Chapter 3- Fiscal Policy Flashcards
What is the budget?
The government is required by law to explain and publish details of its fiscal objectives and report upon the development in public finances
What is a welfare cap?
Requires spending on a specified set of welfare items not exceed, or be forecast to exceed, a certain cap
What is TME?
Total Managed Expenditure (TME), comprises expenditure by the entire public sector and is widely used as an overall measure of government expenditure
What are the 2 components of TME?
- Departmental Expenditure Limits (DELs)
- Annually Managed Expenditure (AME)
What are Departmental Expenditure Limits (DELs)?
Multi-year limits for spending that can be relatively easily controlled
What is Annually Managed Expenditure (AME)?
Not subject to multi-year limits; in some cases because the programmes are volatile and demand-led and thus more difficult to plan in advance e.g unemployment benefits
What are the 2 components of each department’s spending limit (DEL)?
Capital and current/resource spending
What is capital spending?
Can only be used for investment projects such as buildings
What is current/resource spending
Intended to cover day-to-day expenditure
What is the OBR?
Office for Budget Responsibility
What are 3 main functions of the OBR?
- Judges government performance against fiscal targets
- Scrutinises the Treasury’s costing of tax and welfare spending measures
- Assesses long-term sustainability of public finances
What is WGA?
Whole of Government Accounts
