Guidance

Delegated Authority Guidance: Expenditure categories subject to specific controls

Updated 13 August 2026

Introduction

The specific types of spend addressed in this guidance have previously been subject to separate delegated authority limits, “small DALs” – lower delegation thresholds which have been applied because the spend is qualitatively different to routine expenditure or otherwise required greater attention from the Treasury. These areas of spend have also been subject to additional guidance in Managing Public Money, departments and public bodies should continue to have regard to MPM guidance concerning these types of expenditure. Under the arrangements set out here, criteria have been introduced which identify cases which do not need additional Treasury scrutiny, and as such will be subject to the department’s programme and project DALs or where appropriate a bespoke DAL. The intent of these changes is to raise delegations to allow departments to proceed in cases where guidance has been complied with while retaining Treasury scrutiny of non-standard cases. Where a proposed transaction does not meet all of the agreed criteria, it must be treated as novel, contentious or repercussive and submitted to HM Treasury for formal approval before any commitment is made.

In some cases, lower DALs have been retained, where the nature of the spend requires greater scrutiny across the board. The exceptional nature of these cases should mean that the number of approvals actually required is relatively low.

This guidance should be read consistently with the core principles, rules and expectations for the management of public funds as set out in Managing Public Money (MPM). MPM provides Accounting Officers and departments with authoritative guidance on regularity, propriety, value for money and feasibility; and underpins accountability to Parliament by setting consistent standards for planning, spending, control, reporting and stewardship of public money.

Where departments or Arm’s Length Bodies are uncertain how to proceed, they should seek advice first from their internal and sponsor finance teams who may in turn seek advice from their HMT spending team.

Departments have a duty to ensure that payments made under the following delegated authority limits are recorded properly, following internal reporting processes and are disclosed in the Annual Report and Accounts (ARA) in line with MPM and the FReM. This demonstrates proper use of public funds, supports Accounting Officer accountability and enables effective oversight by HMT, Parliament and auditors.

Departments should ensure that payments within delegation are: (a) correctly coded in finance and grant/contract systems (including the relevant delegation or scheme, purpose and value); (b) supported by appropriate business cases and approvals in line with internal governance; and (c) capable of being reported and analysed (e.g. through regular management information, audit trails and ARA disclosures where material). These records should be retained in accordance with departmental policies so that compliance with delegated limits can be demonstrated on request.

Losses and write-offs

See Annex 4.10 of MPM

A loss includes any public money or asset that is irrecoverable, written off or has diminished in value (e.g. benefit overpayments not recoverable, fraud, damaged or missing assets). They represent the consumption of public resources (or the reduction in value of public assets) without sufficient corresponding benefit.

Departments generally have wider delegated authority to authorise losses, subject to meeting the appropriate reporting requirements. In many cases an ‘unlimited’ delegation will apply. Officials in departments should escalate losses to the appropriate senior officer/committee in line with the department’s losses policy. If the amount exceeds a specific delegation, Treasury approval will be required.

More generally, departments should consult the Treasury on cases which are novel, contentious or repercussive, arise because of obscure or ambiguous instructions from the centre, raise doubts about the effectiveness of existing systems, address important questions of principle, or otherwise contain lessons of wider interest. In these cases specific authorisation from HMT may not be required, but departments should take on board Treasury advice on their handling of the loss. Further guidance can be found in MPM Annex 4.10 ‘Losses’.

Losses above £300,000 must be reported in the department’s Annual Report and Accounts, ‘Serious’ losses, either in scale or gravity should be reported separately to Parliament via a written ministerial statement. When considering if a loss is serious Accounting Officers should consider the quantum of the loss compared to the overall expenditure in question and departmental budgets, any aggravating factors such fraud error or other weaknesses in the control environment or any other factors that may mean it is inappropriate to delay the informing of Parliament until the laying of the Annual Report and Accounts.

Each approval must record the nature, gross amount (or estimate if an accurate value is not available) and cause of each loss, the actions taken to recover the loss, date of write-off if appropriate, the annual account in which each loss is to be noted, name and grade of approver; the basis for the decision; and confirmation that MPM, departmental policy and delegation limits have been followed.

