The latest Clay Shaw Butler Money Matters column from the Carmarthenshire Herald


The latest Clay Shaw Butler Money Matters column from the Carmarthenshire Herald.
By Mark Jones, director of Carmarthen-based Clay Shaw Butler chartered accountants and business consultants.

Cue drum roll . . . we are getting ready for what followers of finance describe as a ‘Fiscal Event’.
Wednesday, November 25 is the day Chancellor of the Exchequer George Osborne gives his annual Autumn Statement to the nation.
It’s the Chancellor’s chance for a bit of pre-winter financial housekeeping.
This year, the Autumn Statement is being combined with what is described as the Spending Review.
The Spending Review sets out how the Government spends taxpayers’ money
The review is a process that determines how the Government will spend public money over the course of the current Parliament.
There is the ‘small matter’ (not really) of some £4 trillion of taxpayers’ money to be spent on government departments and public services like the NHS and schools.
In the Spending Review the Government decides budgets for each department, called departmental settlements.
The departmental settlements are the amount the government has allocated to each department to spend over the Parliament. Things that departmental budgets can be spent on include the running of the services that they oversee such as schools or hospital, and the everyday cost of resources such as staff.
The Autumn Statement is the Chancellor’s chance to update Government spending plans.
In normal years, the Government takes this opportunity to recalibrate twice a year - at the spring Budget and Autumn Statement. The Autumn Statement usually happens in November or December. The Budget usually happens around March, ahead of the new financial year.
In September, the Chancellor wrote to the Office for Budget Responsibility (OBR) asking them to publish a forecast on November 25 and making this a joint Spending Review and Autumn Statement.
There will be one speech, one document and one ‘Fiscal Event’.
The OBR was set up in 2010 to provide an independent analysis of the Government’s finances and produces forecasts for the next five years twice a year – at Budget and at Autumn Statement.
On the day of the Spending Review and Autumn Statement, the Chancellor will give a speech to the House of Commons
As on the day of Budget, the Chancellor will give a speech to MPs explaining how he’s spending the public’s money and present the Spending Review and Autumn Statement document to Parliament.
Here’s a short guide to some of the things he’ll talk about -
  • Public sector spending - This is also referred to as Government spending or public expenditure, refers to the money that the Government spends. It can be spent on a range of different things – from central and local government, to public sector pensions and welfare. 
  • Total government spending - The total amount that the Government spends is also known as Total Managed Expenditure (TME). This is split up into: 
departmental budgets – the amount that Government departments have been allocated to spend; this is known as Departmental Expenditure Limits, or DEL.
money spent in areas outside budgetary control – this is all spending that is not controlled by a Government department and includes welfare, pensions and things such as debt interest payments.; this known as Annually Managed Expenditure, or AME.
  • Departmental Expenditure Limits (DEL) - The Government budget that is allocated to and spent by Government departments is known as the Departmental Expenditure Limit, or DEL. This amount, and how it is split between government departments, is set at Spending Reviews. Things that departmental budgets can be spent on include the running of the services that they oversee such as schools or hospital, and the everyday cost of resources such as staff. The government controls DEL by deciding how much each department gets. 
  • Annually managed expenditure (AME) - Annually managed expenditure, or AME, is more difficult to explain or control as it is spent on programmes which are demand-led – such as welfare, tax credits or public sector pensions. It is spent on items that may be unpredictable or not easily controlled by departments, and are relatively large in comparison to other Government departments. 
  • Resource and capital spending - Money within both Departmental Expenditure Limits (DEL) and Annually Managed Expenditure (AME) can be further split into resource spending and capital spending. Resource spending is money that is spent on day to day resources and administration costs. Capital spending is money that is spent on investment and things that will create growth in the future. The breakdown of both DEL and AME in to resource and capital spending means that sometimes people may refer to ‘resource Departmental Expenditure Limit ‘resource DEL’ or ‘RDEL’, for example. The setting of resource and capital budgets within DEL and AME is also sometimes known as Resource Accounting and Budgeting, or RAB. 
  • The role of the Treasury in controlling public spending - HM Treasury has a constitutional role in controlling public expenditure. Government departments need Treasury consent before undertaking expenditure or committing to spending. All legislation that affects spending must have the support of the Treasury before it is introduced. Policy decisions with financial implications must be cleared with the Treasury before they gain approval by the Cabinet. 
  • Protected budgets - The Government has made a commitment to protect spending on the NHS, schools and overseas aid. This means that these departmental budgets will not be cut during this Government. 
Tax credits will be one issue the Chancellor George Osborne is expected to review in the Autumn Statement.
The team here at Clay Shaw Butler will keep you up to speed on the pertinent announcements. 
You can find out more about money matters on the Clay Shaw Butler website (under our news for business section) -
http://www.clayshawbutler.com/news/latest-news-for-business
We have a strong and experienced team with great local knowledge all geared-up to helping you get the very best from your finances – whether that is as an individual or as a business.
We stay ahead of the game by putting great store by continual professional development for our staff.
With Investors In People status at Clay Shaw Butler, we care passionately about making sure our staff have all the tools they need to serve you, our customers.

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