Supplementary memorandum submitted by HM Treasury
HM Treasury Guidance: Selling Government Services
into Wider Markets
1. This note sets out the circumstances
under which the Treasury would expect to be consulted regarding
the levels of receipts from wider markets activities. As Mr Glicksman
said in answer to Q119, the Treasury guidance is contained in
a document entitled Selling Government Services into Wider
in 1998 ("the Wider Markets guidance").
2. The guidance generally applies to commercial
activity of a non-statutory, discretionary nature. 
3. The guidance, a departure from the previous
policy, was designed to encourage departments to make the best
use of existing public assets. As such, a number of safeguards
and triggers for action were introduced to manage risk. These
included requirements for the Treasury to be consulted in certain
4. The original 1998 edition stated (at
footnote 2 on page 10):
"Where annual receipts from Wider Markets
appropriated-in-aid exceed 5 per cent of departmental (ie Class)
cash-limited provision, departments should consult Treasury spending
5. The guidance was revised in December
2001, to reflect the transition to Resource Accounting and Budgeting
(RAB). The revision states:
"Treasury spending teams should be consulted
where a department's aggregated annual receipts from wider markets
projects exceed 5 per cent of discretionary spending within the
Departmental Expenditure Limit."
6. This applies to net receipts (ie income
from wider markets activities after the costs of providing the
activity have been deducted) and to gross discretionary spending.
7. The intention of the 5 per cent threshold
in the Wider Markets guidance was to give the Treasury early warning
of particularly high levels of wider markets receipts to ensure
that departments' core activities do not become dependent on receipts
from wider markets activity, which may be uncertain and irregular.
8. The requirement is only that departments
consult the Treasury. The Treasury would normally expect
to permit departments to continue to generate wider markets receipts
above this level, subject (where necessary) to conditions, which
might include continued monitoring by the department (in the case
of Agencies and NDPBs) and the Treasury. The key consideration
for the Treasury is that the provision of the departments' core
services remains sustainable.
9. The guidance also states that all projects
where the full annual cost is more than £1 million require
Treasury approval. This threshold was derived from the Treasury's
Fees and Charges Guide. In practice, as departments should be
utilising existing assets, the Treasury would not expect them
to incur major expenditure in establishing wider markets products
or services. Contentious and repercussive projects must also be
approved by the Treasury.
10. The 5 per cent threshold applies at
departmental level. Within that, it is for departments to monitor
and control the activities of their agencies and NDPBs (such as
the Research Councils).
11. To date, the Department of Trade and
Industry has not consulted the Treasury regarding wider markets
receipts under the terms of the Wider Markets guidance because,
at departmental level, receipts have not reached the level of
5 per cent of discretionary spending.
12. The Treasury is currently revising the
Wider Markets guidance. This will reflect developments in competition
legislation, the Freedom of Information Act 2000 and Treasury
guidance: Charging for Information: When and How. The
revision to the guidance will also take the opportunity to specify
more precisely the circumstances under which departments should
consult the Treasury, in particular to specify when net and gross
figures should be used (see paragraph 6).
Mr Brian Glicksman
Treasury Officer of Accounts
8 www.hm-treasury.gov.uk/mediastore/otherfiles/sgswm.pdf Back
Further details about the applicability of the guidance are set
out in paragraph 7 of the Wider Markets guidance. Back