§ Mrs. LawrenceTo ask the Chancellor of the Exchequer when he plans to proceed with the introduction of resource budgeting. [104121]
§ Mr. Andrew SmithThe next spending review, in 2000, will be conducted on a resource basis. This will fulfil the Government's commitment in the Code for Fiscal Stability to adopt, as soon as reasonably practicable, a resource accounting and budgeting approach for planning and accounting for the costs of resources consumed by government.
The decision to proceed with resource budgeting follows a successful "dry run" of the new procedures carried out by all Departments during the course of 1999. This confirmed that the procedures were workable. However, it also highlighted a transitional issue in relation to Departments' ability to forecast the large new non-cash elements of resource budgets (depreciation, capital charges and provisions) for three years ahead.
To allow time for a track record in forecasting, monitoring and controlling these items to be established, resource budgeting will therefore be introduced in two stages. In the first stage, in the plans drawn up in the 2000 spending review, the big non-cash elements of resource budgets will be part of Annually Managed Expenditure rather than Departmental Expenditure Limits. The intention is that, in the light of experience, these items will be moved into Departmental Expenditure Limits following the 2002 spending review.
Details of the new arrangements are being placed in the Libraries of the House.