When setting out its plans for public spending, the Government sets out cash ceilings in the form of Resource and Capital Departmental Expenditure Limits. The former (RDEL) largely comprises central government spending on public services and administration (mostly public sector pay, procurement and grants to local government); the latter (CDEL) largely comprises central government spending on capital investment and capital grants to local authorities and private sector organisations. RDELs and CDELs are specified department by department for the years covered by Spending Reviews and as aggregate numbers for subsequent years. For the purposes of our forecast, we need to predict how much money will be spent relative to these limits. We do this before reaching a judgement on the degree to which the aggregate RDELs and CDELs in each year will be under or overspent, drawing information from the Treasury, departmental forecasts and past performance. We do not produce a bottom-up forecast of DEL spending, department by department, and we do not scrutinise announcement of individual spending increases or cuts within the DEL totals.
For more information on the Treasury’s DEL assumptions, see Spending assumptions 2011- 2015.