The following categories of loss will retain existing, separate department specific delegations:

• Constructive losses – A loss that arises when departments correctly incurred a liability or made a payment, but which subsequently did not prove to be needed or provide the expected benefit. This is often due to a deliberate policy choice on the part of the department. Where the losses manifest due to policy choice to incur expenditure in respect of the pursuit of an alternate policy it will generally be appropriate to seek approval for losses as part of the business case seeking approval for the new expenditure.
• Claims Waived or Abandoned (where the counterparty is solvent or insolvency proceedings are incomplete) – deciding not to pursue money or assets owed to the department (e.g. dropping a legal claim, waiving a debt)

All other losses do not require HMT approval unless considered novel, contentious or repercussive. This includes:

• Cash losses – money that should have been received but is not (e.g. theft, fraud, irrecoverable debts, overpayments that cannot be recovered).
• Book losses – when an asset is written down or written off (e.g. obsolete stock, damaged equipment, disposal of an asset for less than its book value).
• Stock write-offs and impairments – Stock write offs occur when inventory is lost, damaged or obsolete and has no recoverable value, and is removed from the accounts as a loss. Impairments occur when an asset value falls, and its carrying value is reduced to the lower recoverable amount.
• Claims waived or abandoned where insolvency proceedings are complete – write-offs of remaining debts against insolvent counterparties after the completion of the legal insolvency process.
• Fruitless payments – payments which are made (e.g. due to a legal entitlement), but which should have been avoided because they generate no commensurate benefit to the department. These may be subject to a lower reporting threshold, as they are often the product of avoidable errors (e.g. payments for tickets ordered in error, costs of rectifying design faults).

Special Payments

See Annex 4.13 of MPM

Special Payments are one off, exceptional payments that fall outside the normal range of planned departmental activity. In many cases these are discretionary, government is not legally required to make them, and they fall outside normal contractual, legislative or standard entitlements.

In all cases they must be clearly justified on their own merits (e.g. fairness, public interest, value for money), and be recorded and reported transparently.

Accounting Officers must be content that they meet the AO standards of regularity, propriety, value for money and feasibility. Because they often circumvent normal practice and entitlements, departments should start from a presumption against making special payments. Departments must comply with guidance on Special Payments found in MPM Annex 4.13 ‘Special Payments’.

By default, all special payments need specific Treasury consent, different categories of special payment will have separate delegations, however this guidance sets out a framework whereby certain types of special payment which meet the necessary criteria may be delegated regardless of value.

Departmental specific delegations for cases which fall outside the framework below remain permitted with the agreement of the Treasury if necessary to accommodate department specific circumstances.

The various categories of special payment are addressed below:

Ex-gratia payments

These are payments made by departments on the basis that, while there is no legal liability, statutory obligation or administrative rule that requires payment, and no specific liability exists or is mitigated, the payment represents the ‘right thing to do’ on the judgement of the Accounting Officer.

These are exceptional by their very nature and as such a delegation is retained except for low-value consolatory payments as outlined in paragraphs 25 to 28 below.

Where departments require widespread use of ex-gratia payments, a scheme governing these, with a delegation framework should be agreed with the Treasury.

One-off low value consolatory payments

These are a subset of ex-gratia payment made to individuals to recognise and apologise for distress or minor inconvenience caused by a department, but where there would be no legal claim or other duty to compensate.

These retain a low (£500) blanket delegation.

Large scale consolatory payments, for example in response to widespread administrative failures, will always be novel, contentious or repercussive and may likely require statutory authority.

Where there is a recurring requirement for widespread payments, a framework for delegation should be agreed with the Treasury.

Compensation payments

Made by departments to individuals or organisations who have suffered loss or damage and where the department accepts it has a legal liability or strong moral obligation to pay.

This includes redress for personal injuries (except for payments under the Civil Service Injury Benefits Scheme), traffic accidents, damage to property etc. suffered by civil servants or others. They include other payments to those in the public service outside statutory schemes or outside contracts.

All compensation payments must comply with the guidance set out in MPM Annex 4.14 ‘Remedy’.

