Monday, October 23, 2017
You are here: Isle of Man > Isle of Man News
Isle of Man News
General News
Capital Spending by Departments within Overall Budget 13 October 2006

Capital spending by Government Departments over the past five years has been well within the overall budgets agreed by Tynwald, according to the Treasury.

From 2001/02 to 2005/06 the Departments completed 35 major projects at a cost approaching £300 million – 95 per cent of the funds made available to them by Tynwald. This was despite the fact that three of the projects did overspend to the tune of £3.3 million.

Treasury Minister Allan Bell MHK commented:

‘Criticism of Government’s capital programme may have given the public the impression that it is out of control and that overspending is common. The reality is that all but a tiny fraction of capital spending by Departments over the past five years has been delivered within the budgets agreed by Tynwald. Overall, capital account spending was well within the funds authorised by Tynwald.’

Mr Bell continued:

‘Public concern over capital spending is understandable, especially in view of what happened at the Manx Electricity Authority. But it is important to appreciate that capital funding of the MEA, as a commercial statutory board, took place outside of the mainstream Departmental capital programme. This was an exceptional situation which is still being investigated.’

The Minister added that there was also criticism that Government spends too freely on capital projects, and that such expenditure is too high particularly in relation to day-to-day revenue funding of services.

Mr Bell explained:

‘The procedures for capital schemes require all Departments to submit, for each project, a business case – relating to the Department’s own business plan – before it will be considered for inclusion in the five year plan.
‘In order to progress the Department must demonstrate at each stage that they are complying with the procedures. Only then are they allowed to proceed to the next stage.
‘People sometimes wonder how Government can afford to spend so many millions on capital projects when new funding appears to be limited in some areas of revenue spending on public services.
‘The reason for this is that capital and revenue spending are completely different. Capital spending involves one-off sums borrowed by Departments from a central Government fund and repaid into that fund so that it is constantly being replenished. Revenue spending is an ongoing commitment to pay for public services, year after year, funded by the taxes that Government receives. You cannot pay for ongoing revenue commitments with one-off capital funds.’

The Minister concluded:

‘As ever, there is no room for complacency when it comes to Government spending, and we should always seek best value for public money. But it is important to see this issue in perspective.
‘The Island is fortunate that it has been able to afford a major programme of capital investment in the public service infrastructure that serves our community, including a new hospital, schools and an energy-from-waste plant. All this has been achieved whilst maintaining a high level of economic and financial stability, as confirmed by the Island’s triple-A international credit rating.’

For more information please contact:-

Mark Shimmin, Chief Financial Officer, The Treasury, Isle of Man.
Telephone: (01624) 685586
Fax: (01624) 685662

More stories >>>  

Related News Articles
UK Measles Outbreak: The Need for Action Now 23 April 2013
The UK Measles Outbreak continues in South Wales and other parts of the UK. [More]
Chief Minister's statement to the House of Keys on support for the Sefton Group 23 April 2013
Mr SpeakerIn the absence of the Economic Development Minister on Government business, I and the Treasury Minister gave a presentation on Friday to Members of Tynwald on the reasons for Council of Ministers’ decision to support the Sefton Group. [More]
Public Services Commission Consultation 22 April 2013
In line with Government’s Agenda for Change programme and in particular its policy to reduce bureaucracy, the Civil Service Commission has launched a public consultation on the proposal to establish a Public Services Commission (PSC). [More]
Government acts to protect local economy and jobs 19 April 2013
GOVERNMENT is backing the financial restructuring of a prominent Island business group to help protect the local economy, Chief Minister Allan Bell MHK announced today (Friday April 19, 2013). [More]
Isle of Man signs Double Taxation Agreement with Luxembourg 18 April 2013
As part of the Isle of Man Government’s ongoing programme of signing Double Taxation Agreements (DTAs) and Tax Information Exchange Agreements (TIEAs), the Isle of Man has signed a comprehensive DTA with Luxembourg. [More]

Other Guides by Maxima Systems Ltd: Disney World