» Wednesday, June 24, 2009

Capital Spending

In response to the question of whether the Government was now admitting that capital spending would fall, the PMS said he could go through this in great detail if people wanted. There had been a change in the profile of public spending for the years in the run-up to the Olympics. From 2008/09 to 2011/12, expenditure was brought forward in the PBR and then again in the Budget.

If people looked at the total amount of capital investment in 2008/09 up to 2011/12, it was actually higher in the Budget 2009 than it was in the Budget 2008.

So we had changed the profile between Budgets but we had also increased the amount. Spending had been brought forward from later years into earlier years so that it was higher in 2008/09 than it was and higher in 2009/10. As a consequence it was lower in 2010/11 and lower in 2011/12. Taking those four years as a whole, the total amount of investment as set out in the Budget 2009 was higher than the figures we had set out at the time of the Budget 2008.

Put that spending would not rise year-on-year, the PMS said that the Prime Minister had explained in the House of Commons that in the Budget 2008 it was rising year-on-year and then in the PBR and the Budget, we had changed the profile of the spending and brought some forward. This meant that there was more spending in 2008/09 and 2009/10 and less in 2010/11 and 2011/12.

Clearly there was an Olympic effect as well; the Olympic-related spend came during the construction phase of the Olympics and not in the year of the Olympics. There had been a change in the profile of spending and spending had been brought forward into 2008/09 and 2009/10 because that was when we needed extra spending due to the recession.

Put that when responding to David Cameron s question of whether he stood by what he had said in PMQs last week, the Prime Minister had said yes and what did that mean, the PMS replied that he thought it was very clear what the Prime Minister had meant by answering yes.

Put that the amount of that spend did not offset the reduction in the capital expense going forward, the PMS said that it did to the years up to the Olympics. Put that the opposition were looking at spend from the year 2009/10 onwards, whereas the Government was looking at spend from the year 2008/09 onwards and that was where the difference came from, the PMS said we were talking about decisions taken in the PBR 2008 that had an impact on the financial year 2008/09.

Over the period of the Spending Review, plus the first year after the Spending Review, which took us up to the Olympics, there was previously a rising profile; there was no longer a rising profile due to the fact that spending had been brought forward from 2010/11 and 2011/12 into 2008/09 and 2009/10.

Asked what no longer having a rising profile meant, the PMS said that there was a change in the profile of spending and the figures were clearly set out in the Red Book.

original source.

Briefing took place at 16:45 | Search for related news

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