In this forecast, there have been two switches between RDEL and AME that apply from 2015-16 onwards. Within AME, these changes reduce welfare spending and increase local authorities’ self-financed current spending (current LASFE), giving a small increase overall that is mirrored by a small net reduction in RDEL. Specifically, as shown in Table A:
- war pensions will be will be switched out of Ministry of Defence AME into Ministry of Defence RDEL; and
- business rates in Wales will be switched out of the Welsh Assembly DEL into (non-departmental) current LASFE. In effect, they will be treated as finance raised and spent in Wales rather than as central government funding distributed from Whitehall.
Table C: DEL and AME switches for war pensions and Welsh business rates
DEL plans for 2015-16 have also been updated to reflect the DEL spending financed by Scottish taxes and borrowing in the DELs for Scotland. Specifically:
- within PSCE in RDEL, RDEL has been increased by £0.5 billion, for the spending financed by the Scottish devolved taxes for land and building transactions and landfill; and
- this is offset within PSCE in RDEL by a reduction in the Scottish block grant of £0.5 billion.
PSGI in CDEL already includes £0.3 billion of capital spending that is expected to be financed by Scottish borrowing. This was included in CDEL plans in PESA 2014.