ANNEX B
COMMENTARY ON "DEPARTMENT YELLOW"
RESOURCE ESTIMATE FORMAT
B1. Schedule 1 to this Annex shows a possible
layout of the resource-based Estimate of Department Yellow. Schedule
2 illustrates the corresponding forecast operating cost statement
and Schedule 3 the forecast cash flow statement. The following
paragraphs provide a commentary on the resource-based Estimate
of Department Yellow.
Part I: ambit and voted amounts
B2. As in existing Supply Estimates, Part I
of the resource-based Estimate will contain the ambit (ie coverage)
of the Estimate and list the amounts to be voted in relation to
the provision in the Vote on Account previously presented to Parliament.
Part II: matrix of resource requirements
B3. There are three separate requests for resources
for the department in Part II of the Estimate. The first section
of Part II is in a matrix format, with a similar structure to
existing simplified Estimates. The columns are more detailed than
in the Summary of Resource Outturn (Annex C schedule 1), where
the FRAB suggested putting more detailed information in the notes
to the accounts. In the Estimate there are three analyses of gross
expenditure compared with the single figure in the accounts. The
requests for resources have been subdivided into the next level
of detail. Here it is assumed that the requests for resources
are split along functional lines, although in some cases they
might relate to the objectives which make up a departmental aim.
B4. Columns 1-8 in the first section of Part
II are expressed in accruals terms. Reading along the total line,
the Estimate shows that the net resource requirement is £91.376
million, after taking account of appropriations in aid of £55.763
million. Columns 6-8 of the first section show the non-resource
budget elements which go towards making the cash requirement.
Appropriations in aid relating to non-operating cost items estimated
at £100,000 are shown in column 8. Also shown in the right
hand side columns are forecast capital expenditure and other adjustments
which are itemised in the cash/resource reconciliation.
B5. The bottom right hand corner of the matrix
shows the total net cash requirement of £88.223 million,
which is the limit on Supply issues from the Consolidated Fund.
B6. Although not shown in this example, resource
Estimates will include two further columns showing comparative
figures for the net resource totals in the previous two years.
Part II: cash/resource reconciliation
B7. The reconciliation between the net resource
total of £91.376 million and the cash requirement of £88.223
million is shown in the second half of Part II of the Estimate.
Non-cash items which were included in the resource budget are
removed here: interest on capital charges of £1.85 million
and depreciation of £4.603 million are subtracted from the
resource budget. Capital expenditure is outside the resource budget
but the cash required for capital expenditure has to be provided
and this forms part of the cash requirement; so capital expenditure
of £2.6 million is added. The cash effects of various adjustments
relating to working capital changes (stock, debtors and creditors)
and changes in provisions are shown next. The final item shown
is the cash generated by the disposal of fixed assets which can
be appropriated in aid of the Estimate (see column 8). This example
assumes there is no difference between the cash and resource measures
of this type of receipt but that will not always be the case.
B8. The net effect of these changes is to reduce
the net resource requirement to the £88.223 million cash
required from the Consolidated Fund.
B9. Thus 8 figures will be voted for Department
Yellow:
— the accruals-based figures for net
resources and appropriations in aid for each of the three requests
for resources (6 figures to be Voted);
— the non-operating cost appropriations
in aid figure of £100,000; and
— the total net cash requirement of
£88.223 million, which is the limit on Supply issues from
the Consolidated Fund.
B10. The reason for voting separately the £100,000
is that without a Parliamentary limit on this source of income,
departments could use unforeseen receipts to finance additional
expenditure without further Parliamentary approval. So if Department
Yellow experienced a surge in this type of income, it would as
now have to present a Supplementary Estimate in order to use the
additional income to finance higher expenditure.
Part III: Extra receipts payable to the Consolidated
Fund
B11. Part III of the Estimate would as now notify
Parliament of the department's estimate of receipts to be paid
directly to the Consolidated Fund.
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