffordable spending”, while at the Summer Budget 2015 the Chancellor committed to saving £12 billion from the working-age welfare bill. These cuts are yet, however, to result in a sustained fall in total welfare expenditure. Expenditure did fall in 2013/14 by 1.2% compared to the previous year. In other years up to 2015-16 it continued to increase, however, though more slowly than would otherwise have been the case had changes not been made.
Ah. In that case, does welfare expenditure keep on rising?Welfare expenditure in Great Britain rose, in real terms compared to the previous year, in 31 of the 37 years between 1979-80 and 2015-16. It fell in six years: from 1987/88 to 1989/90, in 1996/97, 1997/98 and 2013/14. The OBR’s June 2015 Welfare Trends report looks at this more closely. Expenditure is forecast to fall, however, over the next four years: from £219.9 billion across the UK in 2015-16 (real terms 2016-17 prices) to £212.9 billion in 2019-20 (real terms 2016-17 prices). This is in part due to welfare changes announced by the Chancellor between June Budget 2010 and March Budget 2016. Assuming all savings announced by the Chancellor since June 2010 are realised, as initially forecast, in full, a total of around £36 billion (real terms 2016/17 prices) will be saved in 2019-20. That’s around 15% of what total expenditure might otherwise have been.
Total aid spendingThe International Development (Official Development Assistance Target) Act 2015 made it a legal requirement for the UK to spend at least 0.7% of gross national income on aid. The UK was already meeting this target prior to the Act, having done so for the first time in 2013. The government aims to hit, but not significantly exceed, the 0.7% level. In 2016, 0.7% of gross national income is forecast to be £13.4 billion (using OBR forecasts from July 2015 and gross national income estimates produced using current methods). Of course this figure is based on current forecasts, and forecasts change – we will have new forecasts published alongside the Spending Review, and we will not know what 0.7% of gross national income in 2016 actually has been until after that year ends.
In 2014, an estimated £11.8 billion was spent on aid.Defining aid spending: The commitment to spend 0.7% of gross national income on aid uses the international standard definition of aid, Overseas Development Assistance (ODA). Spending counts as aid under this definition essentially if it goes to certain countries and multilateral development organisations, and if it is “administered with the promotion of the economic development and welfare of developing countries as its main objective”. There are some additional parts to the definition – for example relating to limiting when military spending can count as aid. The OECD’s Is It ODA? (2008) provides a good overview.
Who allocates the aid? DFID and other departmentsThe 0.7% spending commitment relates to spending both by the Department for International Development (DFID) and by other government departments and official sources. In 2014, DFID accounted for 86% of aid spending – about £10.1 billion out of the total of £11.8 billion from official UK sources.
Budgets in 2015/16The government is looking for savings to help reduce the budget deficit, and it has been suggested that the aid budget could be used more to support the work of departments other than DFID. Such changes have already started to happen, for example since the 2013 Spending Review, the amount allocated to DFID in 2015/16 has changed: its resource DEL – the part of the budget that covers most of DFID’s non-capital spending – has fallen by more than a billion pounds, from £8.5 billion to £7.4 billion. This change is due to transfers to other government departments, largely to the new conflict, stability and security fund (CSSF) launched in April 2015, which replaces the DFID, FCO and MOD Conflict Pool. The new CSSF brings together the UK’s contribution to multilateral peacekeeping, security and defence activities, along with aid and non-aid programmes in countries at risk of instability. Much of the CSSF settlement was originally part of DFID’s budget but the majority has now been transferred to the budgets of other parts of government. In total, £823 million has been transferred from DFID in relation to the CSSF, mostly to the FCO (£739m). Beyond this, around £270 million of aid spending for 2015/16 was moved from DFID to other departments, for them to spend in line with the standard international definition of aid. The FCO has received almost half of this budget, and a third has gone to the Department for Business, Innovation and Skills, which is responsible for certain spending on research and science.
