Expenditure

Expenditures are phased in to match revenues, with initial spending to match revenues from the higher APD. The table below provides an overview of the phasing by Service.

The P2030 cashflow uses annual budgets, which assume scheduling in Year 2 to match new expenditures with new revenues as they phase in. This may affect timing, so the exact start dates of the new services is not specified to allow for cashflow to be managed to keep expenditure in line with revenue.

Substitutions

Substitutions are a category of Universal Services where costs are transferred from individual bills to direct payment from Treasury. There are four payment channels, three of which are annual budgets, plus the digital service vendors, who are paid monthly for each registered user.

• The Information service is a direct payment to the BBC to replace TV Licence fee revenues.
• The first year of the Transport service requires local bus operators to submit passenger numbers for reimbursement (up to a maximum of prior year fare revenue). Thereafter, payment is dispersed through local Councils for their local service contracts.
• Starting in Year 2, NESO receives direct funding for energy network system costs.
• Water companies are paid directly, replacing their revenues from standing charges. Once CWSOs are established, the water expenditure will flow to the CWSO on a per household basis, for onward disbursement.
• The Digital service reimburses service providers directly each month based on the number of registered eligible individuals who have selected them as their provider. The voucher value is fixed per person. Provider assignments are tracked in the information.gov.uk system (built on existing Government Digital Service infrastructure concurrent with the service).

P2030 Phasing

New Services

Expenditure on new services is low in the first year, due to legislative, practical administrative, revenue, and local government capacity constraints.

Most of the new service expenditures (64%) are funded through local government, and 85% of that depends on Councils processing or submitting applications. Which is why the new services require reforms to local democracy to strengthen their capacity for commissioning and associated budget responsibilities. The funding for the Democracy Revival reforms (£2B from year 2) will require short-term reallocations from existing budgets before local elections.

One third of expenditure is direct from Treasury, mostly following the same channels as the substitute services. The new National Digital Service will be directly funded once its governing Commission is set up. Until then, related digital infrastructure funding can flow into the budgets of existing departments for functions that will become part of the NDS, such as digital ID.

** P2030 Phasing**