Further letter from HM Treasury to the
Clerk of the Treasury Sub-committee
Thank you for your letter of 16 June about the
changes to the departmental expenditure (DEL) and running costs
limits for Treasury, Inland Revenue and HM Customs and Excise
announced on 13 June.
The change announced in the written answer for
Treasury was an increase in DEL of £26,376,000. There is
a Capital Modernisation Fund (CMF) allocation of £28.3 million
in 2000-01 for the new Partnerships UK (PUK), and £27 million
will be drawn down from it in the Summer Supplementary Estimate.
PUK was established as a Government owned company on 13 June and
will be launched as a Public Private Partnership in late autumn.
The increased provision is sought to meet the costs of PUK's operations
until the autumn launch, and for the Treasury's investment in
PUK thereafter. It will also provide for payments to PUK for provision
of services to the Treasury under a framework agreement which
comes into effect this summer, the cost of advisers' fees; and
the fit-out and IT costs of PUK accommodation.
The supplementary estimate also includes additional
provision for the continuing costs of the Treasury Taskforce,
which has been financed by a transfer from the department's existing
running costs provision.
As part of the 1998 Comprehensive Spending Review,
the Inland Revenue is committed to making efficiency savings of
10 per cent in total over the three year period covered by the
Review. In addition to this, the Revenue plans to make further
savings of £23 million in the current year, 2000-01. However,
the costs of recent policy changes and growth in workloads have
been very substantial and Ministers have decided that the Revenue
requires additional funding.
The increase in running costs of £154.6
million is made up as follows:
(a) increases in expenditure arising from
a variety of individual requirements which are set out in the
Annex to this note, in total £125.4 million.
(b) a transfer from the Department of Social
Security of £16.9 million. This transfer covers the costs
of work being undertaken by the Inland Revenue for the Welfare
Reform Agenda. Much of this work is being undertaken by staff
and systems transferred from DSS last year. The main components
of the transfer are for work on stakeholder pensions, state second
pension, pension sharing on divorce, incapacity benefit changes,
bereavement benefit changes and pensions forecasting;
(c) £3 million being transferred from
the Modernisation Fund in respect of the Civil Service Reform
(d) £2.1 million being transferred from
Customs and Excise. This transfer is from the allocation to Customs
and Excise of the Invest to Save Budget and is for closer working
initiatives with the Inland Revenue in 2000-01. This closer working
will be in areas including joint teams working on the Shadow Economy,
a pilot closer working scheme in the fashion industry, local pilots
on compliance work, and some sharing of data.
(e) a small transfer of £0.2 million
from the Property Advisers to the Civil Estate (PACE) following
the change in ownership of a building in Peterborough.
(f) a sum of £7.0 million which is added
to the Department's unallocated provision, pending consideration
of the Makinson and Bichard reports on pay and incentives, in
the context of the Civil Service Reform Programme.
The items above add up to the total of £154.6
million running costs announced in the written answer. Against
this sum, there is offset a £7 million reduction in capital
provision, leading to the increase in the Departmental Expenditure
Limit of £147.6 million, also announced in the written answer.
The change announced for Customs was a reduction
in DEL and running costs of £2.1 million which is being reflected
in a Revised Estimate. The £2.1 million is the transfer to
the Inland Revenue for closer working and details of this are