Final Consumption Expenditure (FCE) of Government is government spending on providing services and goods directly for the country. This includes the cost of running schools, hospitals, prisons, the Gardaí, the Army, social housing and the rest of public services.
The value of the services Government provides is hard to estimate using market prices, since few of these services are provided on an open market. For this reason, the Final Consumption Expenditure of Government is valued as the sum of the costs to produce these services. A large part of this spending is made up of the Pay of Workers, but it also includes the cost of Intermediate Consumption and Consumption of Fixed Capital.
The Final Consumption Expenditure excludes any income government gets from selling services. So, for instance, passport fees are deducted from the total expenditure on providing the passport, because that part of the cost is borne by the passport holder instead.
Local authority FCE on housing is calculated as the rent that would be paid for the home on the open market minus the rent actually paid by the government’s tenant.
Final Consumption Expenditure of Government excludes cash payments to households, such as the state pension and Child Benefit. It also excludes interest on the national debt (see Investment Income), investment grants, Subsidies to companies and the self-employed, and our contributions to the European Union.
Final Consumption Expenditure of Government includes goods and services which are paid for by government and which commercial enterprises provide directly to the public. For example, the cost of the Drug Payment Scheme. This category is officially called “Social Transfers in Kind – Market Production Purchased by General Government.”
Final Consumption Expenditure of Government is used in Government Accounts and is similar to Net Expenditure by Central and Local Government used in the Quarterly National Accounts (QNA) and Annual National Accounts (ANA), formerly National Income and Expenditure (NIE). The difference is Social Transfers in Kind – Market Production Purchased by General Government: in the QNA and NIE this is part of Personal Consumption Expenditure and not Net Expenditure by Central and Local Government. In Government Accounts, Market Production Purchased by General Government is part of Final Consumption Expenditure of Government.
