APPENDIX 1
Memorandum from the Office of Science
and Technology
OST RESPONSE TO QUESTIONS FROM THE SCIENCE &
TECHNOLOGY COMMITTEE ON THE SPRING SUPPLEMENTARY ESTIMATE 2004
INTRODUCTION
Under the current Public Expenditure framework, the
Resource Accounting and Budgeting (RAB) boundary includes Non
Departmental Public Bodies (of which the Research Councils are
major examples) as well as their parent department. Thus the DTI's
Departmental Expenditure Limits (DEL) bids, settlements and final
allocations include funding for the Research Councils—a
major part of the Science Budget—on a full RAB basis. These
are entered on the PES Database, which is the prime record for
controlling government expenditure. The Treasury requires OST
to actively control expenditure within annual limits for resource
and capital expenditure, with certain subsidiary controls.
The Estimates and Resource Accounts boundaries
focus solely on the department and therefore Parliament continues
to approve a cash Grant-in-Aid for each Council within the departmental
Estimate (other direct expenditure is requested on a full RAB
basis). The cash requirement is determined by reconciliation to
the use of the full resource and capital budgets by each Council.
Within the budgeting framework, OST maintains
Resource and Capital budgets (DELs) for individual subprogrammes,
including those which cover the funding for each of the individual
Research Councils. End Year Flexibility (EYF) is based on outturn
against resource and capital DELs, rather than cash. As such,
changes to the Grant-in-Aid figures for the Research Councils
only indirectly reflect changes in total Research Council expenditure,
but incorporating changes in the timing of expenditure, and in
the timing of cashflow.
QUESTIONS AND
RESPONSES
Q1.1 How is OST's End Year Flexibility distinguished
from the main DTI allocation?
A. The Science Budget, which includes funding
for the Research Councils, is ring-fenced from other DTI programmes
and is covered by a separate Request for Resources. Allocations
and outturn expenditure are recorded against subprogrammes. Within
the Science Budget, there is a separate subprogramme for each
Research Council: there are also individual subprogrammes for
other activities. OST monitors and controls unused allocations,
which generate EYF, at the subprogramme level and EYF deriving
from Science Budget subprogrammes is thus preserved for the benefit
of Science Budget.
Q1.2 What was OST End Year Flexibility at
the start of 2003-04?
A. Total End Year Flexibility available
for the Science Budget at the start of 2003-04 was £261.4
million . Of this, £139 million related to resource expenditure,
£35 million related to capital spending and £87.4 million
related to capital grants.
Q1.3 What are the rules and practices governing
the transfer of hypothecated amounts of EYF between Research Councils?
A. Treasury rules do not themselves hypothecate
funding to individual Research Councils, as opposed to the Science
Budget as a whole. However, OST policy, reflected in the Financial
Memorandum for each Council, has been that individual Councils
may carry forward any unused capital budget. In addition a Council
may automatically carry forward unspent recurrent resource budget
up to a maximum of 10% of its total recurrent resource budget,
or more than this level with the agreement of the Secretary of
State.
As part of its overall management of the Science
Budget, OST arranges transfers of funding between Councils in
order to match available funds to current needs where activity
is moving behind and ahead of expectation.
OST is in the process of revising Councils'
Financial Memoranda. As part of that process it has proposed that
Councils should be able to carry forward any unspent resource
budget in full, whether capital or recurrent. This will provide
Councils with greater certainty against which to plan and manage
their financial affairs, and is in line with HM Treasury policy
to encourage departments to cascade EYF.
Q1.4 What are the repayment arrangements?
A. EYF is a budgetary arrangement which
allows the spending of funds which were allocated to a particular
year, but unused in that year, to be used in a subsequent year.
This process does not involve repayment. Where EYF for individual
programmes is effected by in-year transfers between programmes
compensating adjustments are made to the summary of EYF entitlement.
Q1.5 What is each council's entitlement to
End Year Flexibility?
Please see the answer to Q1.3 above. EYF is
calculated annually, initially in May based on provisional outturn
for the previous year: the figures are then subject to confirmation
when the final outturn is determined, and then to approval by
HM Treasury.
