Select Committee on Treasury Minutes of Evidence


Annex D

IN-YEAR CONTROL UNDER RAB

  This Annex illustrates a set of working assumptions for the operation of in-year control over expenditure under RAB. The first table focusses on Supply issues and the second on other instruments of in-year control and related matters which arise as a result of the move to RAB. In each case, Parliamentary controls are shown in italics.

  2.  The third table sets out a provisional timetable for testing resource-based budgeting and in-year control alongside the "real" arrangements which will be in place during the transitional years to full RAB implementation.

Table 1

SUPPLY


Resources Capital Cash

Resource EstimatesEstimates split into one or more Requests for Resources (RfRs) and associated Appropriations in Aid (A in A).

Parliamentary approval needed to increase an RfR or A in A total.
Administrative control over capital expenditure.

Parliamentary approval needed to increase total non-operating A in A.
Net cash requirement.

Parliamentary approval required for increases and excesses.
VirementFreedom for departments to move between other current and grants columns and out of administrative costs column.

Treasury approval needed to move into administrative costs column or between functional lines within an RfR.

Parliamentary approval for movements between RfRs.
Treasury approval to move allocation between RfRs. Not normally applicable as single cash control figure for department unless a switch from non-cash into cash expenditure increased the net cash requirement, in which case Parliamentary approval is required.


Table 2

OTHER IN-YEAR CONTROL INSTRUMENTS


Resources Capital Cash

Departmental Expenditure Limits (DEL)Resource DEL.

Treasury approval (and notification to Parliament) of increased DEL limit.

Supplementary required if result was to increase voted DEL.
Capital DEL.

Treasury approval (and notification to Parliament) of increased DEL limit.
No formal control limit but Treasury scrutiny and Parliamentary approval for increase in net cash requirement through Supply.
DEL ReserveTreasury approval for calls on Resource DEL Reserve where increase in DEL limit not offset. Treasury approval for calls in Capital DEL Reserve where increase in DEL limit not offset. No formal control limit but Treasury scrutiny and Parliamentary approval for increase in net cash requirement through Supply.
Annually Managed Expenditure (AME)Resource AME.

Re-forecast twice yearly.
Capital AME.

Re-forecast twice yearly.
No formal control limit but Treasury scrutiny and Parliamentary approval for increase in net cash requirement through Supply.
AME MarginManaged rather than subject to control limit in-year but Treasury scrutiny and Parliamentary approval for Supply consistent with Government Accounting if results in increase in an RfR. As for resources.No formal control limit but Treasury scrutiny and Parliamentary approval for increase in net cash requirement through Supply.
Administrative cost limitTreasury approval to increase administrative cost limit within Resource DEL. Not applicable.No formal control limit but Treasury scrutiny and Parliamentary approval for increase in net cash requirement through Supply.
Departmental Unallocated Provision (DUPs) No formal Treasury approval for take up required but Treasury scrutiny and Parliamentary approval for Supply consistent with Government Accounting where results in increase in an RfR. No formal Treasury approval for take up required but Treasury scrutiny and Parliamentary approval for Supply consistent with Government Accounting where results in increase in an RfR. No formal control limit but Treasury scrutiny and Parliamentary approval for increase in net cash requirement through Supply.
Switches between Resource Budget and Capital Budget Unlimited switches for devolved authorities.

Unlimited switches from current to capital.

Limited freedom from switches from capital to current set individually for each department usually at 5 per cent.

Supplementary required if RfR increase results.
No formal control limit but Treasury scrutiny and Parliamentary approval for increase in net cash requirement through Supply.
End-year flexibility (EYF)Unlimited Resource DEL carryover within planning period. Take up dependent upon Treasury scrutiny and Parliamentary approval for Supply consistent with Government Accounting if results in increase in an RfR. Unlimited Capital DEL carryover within planning period. No formal control limit but Treasury scrutiny and Parliamentary approval for increase in net cash requirement through Supply.
Working capital adjustmentsNo resource implications in period for which working cash required. Not applicable.Within net cash requirement.

No formal control limit but if insufficient provision set at Main Estimates need for Treasury scrutiny and Parliamentary approval for increase in net cash requirement through Supply.


Table 3

TIMETABLE FOR TESTING RESOURCE BUDGETING AND IN-YEAR CONTROL


Trials/testing on resource basis Real

1998-99—resource accounts —cash-based Estimate

—in-year control in cash

—appropriation accounts
1999-00—dry run review

—population of database

—trials and testing of production of baselines and Resource Estimates from the database

—in-year control testing

—produce guidance for 2000 Review

—confirm in-year control working assumptions
—cash-based Estimates

—in-year control in cash

—resource accounts alongside
appropriation accounts
2000-01—shadow Resource Estimates

—full in-year control testing
—database recording resources and cash

—cash-based Estimates

—in-year control in cash

—2000 Review on a resource basis

2001-02
—Resource Estimates

—resource based in-year control

—resource based guidance to be used to inform all budgeting policy including planning and in-year control

—resource accounts




 
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