The Spending Review and budgets from 2016/17As part of the Spending Review, the Treasury has been running a competitive process across government to scrutinise aid spending across government and to ensure that aid spending represents “high value for money”. It has been reported that the FCO has been pressing for more money through this route, including to spend on promoting trade and investment in various emerging markets. The Department for Business, Innovation and Skills is said to have requested funding for science that could help people in developing countries, including the development and distribution of vaccines.
What will DFID do with its budgets in future?DFID are currently reviewing their aid spending, through bilateral and multilateral aid reviews. The bilateral aid review will help DFID target and allocate its funding by looking at factors such as the level and persistence of extreme poverty in each country and the ability of the governments to finance their own development needs. The multilateral aid review will look at providing funding through different multilateral organisations, exploring factors such as the value for money provided by potential partners and whether their objectives are aligned with those of the UK. The bilateral and multilateral aid reviews may not be completed by the time of the Spending Review – the multilateral aid review at least is due to be published in March 2016. We may however have more information in a Single Departmental Plan for DFID. Single Departmental Plans are a new set of publications, being developed alongside the Spending Review, which are expected to set out government priorities alongside the resources to be dedicated to them. The Conservative manifesto also gives some indications as to future activity – talking about immunisation, the development of new drugs, education, nutrition, access to clean water and sanitation, gender equality, jobs and growth, and responding to humanitarian crises. It also proposed that payment by results be expanded and that aid money to governments be clearly earmarked for specific purposes. Earlier this month, the Prime Minister announced that at least half of the Department for International Development’s budget will be spent on stabilising and supporting broken and fragile states. In 2013, 43% of UK aid was spent in fragile and conflict-affect states.
Update:Shortly after the original publication of this article, the Government published UK aid: tackling global challenges in the national interest (23 November 2015). This new strategy document explains that the aid budget will be restructured. Underpinning the strategy is the principle that the UK’s development spending “will meet our moral obligation to the world’s poorest and also support our national interest”.
There will be four strategic objectives for aid spending:
- Strengthening global peace, security and governance.
- Strengthening resilience and response to crises.
- Promoting global prosperity.
- Tackling extreme poverty and helping the world’s most vulnerable.
- an aid crisis reserve,
- an increase in the size of the conflict, stability and security fund, increased aid spending for the Syrian crisis and the related region,
- a new Global Challenges research fund to “ensure UK science takes a leading role in addressing the problems faced by developing countries”,
- a new “Ross Fund” to provide funding to tackle infectious diseases, including those with potential to become epidemics,
- a new Prosperity Fund, led by the National Security Council, to help improve the business climate in developing countries, along with the operation of markets, energy and financial sector reform, and the ability of governments to tackle corruption.
Sources and further information:
- National Audit Office, Managing the Official Development Assistance target (January 2015)
- Independent Commission for Aid Impact, UK Aid Spent by Departments Other Than DFID (preliminary investigation, February 2015)
- Department for International Development, Provisional UK ODA as a proportion of GNI 2014 (April 2015)
- Conservative Party Manifesto 2015 (April 2015)
- Department for International Development, Main Estimate 2015/16: Memorandum to the International Development Committee (published July 2015)
- HM Treasury, A country that lives within its means: Spending Review 2015 (July 2015)
- John Manzoni, Clarifying our priorities – Single Departmental Plans (July 2015)
- Justine Greening: UK aid – why it’s the right thing and smart thing to do for Britain (15 October 2015)
- Lord Mayor’s Banquet 2015: Prime Minister’s speech (16 November 2015)
- Financial Times, Cash-strapped UK departments circle aid budget ahead of cuts (20 November 2015)
- HM Treasury and DFID, UK aid: tackling global challenges in the national interest (23 November 2015)
- Strategic Defence and Security Review (October 2010), PQ 224151 23 February 2015, PQ 12448 26 October 2015, HC Deb 10 Sep 2015 cc640-2