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. For in-year spending, we consider the latest in-year data as well as historical trends and reserve pressures. The judgement on future years is based on historical trends, the level of reserves and pressures against them, the level and path of DEL spending, and macroeconomic factors such as private sector wage growth and construction supply indicators.
For more information on the Treasury’s DEL assumptions, see our forecast-in-depth page.