Individual compensation payments below departmental delegated limits are delegated to departments where:

• Legal advice confirms that the likelihood of the department successfully contesting liability for the harm or damage caused is low (less than 30%) or medium-low (30-50%), or where the department has already accepted legal liability.
• Legal advice confirms that each of the losses or harms covered are likely to be awarded by a Court
• Legal advice confirms that the value of the total payment and any individual element of the total payment is equal to or less than the most likely amount that would be awarded by the court, excluding reasonable legal costs.
• The case is solitary and non-repercussive – it has no relation to similar or connected claims caused by wider systems failures or maladministration.
• The case is not considered novel, contentious or repercussive for some other reason.

Payments outside these criteria will require Treasury consent. The Treasury may agree with departments to institute alternative arrangements (e.g. a separate general compensation delegation) in lieu of or in addition to this guidance, where this would be more effective.

Departments should always scrutinise any proposed schedule of loss and challenge unmerited claims.

Compensation for multiple cases should normally be addressed via a systematic compensation scheme. This will generally require legislative backing or be time limited so as to proceed under the Sole Authority of the Supply and Appropriations Act . Compensation schemes will require Treasury consent.

Reasonable legal costs

Reasonable legal costs are legal fees and related expenses that are necessary, appropriate and proportionate to a legal case, as determined by departmental lawyers,

Payments of reasonable legal costs are subject to an unlimited delegation.

However, any agreement to meet another party’s legal costs must be properly authorised. A department’s legal representative must not enter into any informal agreement to meet another party’s solicitor or barristers fees. Any such agreement must follow the department’s losses and special payments procedures, including senior sign off and proper reporting.

Significant or unusual legal costs, especially from major cases, should be explained briefly in the ARA narrative. Cases which are otherwise novel, contentious or repercussive will require Treasury consent.

Special Severance Payments

These are payments to an individual in relation to their departure from public employment. These include any payments beyond legal or contractual obligations, including non-contractual pay in lieu of notice, and settlements to avoid or prevent legal action including judicial or non-judicial mediation.

The Treasury delegates authority to departments to make special severance payments where the payment is not novel, contentious or repercussive.

Novel, contentious or repercussive settlements include:

• Cases where legal advice states that the government has a medium-high (50-70%) or high (over 70%) chance of successfully defending the case in court, or where there is no significant risk of legal challenge.
• Where legal advice states that any of the losses or harms covered by the payment are unlikely to be awarded by a Court.
• Where legal advice states that the value of the total payment (excluding reasonable legal costs) or of any individual element of the total payment exceeds the most likely amount that would be awarded by the Court.
• Payments to Special Advisors or any individual earning above the senior pay threshold
• Payments that are not affordable within departmental budgets or create additional unfunded pressures.
• Cases likely to set a precedent or have implications for wider government policy, or other settlements,
• Case is high visibility or contentious, including those likely to attract public attention or involving senior members of staff,
• Settlement agreements which include confidentiality clauses
• Dismissals or contract terminations outside the formal conduct, capability, retirement, redundancy or voluntary exit scheme procedures,
• Payments that could be seen as rewarding failure or poor performance on the part of the individual or employer
• Poor value for money payments

Separate guidance on special severance payments is published by HM Treasury and should be consulted in all cases.

Extra-contractual payments

These are payments to suppliers that fall outside the terms of the existing contract, though not legally due, they are made to meet an obligation on a public sector organisation that might be upheld by the courts. These may arise in relation to an organisation’s action or inaction in relation to a contract, and there may be some doubt as to whether the organisation is liable to pay. This includes settlements with suppliers which are made without going through a contractual arbitration process.

These are distinct from ‘ex-gratia’ payments made to suppliers on the grounds of hardship, where no real or potential liability exists.

Extra-contractual special payments which settle contractual disputes with suppliers are delegated to departments up to the standard delegated authority limit for the department; provided the following criteria are met:

• Settling represents good value for money in the round
• Legal advice states that the likelihood of the government successfully defending the relevant claim or obtaining recovery in court is low (less than 30%) or medium-low (30-50%)
• Legal advice confirms that each of the losses or harms covered are likely to be awarded by a Court
• Legal advice confirms that the value of the total payment and of any individual element of the total payment is equal to or less than the most likely amount that would be awarded by the court.
• Settling will not prejudice other ongoing claims -There are no outstanding potential counter-claims – settlements which incorporate the waiver of government claims will fall under ‘claims waived or abandoned’ delegations.
• The case is not considered novel, contentious or repercussive for some other reason

Other cases will be considered novel, contentious or repercussive. Unlike special severance payments, confidentiality clauses may be appropriate on value for money grounds in order to preserve commercial confidentiality, or to prevent further cases. Neither settlement payments nor confidentially clauses should be used to seek to avoid embarrassment or conceal departmental errors or inappropriate actions.

