“The money that the government spends through the Department for Health and Social Care is around 40% of our day-to-day spending”
In Parliament today the new health secretary, Dr Thérèse Coffey, claimed 40% of the government’s day-to-day public spending goes on health and social care.
This is based on a definition of “day-to-day spending” which excludes large amounts of what may be reasonably called day-to-day spending, like pension and benefit payments, and is an issue which Full Fact has written about before.
If you look at all public spending which might reasonably be considered “day-to-day”, the picture is very different. While there are different ways to calculate an alternative proportion, government figures suggest health actually accounts for roughly a quarter of total day-to-day spending.
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Understanding finance statistics
Public sector spending is separated into two main categories.
There’s the spending that departments can budget for and have expenditure limits on, like the cost of running a hospital or a school. This is known as departmental expenditure limits (DEL).
And then there’s the spending which it can’t easily budget for, like the amount it will need to spend on welfare, which is driven by demand. This is known as annually managed expenditure (AME).
Each of these pots can then be further split into resource (or ‘day-to-day’ spending) and capital spending on one-off investment projects like building a hospital or a new road.
So that gives you essentially four types of spending. In 2021/22 the total spent on each, with the proportion of all public spending it represents, were as follows:
- “Resource” or day-to-day DEL: £467 billion (44%)
- Capital DEL: £93 billion (9%)
- “Resource” AME, which might also be considered day-to-day: £474 billion (45%)
- Capital AME: £26 billion (2%)
If you look at just the resource (or day-to-day) DEL, which is the bits of government spending that can be budgeted in advance, then health and social care does account for about 40% of the total.
In 2021/22 the department spent £184 billion, 39% of all equivalent spending across government.
But if you include resource AME spending (which might also be considered day-to-day), the share of total day-to-day spending on health is much lower, at around 24%.
This is because far more spending by the Department for Health and Social Care is DEL, which covers things like NHS staff costs, than AME. Whereas other departments, chiefly the Department for Work and Pensions (DWP), spend far more as AME (in DWP’s case pensions and benefit payments fall under AME) than DEL.
So if you focus on the DEL, health spending looks like it accounts for a much greater share of public spending.
Dr Coffey is not the first person to talk about public finances in this manner.
For example, think tank the Institute for Government uses the term “day-to-day spending” to refer solely to resource DEL, albeit after a detailed explanation of its reasons.
Last September, the Institute for Fiscal Studies told Full Fact it uses the phrase “day-to-day public service spending” (our emphasis) to distinguish resource DEL from resource AME.
The Treasury has also talked about resource DEL as “day-to-day spending”. But it has also written that “resource spending is money that is spent on day to day resources and administration costs” and includes within “day to day” resource spending, both resource DEL and resource AME. The Foreign, Commonwealth and Development Office has similarly talked about resource AME as “day-to-day spending”.
Sometimes it might be relevant to look at day-to-day DEL separately from day-to-day AME, but describing either one as all “day-to-day spending”, without clarification, may have the potential to confuse, because it excludes about half of what might reasonably be called day-to-day public spending.
Full Fact has approached the DHSC for comment but had not received a response at the time of publication.