The HSE obtains money from two main sources: the Government (via the Department of Work and Pensions) in the form of a 'grant-in-aid' and from income generated through its chargeable activities.

The budget heading that needs to be given particular scrutiny is 'administration' . Whilst capital costs are important for any organisation, for the HSE it is the level of the 'administration' budget that determines the numbers of inspectors that the HSE employs and it is the number of inspectors that is crucial to the HSE being able to carry out its core activities.

Out of the 'administration' budget also comes resources for support staff and lawyers who are important to the efficient working of the HSE's inspectors.

Since May 1997 there have been three financial settlements between the HSE and the Government - opne in 1998, one in 200 and the other in 2002.

The 1998 Settlement
When the Labour government came to power in 1997, the HSE spend £155 million on its administration bvudget. In 1998, the Government made its first financial settlement with the HSC which resulted in the increases in the administrative budget. However, little of the increase was the result of new Government money, most being the result of increased resources from HSE charging.

The 2000 Settlement
In 2000, it was announced the Government was providing the HSE "£24 million" of new money over a threee year peiod for administration costs.

However this figure was rather misleading. The real increase in the proposed 'administration' budget between 2000/01 and 2003/4 directly as a result of this settlement was £9 million - .

The 2002 Settlement
In Decembger 2002, the Government announced that it would provide the HSE's 'administration budget' with an extra £10 million over a three year period. However, this figure is again rather misleading. At the end of the three year peiop, this equates to an increase of only #2 million on the administration budget when compared to 2002/3 - the year prior to the settlement.

The 2002 settlement: Administration Budget (£ mil)

	2002/003	2003/4	2004/5	2005/6
Total to be spent on Administration as result of settlement	£199	£203	£203	£201
Resulting Year on year increase/decrease		+ £4	£ 0	- £2
Year on year increase if funding had been pegged to 2.5% inflation		+ £4.9	+ £5.1	+ £5.3
Resulting total sum that would have been available if funding has been pegged to 2.5% inflation		£203.9	£209	£214.3

Analysis of 2000 and 2002 settlements combined
In 2005/6, the Government is currently allowing the HSE to spend £22 million more than the level it allowed the HSE to spend in 2000/01. That is to say the administration budget will have risen from £179 million to £201 million.

This increase represents an average year-on-year increase of about 2.5% - which about matches the level of inflation.

However, two thirds (£15 mil) of the two increases (£22 mil) came in one year 00/01 - 01/02 and of this £15 million, the Government actually only contributed £5million in direct grant-in-aid - the rest coming from HSE's own charging activities. Subsequent to that year, the level of funding was on average less than 1.25% increase year on year.

To read a table showing details of HSE's administration budget from the time Labour came into power to 2005/6, click here