Documents produced to show how bodies and departments have used the resources that were at their disposal.
A method of recording income and expenditure during an accounting period. Expenditure of income is accounted for in the year in which it is incurred/earned, not when the cash changes hands.
Within each Spending Programme Area, budgets are allocated to a number of sub-programmes known as Actions.
One of the four basic principles of financial scrutiny. Relates to the consideration of whether sufficient resources are available to meet spending plans, and whether these are appropriately balanced.
Descriptions of the specific purposes for which the Welsh Ministers are authorised by the Senedd to spend resources. Ambit descriptions and resource limits are contained with the Annual and Supplementary Budget Motions. Ambits correspond to MEGs (Main Expenditure Groups).
Expenditure, which is less predictable than departmental expenditure limit (DEL), covering spend which is generally demand-led and volatile. As such, the provision cannot reasonably be subject to multi-year limits, for example, the issue of student loans. HM Treasury reviews AME twice a year as part of its Budget and Pre-Budget Report processes. Funding for AME can only be allocated to the purpose for which it is assigned; therefore the Welsh Government has no discretion over its allocation
The act of a legislature authorising money to be paid from HM Treasury for a specified use.
The external auditor of the Welsh Government, Welsh Government Sponsored Bodies, NHS and local government bodies in Wales. The Auditor General for Wales is appointed in accordance with Public Audit (Wales) Act 2013.
A formula used to allocate a population-based share of changes in planned expenditure on comparable services by departments of the UK Government to the devolved governments of Scotland, Wales and Northern Ireland. The Barnett formula calculates the size of changes to the assigned budget rather than the total assigned budget. The Barnett formula was revised as part of the Fiscal Framework. From 2018-19, a Needs Based Factor was introduced into the Welsh Block grant calculations. This means that, if the consequentials for Wales are greater than 0 from 2018-19 going forward, this will be multiplied by 1.05 (105%). If the consequential is 0 or less, it will be left as is. When funding relative to England has converged to an agreed level this factor will be increased to 115%.
The reference position against which change can be measured. In terms of budgets, this usually refers to the previous financial year.
The block grant is the sum of money voted by the UK Parliament to the Secretary of State for the relevant devolved government. Devolved governments’ block grant funding is presented as Total Departmental Expenditure Limit (DEL) within HM Treasury’s budgeting framework. It is split between resource DEL excluding depreciation (RDEL) and capital DEL (CDEL), with a financial transactions ringfence within CDEL. Changes in block grant funding for the devolved governments are linked to changes in planned spending by UK Government departments. This link is generally achieved through the Barnett formula.
Historic mechanism in place before the Fiscal Framework was agreed for the Welsh Government to carry forward any underspends of the assigned budget from one financial year to the next, subject to the agreement of HM Treasury and up to an agreed cap of 0.6 per cent of resource DEL and 1.5 per cent of capital DEL. This system has been superseded by the Wales Reserve.
Within each Action, budgets are allocated to a number of sub-expenditure groups known as BELs. Tables showing budgets at BEL level are available in Welsh Government budgets.
A budget motion is the means by which the Senedd authorises the Welsh Ministers to spend resources up to a specific level for specified purposes and to draw cash up to a specific limit from the Welsh Consolidated Fund. A budget motion and resolution is the mechanism in the Government of Wales Act 2006 to ensure that expenditure from the Welsh Consolidated Fund is regular.
The annual budget cycle for the Welsh Government can be broken down into distinct stages: draft budget; annual budget motion; final budget; and supplementary budget motions. The 2026-2027 draft budget process was further broken down into two stages: a draft outline followed by a draft detailed budget.
As part of the new powers legislated for in the Wales Act 2014 and as set out in the Fiscal Framework, the Welsh Government can borrow up to £1 billion for capital projects with a limit of £150 million per annum.
Spending which is generally invested in fixed assets (buildings, equipment and land) intended to benefit future accounting periods, or spending that increases the capacity, economy, efficiency or lifespan of an existing fixed asset. In the budget, both departmental expenditure limits and annually managed expenditure have separate resource and capital limits.
An allowance of cash or resources to cover unforeseen circumstances.
Normally set over three or four years as part of the UK Government’s spending review process, this is the multi-year budget limit for the Welsh Government. Most of the DEL is unhypothecated and allows the Welsh Government full discretion over its spending priorities. Changes are determined by the Barnett formula. Some elements of DEL however, are hypothecated and can only be used for specified purposes.
A decrease in the value of assets due to the passage of time, wear and tear or obsolescence. In the Welsh Government’s budget, depreciation is part of the departmental expenditure limit, but is a non-fiscal resource item.
The Wales Act 2014 set up the process for the devolution of tax raising powers to Wales. Non-domestic rates were fully devolved from 1 April 2015, Landfill and Land Transaction Taxes from 1 April 2018 and income tax partly devolved from 1 April 2019. The Wales Act 2014 also gives the Senedd a general power to propose completely new taxes in devolved areas, however the Welsh Government would need to get permission of both Houses of Parliament and the Senedd before it could pass legislation for a new tax.