Q2. The Committee would also like an explanation
of the reallocations which took place between the Research Councils
in the spring supplementary estimate, with particular reference
to the decrease in funding of £38.2 million to the Engineering
and Physical Sciences Research Council; the increase of £21.9
million to the Medical Research Council; the increase of £9.4
million to the Particle Physics and Astronomy Research Council;
and the extra grant-in-aid funding of £11.1 million to PPARC.
A. The reallocations of the existing Grant-in-Aid
provisions in the Spring Supplementary Estimates were not transfers
between Councils: they represent adjustments to the timing of
Grant-in-Aid to individual Councils. Grant-in-Aid represents cash
funding to the Councils, and the transfers generally reflect adjustments
to the individual Councils' forecast net cashflow rather than
to their total expenditure (although it is recognised that cashflow
changes could also reflect changes to the level of expenditure
as well as the profile). The decrease in cash requirement at EPSRC
arose from a slower than expected uptake of research grants under
various schemes: the increase in cash requirement at PPARC arose
mainly from exchange rate fluctuations effecting the sterling
value of International Subscriptions: and the additional cash
made available to MRC was used to make payments due slightly earlier
than would otherwise have been the case.
Q3. The Secretary of State further indicated
in a written statement to Parliament of 24 February 2004 that
the Particle Physics and Astronomy Research Council would receive
an additional £22.6 million and the Medical Research Council
would receive £461,000 (both non-voted) of capital funding.
The Committee would be grateful for a note clarifying the following
points: To what purpose will these additional resources be put?
Why have funds become available? How do these changes in funding
allocation affect the achievement of the science, engineering
and technology objectives set out in "The Forward Look 2003"
and the various targets and milestones laid out in the Research
Councils' operating plans for 2003-04? The Committee would also
be grateful if OST could indicate from where the funding, other
than the end Year Flexibility, to increase the Particle Physics
and Astronomy Research Council grant-in-aid allocation derives.
A. The items highlighted in the Spring Supplementary
Estimates covered by Question 2 are the cashflow implications
of the Resource and Capital DEL increases announced in the Secretary
of State's Statement. As noted in the introduction, changes to
non-voted Resource and Capital DEL are likely to give rise to
changes to cashflow (Grant-in-Aid) figures for the Research Councils,
although other factors can also affect cashflow.
Q4. The Committee notes that, in the spring
supplementary estimate, £24 million of end Year Flexibility
has been drawn down to provide additional funding for the Higher
Education Innovation Fund. The Committee would be grateful for
a note setting out the additional activities and benefits to be
delivered as a result of these increased resources.
A. HEIF is a programme of grant funding
to Higher Education Institutions to facilitate knowledge transfer
activity. In this instance, the £24 million EYF which was
taken up in the Spring Supplementary Estimates related to grants
for projects approved in 2002-03 but for which claims were not
submitted and approved by the end of the year. Any funds still
not expended in 2003-04 will be rolled forward to subsequent years.
As such, this draw down represents a rescheduling of funding rather
than an increase in either the total resources or activity over
that originally planned for the periods 2002-03 to 2003-04.
Q5. The Committee notes that the £200,000
transfer from the Department for Education and Skills will provide
funding for the Women's Resource Centre. It would be helpful to
have a note setting out activities undertaken by the Women's Resource
Centre and outlining the additional services that will be provided
as a result of this transfer.
A. The Women's Resource Centre will support,
advise and work with Science, Engineering and Technology (SET)
employers and professional bodies. Its objectives include tackling
the barriers in employment which result in few women being represented
in SET occupations, especially at senior levels; raising the profile
of women in SET; running an expert women's database; producing
good practice guides; and developing a means of recognising good
SET employers. It has been agreed that the £200,000 allocated
from the Department for Education and Skills will be spent on
new, innovative, undergraduate initiatives of which there are
few, if any, existing ones. Recommendations include addressing
the supply chain of females to SET from undergraduate courses,
ensuring that undergraduates stay in SET and when they graduate
they take a career on SET, examining business practices and recruitment
of female SET graduates and taking into account other areas of
widening participation including ethnic minority women.
April 2004
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