- Capital spending
- Capital spending is government spending on assets that are used for many years, such as roads and buildings, and on loans to businesses and individuals.
- Current spending
- Current spending is government spending on the day-to-day running costs of public services, such as staff pay, supplies, grants and administration.
Three types of government spending
Can you name the three types of government spending?
Each type is told apart by what the money buys.
Current spending pays for the day-to-day running of public services, such as the pay of nurses and teachers, medicines and administration.
Can you think of an example?
An NHS trust in Manchester pays its nurses each month and buys the drugs its wards use this year. Next year it must pay for both again.
Capital spending pays for assets used for many years, such as roads, school buildings and hospitals, and for loans to businesses and individuals.
Can you think of an example?
The same trust builds a new cancer centre. It is paid for once and treats patients for decades.
Transfer payments are payments from the government to people, such as the state pension and Universal Credit, for which it receives no good or service in return.
Can you think of an example?
A retired bus driver in Bristol receives the state pension each month. Nothing is produced in exchange.