1. Public budget constraints
Case Study
Public budget constraints
Kevin Andrews
Defra
Workshop on Disproportionate Costs, 10./ Copenhagen

2. Table of Content Introduction Overview of case study
Topic of case study
Results
Conclusion and outlook
Workshop on Disproportionate Costs, 10./ Copenhagen

3. Introduction Main methodological issue tackled
Public budget constraints and the analysis of alternative financing mechanisms
Relevance in respect to the request of the Water Directors
View 1 “…potential affordability…of the public budget are not part of the assessment of disproportionality”
View 2 Affordability “…not only limited to certain sectors but also true for the set of measures financed by the public budget.”
Workshop on Disproportionate Costs, 10./ Copenhagen

4. Overview of the CS
WFD PPP but inevitably some public financing of measures is necessary
pCEA considered many areas where public budgets relevant – mainly historical pollution and where public goods are being financed.
How are public budgets set – macro-economic climate, spending reviews, prioritisation/business planning
Workshop on Disproportionate Costs, 10./ Copenhagen

5. Topic of CS:
Is there a difference between public and private budgets in terms of considering disproportionately
A Clue -> who finances public budgets?????
If NO…how can public budgets be considered so that MS “may phase implementation of measures to spread the costs of implementation….with clear and demonstrable action in the first cycle”
How relate to alternative financing
Workshop on Disproportionate Costs, 10./ Copenhagen

6. Results:
Main areas where public budgets are relevant are navigation, flood/erosion control, abandoned mines, morphological restoration total costs = 300m Euro per year
Process of budget setting, macroeconomic climate, spending reviews, delegation, prioritisation -> hard budget
Defra = Euro 5 B, cuts in real terms, BW = Euro 70 M
Case of BW all alternative financing options regularly reviewed. Insufficient to cover cost and hence government grant. Level of grant is insufficient to maintain steady state
Additional WFD costs on top of this – some scope of win-wins but difficult to justify increased expenditure
Phasing -> more effective investments – residual life issues
Workshop on Disproportionate Costs, 10./ Copenhagen

7. Cost Euro M/yr Equivalent Annual Cost
Item impacting on public budgets
Cost Euro M/yr Equivalent Annual Cost
Flood risk management (EA, LAs) 80
Navigation and ports
(of which inland navigation, EA and BW) 30
(5*)
Mines (EA, CA)
165
Alien species (EA, NE) 10
Total
300
EA=Environment Agency, LA=Local Authorities, BW=British Waterways,
CA=Coal Authority, EN=Natural England. * approx half would be EA and half BW
Workshop on Disproportionate Costs, 10./ Copenhagen

8. Energy Savings Trust (2) 37
Defra Expenditure area
Total m £/yr
Environment Agency
796
Natural England 
176
Carbon Trust (2) 89
British Waterways 58
National Parks 47
WRAP (1) 43
Energy Savings Trust (2) 37
RBG Kew 26
Joint Nature Conservation Committee 8
Commission for Rural Communities 6
ENCAMS 5
Food From Britain 4
National Forest Co.
Gangmasters Licensing Authority 1
Total
1300
Workshop on Disproportionate Costs, 10./ Copenhagen

9. Conclusion and Outlook:
Alternative financing constantly reviewed but still requires a government grant. Further possibilities for government expenditure are limited and limits need to be recognised.
The case study demonstrates transparency can be achieved in order to prevent use of financing as excuse for non action.
For this clarity is needed on a) macroeconomic situation, the b) budget setting and prioritisation process and c) strategies for adapting financing in the future (more money more PPP)
Together allow plan to show that ambition remains high but allows realistic/reasonable objectives to be set
Workshop on Disproportionate Costs, 10./ Copenhagen

10. Thank you for listening.
Contact for further details on the Case Study
Please add here the institution in charge for carrying out the CS
[e.g. Ingo Bräuer
Ecologic, Pfalzburger Str , D Berlin  , 
Workshop on Disproportionate Costs, 10./ Copenhagen