Underspend


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Underspend

To spend less than one was allotted in a budget. Underspending in personal finance is almost always a good thing as it allows one to save more or to pay down debts. In corporations, however, underspending can be negative; for example, if a department does not spend its entire budget, the executives may conclude that it does not need such a high budget and cut that department's allotment. This creates a perverse incentive for departments and other subdivisions to spend their entire budget whether or not they need to.
References in periodicals archive ?
The report states: "Reduced expenditure on payroll, procurement and utilities contributed to the underspend, together with increased recoveries of income, lower utilisation of contingency funds and savings on capital financing charges."
"When deducted from the controllable underspend, the total out-turn adjustment to the general fund is a contribution of PS121,000.
"We may have an underspend currently but our reserves are low and being used to support the most vulnerable people in Staffordshire." Councillor Price insisted the county council needed to prioritise where it spends money.
As recently as 2016-17, the underspend was only [pounds sterling]84 million.
He added: "This was quite a big underspend, let's not make any bones about it, and I think this opens up a wider discussion.
The report to councillors also explains that Active Northumberland is to receive an additional one-off contribution from the underspend of PS300,000, while an increase to the equal pay provision of PS1.8m is requested, mainly to cover HMRC liabilities.
Health and social care chief Coun Paulette Hamilton (Lab, Holyhead) said the underspend in her portfolio was mainly down to reduced demand for care packages as well large funding sums being ploughed in to the department in recent years.
This long-awaited project, which has benefits that far outweigh its costs, is at risk of never being realised if NHS England continue to rely on an underspend to fund it."
"This is a normal exercise we go through late in the year to have a look where the money is, and based on the numbers I have seen so far from early emerging month 11 figures I'm satisfied that that cost of [pounds sterling]5.8m can be absorbed for the current year and we'll still underspend for the current year as an overall."
Northumberland County Council's finances this year are "a positive picture overall in challenging times", with a [pounds sterling]4.2m underspend now forecast.
Cleveland Fire Authority's Audit and Governance Committee received a report detailing it is on track to achieve a PS924,000 underspend for 2018/19.
The report added: "This underspend has arisen mainly due to a number of one-off underspends that are not expected to continue to arise in future years.