2.10 Capital spending in any year is subject to separate spending limits agreed with the Treasury. Departmental Expenditure Limits incorporate capital grants from departments to devolved bodies and additions to departments' own fixed assets. Capital grants are included in our analysis of programme spending (Figures 7 and 8). Figure 9 shows the change in capital additions in the 17 main departments. The number of capital projects managed by departments, and their average cost, is highly variable from year to year.
However, using the same price and growth assumption we used to evaluate programme and administrative cost reductions suggests that capital spending has reduced by £1.6 billion (10 per cent) in real terms.
2.11 Departmental reductions in capital spending in 2010-11 reflect:
● cancellation, or curtailment and delay of some major programmes with heavy IT requirements such as identity cards;
● the moratoria on IT spending and controls on major projects which require Cabinet Office approval for large new spending; and
● the negotiations with major cross-government suppliers (Figure 4).
2.12 However, 2009‑10, which we have used as our baseline, includes capital spending brought forward to offset the impact of the credit crisis which was expected to reverse in 2010-11 and beyond. This has contributed to the Department for Transport reducing its capital spending on major transport projects by £357 million (18 per cent) in real terms.
| Figure 9 Real‑terms reductions in capital spending by central government departments 2009‑10 to 2010‑11 | ||
| Area IT | Reduction since 2009-10 (£m) (%) 537 35 | |
| Land and buildings | 392 | 18 |
| Transport projects | 357 | 18 |
| Military equipment | ‑184 | ‑3 |
| Other capital spending | 544 | 12 |
| Total reduction | 1,646 | 10 |
| Source: National Audit Office analysis of departmental capital spending | ||
Post publication this page was found to contain an error which has been corrected (Please find Published Correction Slip)
2.13 Changes in spending on land and buildings may be sustainable where they reflect reductions in government's use of property. The fall of 35 per cent in IT spend is partly the result of decisions to permanently halt or reduce spending on specific projects. However, it is unlikely that IT capital spending will remain at this lower level in total if investment in IT is necessary to allow departments to deliver more efficient services while reducing staff and to support business changes such as delivering services online.