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Public Sector Spending
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Public Sector Spending
• The Public Sector – that part of business activity that is organised and controlled by the government or its agencies on behalf of the nation as a whole
• The public sector comprises:
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Public Sector• Central Government
– Parliament– Government Departments – education, defence, etc.– Devolved Governments– Other public funds - Foreign exchange reserves, Quangos
• Quasi Autonomous Non-Governmental Organisations now referred to as Non Departmental Public Bodies, e.g. Equal Opportunities Commission, Advertising Standards Authority, Competition Commission, English Heritage
• Local Government • Public Corporations
– Post Office– BBC
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Public Sector Spending
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Public Sector Spending
Data Source: HM Treasury Public Sector Finances Databank
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Public Sector Spending
• Total Managed Expenditure for 2003 – 2004:• £454.6 billion!
Most items of defence spending do not come cheap.
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Total Managed Expenditure (TME)
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Total Managed Expenditure
• The Government’s preferred measure of public spending
• Derived from National Accounts• Meets international guidelines
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Components of TME• Current Expenditure: Spending on day-to -day
government activities
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Components of TME
• Capital Expenditure:
• Spending on buildings, machinery, vehicles, etc.
• Fixed Capital Formation– Tangible assets – buildings and so on– Intangible assets – for example, software– Capital grants
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Financial Transactions
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Components of TME
• Financial Transactions:• Financial transactions carried out
by the government – e.g. buying shares, lending money to business and other countries, etc.