The Treasury manages public spending within two ‘control totals’ of about equal size:
- departmental expenditure limits (DELs) – mostly covering spending on public services, grants and administration (collectively termed ‘resource’ spending) and investment (‘capital’ spending). These are items that can be planned over extended periods.
- annually managed expenditure (AME) – categories of spending less amenable to multi-year planning, such as social security spending and debt interest.
Network Rail is classified as part of central government, but it is not a Ministerial department. Its spending is part of AME, although in our forecasts it is treated in much the same way as we would a departmental expenditure limit (DEL). This is consistent with how Network Rail’s spending is controlled by the Government: Network Rail must operate within the confines of a multi-year borrowing limit, in a similar way to how departmental spending is constrained by budgets that are set over extended periods; however, Network Rail has flexibility to move budgets between years and between current and capital spending.
Network Rail was reclassified as a public sector body by the Office for National Statistics (ONS) in September 2014. We have therefore been forecasting Network Rail spending since our December 2014 forecast. These cover spending on everyday running costs (current spending) as well as spending on largescale infrastructure projects (capital spending). Spending is recorded net of transfers and transactions within the public sector, as these do not affect total managed expenditure (as recorded in the National Accounts). Spending is also recorded as net of asset disposals (these however affect total managed expenditure, as asset sales act as a source of income, reducing Network Rail AME).
In our latest forecast, we expect total Network Rail spending in 2018-19 to total £6.3 billion (with £0.3 billion of current spending and £6.0 billion of capital spending). Both figures are ‘net’ of some items that are treated as negative spending in the National Accounts. On the current side, that includes Network Rail’s income from track access charges; on the capital side, it includes non-financial asset sales. Network Rail’s overall 2018-19 spending would represent 0.8 per cent of total public spending, and is equivalent to £220 per household and 0.3 per cent of national income.