Rigorous separation of capital and revenue commitments across all seven prior briefings. This is the single largest fiscal clarification available and materially reshapes the headroom picture.
Method: Each commitment classified as:
Under standard OBR/IFS methodology, capital spending financed via gilts against productive public assets does not count against the current-budget deficit. This is the core reframe.
| Item | Y5 total | Revenue | Capital | Notes |
|---|---|---|---|---|
| Medical education free + service tie | £2.5bn | £2.5bn | — | Bursary/tuition costs are revenue |
| Workforce pay uplift | £6bn | £6bn | — | Pure revenue |
| Hospital construction + revenue | £6bn | £1bn | £5bn | £5bn capital (construction), £1bn revenue (operating new estate) |
| Procurement savings | −£4bn | −£4bn | — | Pure revenue saving |
| Consultancy reform (net) | −£1.2bn | −£1.2bn | — | Pure revenue net of sovereign replacement |
| 111 digital reform | −£0.2bn | −£0.7bn | £0.5bn | Capital for build, revenue savings from efficiency |
| Social care integration | £4bn | £4bn | — | Pure revenue |
| TOTALS | £13.1bn | £7.6bn | £5.5bn |
Y10: Revenue £9.1bn / Capital £5.5bn / Total £14.6bn
| Item | Y5 total | Revenue | Capital | Notes |
|---|---|---|---|---|
| National Grid acquisition | — | — | £20bn (one-off) | Capital transaction, asset on balance sheet |
| SMR programme contribution | £0.4bn | — | £0.4bn | Capital grant to Rolls-Royce programme |
| Large-scale nuclear | £0 | — | — | Financed via RAB / consumer bills |
| Energy efficiency/retrofit | £3bn | £0.5bn | £2.5bn | Capital for retrofit works, revenue for admin/advice |
| Grid dividends recovered | −£1bn | −£1bn | — | Pure revenue |
| TOTALS | £2.4bn | −£0.5bn | £2.9bn |
Y10: Revenue −£0.7bn / Capital £3bn / Total £2.3bn
The revenue number is negative (net positive for Treasury) once Grid dividends are captured and retrofit efficiency savings register.
| Item | Y5 total | Revenue | Capital | Notes |
|---|---|---|---|---|
| Police restoration | £3bn | £3bn | — | Pay + numbers, pure revenue |
| Legal aid restoration | £1.8bn | £1.8bn | — | Pure revenue |
| Court reform | £1.5bn | £1bn | £0.5bn | Revenue for sitting days + judges; capital for estate |
| Prison reform (phased to £1bn Y5) | £1bn | £1bn | — | Revenue only at Y5; capital prison programme separate |
| Youth justice | £0.4bn | £0.4bn | — | Pure revenue |
| Victims support | £0.3bn | £0.3bn | — | Pure revenue |
| Reoffending credit | −£0.8bn | −£0.8bn | — | Revenue saving |
| TOTALS (phased) | £5bn | £4.7bn | £0.5bn |
Capital prison programme: £8bn over 10 years (£0.8bn/year average), financed via dedicated justice infrastructure gilts. Not in Y5 operating figure.
Y10: Revenue £6.2bn / Capital £0.8bn / Total £7bn
| Item | Y5 total | Revenue | Capital | Notes |
|---|---|---|---|---|
| Local govt funding restoration | £7bn | £7bn | — | Pure revenue (services) |
| Regional infrastructure fund | £2bn | — | £2bn | Pure capital |
| Devolved nations investment | £1.5bn | £0.5bn | £1bn | Hybrid: Welsh turbine conversion capital, industrial support revenue |
| TOTALS | £10.5bn | £7.5bn | £3bn |
Y10: Revenue £7.5bn / Capital £3.5bn / Total £11bn
| Item | Y5 total | Revenue | Capital | Notes |
|---|---|---|---|---|
| Sovereign digital capability | £0.7bn | £1.5bn (neg capex) | £1bn | Capital for build, revenue net positive from eliminating vendor fees |
| Broadband/mobile | £0.5bn | £0.1bn | £0.4bn | Mostly capital |
| Cybersecurity | £0.4bn | £0.4bn | — | Mostly revenue (staff, ongoing) |
| Immigration system | £0.3bn | £0.3bn | — | Revenue (staff, processing) |
| TOTALS | £1.9bn | £0.5bn | £1.4bn |
Y10: Revenue −£0.3bn / Capital £1.2bn / Total £0.9bn (sovereign capability pays for itself by Y10)
| Item | Y5 total | Revenue | Capital | Notes |
|---|---|---|---|---|
| ELM reformed (within envelope) | £0 (reallocation) | — | — | Existing envelope |
| Zero VAT UK farm equipment | £0.2bn | £0.2bn | — | Revenue (tax expenditure) |
| Food security programmes | £0.8bn | £0.6bn | £0.2bn | Mostly revenue |
| Rural services restoration | £1bn | £1bn | — | Pure revenue |
| Fisheries modernisation | £0.2bn | £0.1bn | £0.1bn | Hybrid |
| TOTALS | £2.2bn | £1.9bn | £0.3bn |
Y10: Revenue £1.9bn / Capital £0.3bn / Total £2.2bn
All pure revenue, no capital component. Net impact as previously stated.
| Cluster | Total | Revenue | Capital |
|---|---|---|---|
| NHS | £13.1bn | £7.6bn | £5.5bn |
| Energy | £2.4bn | −£0.5bn | £2.9bn |
| Justice (phased) | £5bn | £4.7bn | £0.5bn |
| Devolution/local | £10.5bn | £7.5bn | £3bn |
| Digital | £1.9bn | £0.5bn | £1.4bn |
| Agriculture | £2.2bn | £1.9bn | £0.3bn |
| SUBTOTAL (priority cluster) | £35.1bn | £21.7bn | £13.6bn |
| Cluster | Total | Revenue | Capital |
|---|---|---|---|
| NHS | £14.6bn | £9.1bn | £5.5bn |
| Energy | £2.3bn | −£0.7bn | £3bn |
| Justice | £7bn | £6.2bn | £0.8bn |
| Devolution/local | £11bn | £7.5bn | £3.5bn |
| Digital | £0.9bn | −£0.3bn | £1.2bn |
| Agriculture | £2.2bn | £1.9bn | £0.3bn |
| SUBTOTAL | £38bn | £23.7bn | £14.3bn |
Total capital commitments across the platform (annual):
This is substantial but sits within the UK's existing capital envelope (Capital DEL of £129.5bn/year in 2025/26, plus Capital AME). Our additional capital commitment represents roughly a 20% increase in public capital investment: a significant but not radical shift, consistent with OBR-forecast capital growth trends under current Labour policy.
Financed via dedicated infrastructure gilts against productive assets. Does not count against the current-budget deficit under standard fiscal practice.
The remaining Y5 revenue overshoot of £7.7bn closes via four mechanisms, in order of preference:
Recommended combination: Phasing (option 1) closes ~£4bn, leaving ~£3.5bn. Modest wealth tax (option 2, deployed at 0.5% rate on £10m+ rather than 1%) closes the remainder. Leaves stronger measures in reserve for economic shocks or policy contingencies.
The fiscal picture is now disciplined and deliverable. Revenue commitments within reach of headroom after phasing plus modest reserve measure. Capital programme substantial but proportionate. Y10 surplus healthy enough to unlock sovereign wealth fund pathway in cycle two.