Out of court settlements (other than severance or contractual disputes)

Payments made to settle actual or potential legal disputes without a court judgement. When considering settlements, departments must consider the accounting officer standards, and in particular whether the financial benefits of settling represent good value for the exchequer as a whole when weighed against both the importance of maintaining the government’s credibility in defence of its policy positions, and the future costs of failing to deter meritless or marginal cases. Legal costs should therefore generally be disregarded from the calculation except in extreme cases.

Settlements are delegated in cases where:

• Settlement represents good value for money in the round
• Legal advice states that the likelihood of the government successfully defending the relevant claim in court is low (less than 30%) or medium-low (30-50%)
• Legal advice confirms that each of the losses covered are likely to be awarded by a Court
• Legal advice confirms that the value of the total payment and of any individual element of the total payment is equal to or less than the most likely amount that would be awarded by the court,
• The claim does not include a confidentiality clause that may undermine scrutiny, Parliamentary oversight, transparency regarding official failure or improper actions ^{[footnote 1]}
• The claim itself is not novel, contentious or repercussive for some other reason

Approvals, both internal and Treasury, must be sought prior to entering into negotiations in order to agree an upper limit or negotiating mandate. Departments must seek to settle for as low a figure as possible within the mandate.

Extra statutory and extra regulatory payments

Payments made which are outside the strict terms of statutory or regulatory entitlements, but which are in line with the intent of the scheme.

These must be in-line with the principles of the original legislation or regulation, and amount must not exceed that which would have applied if the legislation or regulation had been drafted in a way that took the specific circumstances of that case into account.

The first instance of any given extra-statutory or extra regulatory payment will always be novel, contentious and repercussive, unless subject to a specific framework agreed with the Treasury.

However, where a clear, documented precedent for an extra statutory or extra regulatory payment exists, payments strictly consistent with this precedent are delegated to the department provided the Treasury is notified immediately (including provision of the relevant precedent).

In the event that Treasury disagree that the case is consistent with the precedent provided, retrospective Treasury authority must be sought and the special payment will be irregular if not granted.

Payments in Advance of Need

(See MPM A4.8.5 onwards)

Payment in Advance of Need (PIAON) are payments which are made before a department has received the goods or services, or before it is required to pay under the contract. PIAON are generally considered contentious because they breach the principle that public money should only be paid out when there is a clear, immediate need, increasing the risk of non delivery, supplier failure and perceptions of improper support for recipients’ cashflow. They can set poor precedents, weaken financial discipline and attract Parliamentary or public criticism, while also bringing forward cash outflows from the Exchequer, worsening short term fiscal management and potentially increasing government borrowing and debt interest costs. delivery, supplier failure and perceptions of improper support for recipients’ cashflow.

Therefore, payment in arrears should always be the norm, departments must avoid making payments in advance of need, except where this is unavoidable and demonstrably value for money.

Approval for PIAON which meet the following criteria is now delegated to departments (see also MPM A4 8.6 for further guidance), in all cases, departmental finance teams must be satisfied that advance payments are underpinned by a robust justification on value for money grounds that is addressed explicitly as part of the approval process:

• Subscriptions to services, including news, information, software, maintenance contracts, and other services where payment in advance allows immediate access to the service.
• Minor services of low overall cost – training courses, individual conference bookings or magazine subscriptions where advance payment is the only option required to secure a booking.
• Where advance payment is a standard requirement for a particular service or sector – must be backed by evidence that it is not possible to obtain the service from the market without advance payment.
• Grants to Local Authorities and other public bodies which are paid in tranches, provided tranches reflect actual consumption of resources and do not create excess cash balances held by the recipient at year end based on realistic spending assumptions. This includes compliance with the grants functional standard.
• Grants to small charities and community organisations who may have limited access to capital, and where payment in arrears would increase costs. In doing so however Accounting Officers should consider the financial sustainability of the organisation in question to avoid risks of nugatory spending.

