HISTORIC PRESS RELEASE : Major Reform of Public Spending Rules [June 1998]

The press release issued by HM Treasury on 11 June 1998.

Major changes to tighten the control and to improve the long term planning of public spending were announced today by the Chancellor, Gordon Brown, in the Economic and Fiscal Strategy Report. The Chancellor announced that:

Departments will be given distinct current and capital budgets and will be expected to manage them separately. This means that investment plans will no longer be squeezed out by pressure of current spending; spending plans in total will now be based on all spending across the public sector, to be known as Total Managed Expenditure (TME); the Government will end the practice of the annual Public Expenditure round; instead departments will be set firm multi-year spending limits for 1999-2000, 2000-01 and 2001-02 when the outcome of the Comprehensive Spending Review (CSR) is announced;

these departmental limits will be drawn together into a new total, the Departmental Expenditure Limits (DEL); and
departments will have much extended powers to carry budgets over from year to year; resources will be allocated and monitored on the basis of agreed outcomes and departments will be set new quality standards; firm multi-year limits are not appropriate for the large demand-led programmes, which will be brought together in Annually Managed Expenditure (AME);

AME will be subject to annual scrutiny as part of the Budget process and taken into account when the Government sets its plans for TME and DEL.