Expenditure which is legally required to be charged directly to the Welsh Consolidated Fund and therefore does not score against the budgets of the Welsh Government or any other body. Direct charges include the remuneration of the Presiding Officer and Auditor General for Wales.
From Autumn 2017, a new budget process, set out in Standing Orders and the Budget Protocol agreement between the then National Assembly for Wales and the Welsh Government, was implemented. This includes a two stage budget process comprising a high level outline budget followed by a detailed draft budget. The Finance Committee’s scrutiny of the draft budget concentrates on the Welsh Government’s high level strategic prioritisation, taxation, forecasting and borrowing. Other Senedd Committees scrutinise the Welsh Government’s detailed budget proposals prior to the Senedd’s debate and vote on the annual budget motion.
The process of minimising the cost of resources used by government. This is one of three elements essential for achieving value for money or ‘VFM’. See also effectiveness and efficiency.
The relationship between the intended and actual results of public spending. This is one of three elements essential for achieving value for money or ‘VFM’. See also economy and efficiency.
The relationship between the output from goods or services provided by government and the resources used to produce them. This is one of three elements essential for achieving value for money or ‘VFM’. See also economy and effectiveness.
See Budget exchange system (BES).
See budget process.
Financial Transactions Capital is part of the capital DEL settlement that can only be used for loans and equity investments to third parties. In the main, the funding must be repaid to HM Treasury.
Government policy on levels of spending and taxation. In the UK, responsibility for fiscal policy lies with HM Treasury.
The December 2016 agreement between the UK and Welsh Government which enabled the powers in the Wales Act 2014 to be implemented. In particular, it supported the devolution of stamp duty land tax and landfill tax, and the creation of Welsh rates of income tax. It also provided the Welsh Government with additional capital borrowing powers and a Wales Reserve to help manage its budget.
Within resource departmental expenditure limits, this expenditure is recorded on an accruals basis, a measure of transactions which will normally turn into cash flow soon; it takes account of differences between resources used and cash flows at the start and end of the financial year. For example, expenditure on utilities is incurred as the utility is used, although the actual cash payment might be made in arrears on a quarterly basis. Other examples include expenditure on pay, current procurement, resource grants and subsidies. Excludes non-fiscal resource spending.
Used as a measure of general inflation in the domestic economy. A series for the GDP deflator in index form is produced by HM Treasury from data provided by the Office for National Statistics. Forecasts are produced by the Office for Budgetary Responsibility and are usually updated around the time of major policy announcements, namely the Chancellor of the Exchequer’s Autumn Statement and the Budget.
Ring-fenced funding which must be spent on specified services or initiatives and cannot be used for other purposes.
Budgets arrived at by either decreasing or increasing last year’s budget, as opposed to zero-based budgeting which clears the decks and starts all over again. It is based on projected changes in operations and conditions. It tends to lead to budgetary increases over time, as it takes last year’s budget as a starting point for the coming year.
A measure of the changes in prices for goods and services over time. The GDP deflators are often used as a measure of general inflation for the public sector. Amounts shown in cash terms do not take account of inflation, whereas those expressed in real terms do.
Changes to spending plans between annual budget motions; generally authorised via supplementary budget motions.
Comparison of actual expenditure against spending plans for a given financial year, enabling the adjustment of allocations to reflect changed circumstances in that year.
The study of the economy as a whole, concentrating on economy-wide factors such as interest rates, inflation and unemployment. Also encompasses the study of economic growth and how governments use monetary policy and fiscal policy to moderate the harm caused by economic shocks, such as recessions. In the UK, HM Treasury holds overall responsibility for macroeconomic policy.
The Welsh Government DEL is divided into a number of Main Expenditure Groups. At the time of the previous Welsh Government’s Second Supplementary Budget 2025-26 (February 2026), there were eight MEGs: Health and Social Care; Housing and Local Government; Education; Transport; Climate Change and Rural Affairs; Economy, Energy and Planning; Social Justice; and Central Services and Administration.
The tool of macroeconomic policy operated by the Bank of England’s Monetary Policy Committee that seeks to achieve the UK Government’s inflation target by influencing aggregate demand through movements in the money supply and interest rates.
Within resource departmental expenditure limits, this is an accruals measure of transactions included in budgets to ensure they reflect the full economic cost of activities, even though there may be no direct link to cash flows in the relevant time period. Such transactions will either never give rise to an actual cash cost, or will only give rise to cash payments in the future. For example, the budget includes charges for depreciation and the impairment of student loans. Non-Fiscal Resource DEL is ring-fenced and cannot be used to fund fiscal resource DEL spending.
