Skip to main content

Public Expenditure

Volume 706: debated on Tuesday 13 January 2009


Asked by

To ask Her Majesty's Government how they define “spending” and “investment” in relation to public expenditure. [HL473]

The definitions of PSCE and PSNI are available from HMT's PESA publication. The definitions as included in PESA are:

Public sector current expenditure:

is the sum of the current expenditure of general government and certain distributive transactions (interest and rent) paid by public corporations to the private sector and abroad;

does not include expenditure incurred in producing goods and services for sale where undertaken by public corporations—rather the surplus of sale receipts over operating costs for public corporations is scored as a public sector receipt and does not affect the expenditure measure;

is net of certain receipts such as: grants within the public sector; interest flows within the public sector; receipts of contributions to public sector occupational pension schemes; receipts of grants from abroad including the EC abatement; and

includes non-trading capital consumption. This is the depreciation of the fixed assets of public bodies within general government. It excludes depreciation on assets used to produce goods and services for sale including the assets of public corporations and local authority housing.

Public sector net investment is all public sector capital expenditure less an amount representing all public sector depreciation. Broadly, the amount of capital expenditure that equals the depreciation charge could be seen as keeping the stock of assets stable. Net investment therefore represents the increase in the asset base after allowing for depreciation.