Outside these criteria, PIAON is always novel, contentious or repercussive and Treasury approval must be sought.

Departments must ensure that, even where cash payments are made in advance, budgetary and accounting accruals are made in the correct period. Where a benefit is received in a different financial year, budget cover, and fiscal statistics may still score to that year.

PIAON must be clearly recorded in finance systems as a Payment in Advance of Need, with supporting justification (including purpose, amount, counterparty, key terms, risk assessment and evidence of approval within delegated limits). Where a proposed payment in advance of need is high value, departments must seek advice from senior finance officials.

Material payments in advance of need, or material categories of such payments, must be reported in the ARA in line with FReM and audit requirements.

Endowments

A sub-category of payment in advance of need, funds are provided for a recipient to invest for the long term, where the capital is kept and the investment income is used to fund its work, creating a long-term funding stream.

Endowments should always be treated as novel, contentious or repercussive because they are an unusual funding model in central government (permanent capital pots rather than standard time limited grants); can be sensitive, creating long term funding outside the normal budget cycle and raising accountability and precedent issues; and may be repercussive, prompting similar claims from other bodies and affecting future funding decisions. HMT approval is always required.

Other specific delegated authority limits

UK Internal Markets Act (UKIM)

This refers to UK Government funding powers used to support the functioning and prosperity of the UK wide internal market under the UK Internal Markets Act 2020 – for example by investing in local growth, infrastructure, skills and innovation across all parts of the UK.

Spending on schemes making use of UKIM powers are always novel or contentious as they can have cross devolved implications and may affect total DEL and future fiscal risks. Therefore, they fall outside normal delegations and must be approved by HMT.

UKIM spending should be reported through normal accounting processes so it flows into the Statement of Comprehensive Net Expenditure and related notes, with additional narrative or disclosure in the ARA where it is material or strategically important in line with FReM requirements.

Admin expenditure

This refers to the day to day running costs of a department or public body (such as staff and IT costs) rather than money spent on delivering programmes or services.

Departments have delegation to incur expenditure on administration within their admin control totals, except for any spending considered NCR which requires HMT approval.

Charitable grants

Charitable grants are unrequited payments to charities or other not for profit bodies to support activities delivering public or charitable benefit. They must be appraised and managed in line with Managing Public Money and the department’s grant making guidance.

Previous delegation limits have been retained and continue to be set for each department.

Gifts

Gifts are a transfer of public money or assets for nothing in return, outside normal government business. They are unrequited, unlike a contract (payment for services) or a grant (funding specific public benefit activity).

Gifts should receive departmental senior approval within a typical £300,000 delegation limit with some variation by department. Anything above this requires HMT approval.

Where gifts are deemed significant or sensitive, a short narrative should be provided in the ARA explaining the rationale, approvals (including any HMT consent where required) and how the gift represents value for money and complies with MPM.

Subsidies

For the purposes of this guidance, subsidy means any form of public financial support or advantage (e.g. grants, soft loans, guarantees, tax reliefs) given on non-commercial terms to specific organisations or activities. There is no requirement for HMT approval below a department’s main DAL, subject to Subsidies being recorded, monitored and disclosed in line with the UK subsidy control regime and accounting rules.

Departments should record all subsidies in their systems (including legal basis, beneficiary, amount, dates and subsidy control assessment) and publish those above the relevant thresholds on the UK Subsidy Database within statutory deadlines. Material subsidies or major schemes should be disclosed in the ARA in line with FReM, with regular internal reporting on significant subsidies and compliance risks to senior finance, policy leads and the Audit and Risk Assurance Committee, supported by adequate documentation.

Guarantees and indemnities not in the normal course of business

This refers to cases where departments agree to cover another party’s losses or liabilities beyond its routine activities, which can create an unusual risk for taxpayers.

These are covered up to a delegation limit of £3 million. Anything above this should be referred to HMT for approval.

These payments are classed as Contingent Liabilities in the ARA. Material guarantees and indemnities given outside the normal course of business should also be reported in the parliamentary accountability and audit report, including reference to any required HMT or Parliamentary approval.

1. For avoidance of doubt confidentially clauses to avoid departmental, government or official embarrassment will always be NCR and are unlikely to be approved. ↩