The end results from the delivery of goods or services to the public. The outcome should provide the rationale behind the supply. For example, children able to read, or patients recovered. Outcomes can be measured against set targets or objectives. However, it can be difficult to link the outcome directly to a specific input or output. For example, children may have learned to read at home rather than as a result of a specific education programme).
The quantity of goods or services provided in absolute quantities. For example, the number of students, surgeries or doses.
Expenditure actually incurred or estimates made on the basis of actual expenditure to date.
Part 5 of the Government of Wales Act 2006 deals with finance. It provides for the creation of a Welsh Consolidated Fund, to which payments from the Secretary of State out of monies voted by Parliament are made. Payments out of the Welsh Consolidated Fund to meet the cost of Welsh Government programmes need to be authorised by budget motions voted by the Senedd.
One of the four basic principles of financial scrutiny. Relates to the consideration of whether the division of resources between different portfolios, sectors, programmes and policy areas is appropriate, and accurately reflects the stated priorities and objectives of government.
The value of expenditure at a specified general price level; amounts adjusted for general price inflation as measured by the GDP deflator. Expression of amounts in real terms enables comparisons of spending across years at consistent prices.
Represents income received, for example from the sale or rental of capital assets. In the budget, receipts are shown as negative values.
The reserve is an unallocated amount within departmental expenditure limits , which is held centrally and not allocated to main expenditure groups. The reserve is generally allocated in-year via supplementary budget motions.
The Welsh Government’s budget is set on a resource basis derived from accruals information. Accruals information measures resources as they are consumed rather than when the cash is paid. For example, resource budgeting includes a charge for depreciation, a measure of the consumption or wearing out of capital assets.
Can also be termed revenue expenditure. This consists of day-to-day running costs including staff pay and the purchase of consumable goods and services. Loan charges and repaying money borrowed for capital expenditure are also part of revenue expenditure. In the budget, both departmental expenditure limits and annually managed expenditure have separate resource and capital limits. The resource budget is further divided into fiscal resource and non-fiscal resource budgets.
Part of the new powers legislated for in the Wales Act 2014. The Welsh Government can borrow up to £200m each year (within an overall £500m cap) if tax revenues are lower than forecast. Repayments must be within four years.
The Welsh Government’s budget is split into several categories for monitoring and control purposes. Within each main expenditure group, resources are allocated to SPAs according to the type of services they are intended to deliver. Below SPA level, expenditure is identified within actions.
Every two or three years, HM Treasury reviews expenditure for each UK Government department and sets budgets for the forthcoming years. Budgets for the Devolved Governments are derived from these budgets via the Barnett formula, which is the mechanism used by HM Treasury to calculate public expenditure allocated to Wales to reflect changes in spending levels allocated to public services in England.
The Spending Round is a UK Treasury-led process to allocate resources across all government departments, according to the Government’s priorities. It does not include a revision to tax forecasts.
A supplementary budget motion can be moved by a Welsh Minister at any time before, during or after the financial year to which it applies (i.e. any time after the annual budget motion has been passed). The purpose of the supplementary budget is to request authorisation for in-year changes to the annual budget motion.
The combined total of the two budget elements, Annually Managed Expenditure and Departmental Expenditure Limits.
Funding allocated without restriction on how it is to be spent, allowing complete discretion over its allocation.
One of the four basic principles of financial scrutiny. Relates to the consideration of the extent to which objectives are achieved in relation to costs. It is broadly about getting the best quality outcomes for the money spent. Value for money appraisals trace the cost of acquiring inputs (resources) through outputs to outcomes, and combine economy, efficiency and effectiveness concerns.
Created by the Government of Wales Act 2006, the grant from the Secretary of State for Wales (and other receipts not specifically directed elsewhere) is paid into the WCF. The Auditor General for Wales must grant approval to draw from the WCF and, for this to occur, there must be statutory authority to do so (i.e. authorisation from the Senedd via a budget motion). It is the account into which the money voted by the UK Parliament for use by the Welsh Government, the Senedd Commission, the Auditor General for Wales, and the Public Services Ombudsman for Wales is paid.
A body which has a role in the processes of government, but is not a government department or part of one. WGSBs operate at arm’s length from Welsh Ministers, and are the Welsh equivalent of nondepartmental public bodies in the UK. Examples of WGSBs include the Arts Council of Wales, Natural Resources Wales, and Medr.
The Wales Reserve has been in operation since April 2018 as a tool to enable the Welsh Government to manage its budget across years. The Welsh Government will be able to save surplus revenues from the devolved taxes and underspends on the DEL in the Reserve for use in future years. The Welsh Government can hold up to £350m in the Wales Reserve, with an annual drawdown limit of £125m for resource and £50m for capital, as set out in the Fiscal Framework. There is no annual limit for payments into the Wales Reserve.
A method of budgeting in which all expenditures must be justified from scratch and prioritised, as opposed to only explaining the amounts requested in excess of the previous period’s funding as in incremental budgeting.
