Regulatory guidance – Statements about public funding

6 April 2020
Last updated:
11 April 2022

Top 5 considerations when viewing public funding announcements

The statement is clear on how the policy initiative or change being announced is funded. It is clear where the figures used have come from and how the amount of funding has been determined.

It is not always straightforward to include all of the necessary detail in public funding announcements. This is particularly the case in informal interviews, where the questions are not pre-prepared, and social media posts. It is vital for transparency, however, that statements are sourced clearly and can point to any supporting information which details how the figures have been determined and any assumptions that underpin them. Whilst in some cases statistics producers may wish to provide technical background for expert users, it is helpful when a summary of the methods used can be provided in plain English for all users.

The announcement is clear as to whether any increase in funding relates to new money or the reallocation of existing resources, including where increases in funding cover spending previously announced.

Statements should be clear and transparent as to whether a public service or organisation is receiving new money that it did not have access to previously (in any capacity) or whether the money has been reallocated from existing resources (e.g. through reprioritising spending or removing barriers to spending). Where increases in funding include amounts that have already been announced, this should be made clear in the statement and should be reflected in any supporting statements about the future trend of the funding commitment.

The complexity of government funding structures can lead to confusion when money is reallocated from both central and local funding sources. This is particularly the case when components of a budget are set to increase by more than the relative increase in the overall budget. Statements should clearly present who has responsibility for the funding in question and specify where any additional funding is sourced from. If money is allocated from the central government’s budget but localised public services have the discretion to manage their budgets, this should be made clear in any supporting information.

The figures referenced in the statement are provided with appropriate context which includes (but is not limited to): changes to the target population, changes to the remit of the service/organisation or governance of funding arrangements which may present barriers to spending. The statement or supporting material provides information on the funding structures in place that are relevant to the announcement.

It is possible for overall funding to increase but the money seen by individuals receiving the service to fall. This may be a result of the target population size increasing (e.g. more pupils in schools or more patients in emergency services) or a change to the remit of the service receiving the funding and therefore the money is stretched more thinly across more services or more people. Public funding statements should provide context as to whether additional funding or reallocation of funding translates into a real increase for individuals who are receiving the service or whether the funding is expected to cover a wider remit for a service.

The figures used in the statement are clearly labelled as being in cash terms or real terms. The baseline comparator is relevant and consistent and does not mask longer-term trends.

It is important to know whether a public funding announcement takes account of inflation. Statements made in cash terms (i.e. nominal terms) will reflect a change in funding based on the prices as at the time periods referenced. This will tend to show a greater change in funding than statements made in real terms (i.e. constant prices) which account for inflation and therefore account for the change in prices over time.

It is generally more helpful to make public funding statements in real terms to understand the impact on funding levels felt by public services on the ground. Some key terms you may want to familiarise yourself with are:

  • Real terms increase – where inflation adjusted funding is increasing
  • Real terms protection – where funding is stable once inflation is taken into account
  • Cash freeze/cash protection – where budgets are stable in terms of actual numbers but which represent a reduction once inflation is taken into account

It may also be worth checking which deflator (the value used to transform a figure from cash terms into real terms) has been used for statements presented in real terms. For public funding announcements in the Budget, this will likely be the GDP deflator as it is used for consistency across broad areas of government spending. However, there may be times in other public funding announcements when this isn’t the case and an alternative is used which better reflects the changing costs for specific sectors or services.

It is normal for funding announcements to refer to previous years as they are often committing to increasing or decreasing spending from a previous level in time. It is therefore important to understand what the baseline comparator is and whether it is an appropriate comparator to use (e.g. is it year-on-year comparison or the change of funding since the last Budget announcement). The choice of baseline can change the sentiment of the statement and you should consider whether there has been any selectivity of data points to present a more positive announcement.

It may be useful to consider the following context when looking at the choice of baseline:

  • Was the baseline period during austerity? Were there any other funding restrictions in place at this time?
  • Was the same political party in power at the time of the baseline period?
  • Were any funding arrangements devolved at the time which are not any more or vice versa?

Public funding statements should not select a baseline comparator which masks a longer-term trend. Comparisons should be consistent where possible to avoid selectivity of data points which could be liable to mislead.

The period which the funding commitment covers is clear and any cumulative figures can be broken down to understand year on year changes. The statement is clear whether the commitment is ongoing or relates only to a specific time period.

It is common for public funding announcements to reflect spending for a number of years cumulatively, despite commitments being made on an annual basis. Whilst a cumulative figure can provide helpful context for the overall investment into a public service, it can lead to confusion as to how much of an increase will be seen in the interim periods covered by the overall allocation.

Statements should be clear and transparent as to whether cumulative increases will be distributed equally over the years which the period covers or whether the changes to funding are variable year on year over this time period. When referring to annual spending, statements should use the appropriate wording to distinguish between funding commitments “per year” and “every year” to avoid implying that the increase will happen every year if the commitment is not ongoing.

It is also helpful to understand whether any commitment is ongoing or relates only to a specific time period. There are instances where cumulative funding announcements make more sense than referring to ongoing investment in a service, for example capital projects such as building of new transport links or roads, as these projects will relate to a large level of funding over a number of years.

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