Foreign & Commonwealth Office Main
Estimate 2006-07 Memorandum for the Foreign Affairs Committee
RECONCILIATION OF
2006-07 MAIN ESTIMATES
TO SR2004 OUTCOME
1. The 2004 Spending Review settlement showed
the FCO Resource Budget for 2006-07 as £1,687.0 million and
the capital budget as £119.003 million. Since July 2004 there
have been a number of changes to the FCO's Departmental Expenditure
Limits (DELs) and to the Treasury's budgeting framework which
bring the current Resource DEL figure for 2006-07 to £1,818.141
million and the Capital DEL to £150.003 million. The tables
below show the main changes and reconcile the DELs with the Main
Estimates figures.
Table 1
RESOURCE
| 2006-07 | 2007-08
|
| Resource DEL Baseline from SR 2004 (£m)
| 1,687.000 | 1,723.000
|
| Changes to Resource DEL |
| |
| Conflict Prevention Pool Main Estimate Changes (net)
| 174.463 | — |
| Transfer from DFID in respect of Small Grants Scheme
| 7.985 | 7.985 |
| BBC World Service Capital Grant moved to Capital DEL
| -31.000 | -31.000 |
| British Council Capital Grant moved to Capital DEL
| -7.800 | -7.800 |
| Transfer of BBC World Service Broadcasting Service share of BBC Monitoring Subscription to the Cabinet Office
| -6.100 | -6.100 |
| Transfer of FCO share of BBC Monitoring Subscription to the Cabinet Office
| -3.100 | -3.100 |
| Net effect of reclassifying British Council as Public Corporation
| -2.340 | -2.340 |
| Net changes £1 million or less | -0.967
| 0.033 |
| Resource DEL at 1 April 2006 | 1,818.141
| 1,680.678 |
| Difference Between Resource DEL and Main Estimate
| | |
| Remove Common Foreign & Security Policy (non-voted expenditure in DEL)
| -6.713 | |
| Add Reimbursement of Taxes (voted expenditure outside of DEL)
| 18.000 | |
| Remove Departmental Unallocated Provision (not voted) (Table 5)
| -64.000 | |
| Add BBCWS Capital Grant from Capital DEL (Resource in Estimates)
| 31.000 | |
| Add back British Council Capital Grant from Capital DEL (Resource in Estimates)
| 7.800 | |
| 2006-07 Main Estimate Resource Total
| 1,804.228 | |
| | |
Table 2
CAPITAL
| 2006-07 | 2007-08
|
| Capital DEL Baseline from SR 2004 (£m)
| 119.003 | 117.003
|
| Changes to Capital DEL | |
|
| Effect of reclassifying British Council as Public Corporation after SR2004
| -7.800 | -7.800 |
| BBC World Service Capital Grant moved to Capital DEL (Budgeting framework change)
| 31.000 | 31.000 |
| British Council Capital Grant moved to Capital DEL (Budgeting framework change)
| 7.800 | 7.800 |
| Capital DEL at 1 April 2006 | 150.003
| 148.003 |
| Difference Between Capital DEL and Main Estimate
| | |
| Departmental Unallocated Provision for Capital (not voted)
| -1.000 | -1.000 |
| Remove BBCWS Capital Grant from Capital DEL (Resource in Estimates)
| -31.000 | |
| Remove British Council Capital Grant from Capital DEL (Resource in Estimates)
| -7.800 | |
| 2006-07 Main Estimate Capital Net Total
| 110.203 | |
| | |
CONFLICT PREVENTION
POOL MAIN
ESTIMATES CHANGES
2. Activity and expenditure under the Conflict Prevention
Pools are undertaken jointly by the FCO, MoD and DfID. The FCO
manages the Peacekeeping and Global programme expenditure elements
of the pool and has £74 million for the Global Conflict Prevention
Pool in its Resource DEL baseline which is added to by other pool
partners through transfers between Departments in Main and Supplementary
Estimates. The effect of the transfers between pool partners to
the 2006-07 FCO Main Estimates is a net increase of £174.463
million. This is made up of an increase of £200 million for
peacekeeping, transfers totalling £28.680 million to MoD,
DfID and SIA for Global programme expenditure and a transfer of
£3.143 million from DfID for Africa programme expenditure.
3. The Chief Secretary to the Treasury has not yet agreed
the total amount that Parliamentary approval should be sought
for peacekeeping expenditure in 2006-07. Since there is uncertainty
over these costs due to changes in demand for peace support operations,
the Treasury has agreed that an initial amount of £200 million
should be applied for in the Main Estimate. The Treasury expects
that further provision will be sought in the Supplementary Estimates,
by which time more accurate information will be available. Last
year (2005-06) approval was given for a total amount of £373
million to be sought.
TRANSFER FROM
DFID IN
RESPECT OF
SMALL GRANTS
SCHEME
4. The Department for International Development (DfID)
transferred £7.985 million to the FCO in the 2005-06 Winter
Supplementary, in respect of the transfer of responsibility for
the Small Grants Scheme. This is a baseline change that carries
through to 2006-07 and 2007-08. From 2006-07 onwards these funds
form part of the FCO's bilateral programme budget.
CHANGE IN
BUDGETING FRAMEWORK
FOR CAPITAL
GRANTS
5. The Pre-Budget Report 2005 announced a change to the
budgeting framework from 2006-07 in respect of capital grants.
All spending on capital grants is now counted in the capital budget
(Capital DEL) to align better with the national accounts measures
used for the fiscal framework. However, for Estimates purposes
this expenditure will continue to be recorded as Resource across
Whitehall. Hence, the reconciliation of the current 2006-07 DEL
to that announced in SR2004 shows expenditure on capital grants
moving from Resource DEL to Capital DEL, whereas the reconciliation
of the Resource & Capital DEL to the 2006-07 Main Estimate
shows it moving back from Capital to Resource.
TRANSFER OF
RESPONSIBILITY FOR
BBCWS MONITORING SERVICE
TO THE
CABINET OFFICE
6. The Cabinet Office took over from the FCO as lead
stakeholder for the BBC World Service Monitoring Service on 1
April 2006. As a result of a 2005 review of BBC Monitoring, all
stakeholders agreed to make a PES transfer that moves funds permanently
from their own baseline budgets into a central fund to be administered
by the Cabinet Office on behalf of BBC Monitoring.
7. The FCO transferred £3.100 million from its baseline
budget. The BBCWS Broadcasting Service is also a BBC Monitoring
stakeholder and £6.100 million of their ringfenced grant
in aid provision was transferred to the Cabinet Office.
8. The FCO and the BBCWS Broadcasting Service will no
longer make any subscription payments to the BBCWS Monitoring
Service.
NET EFFECT
OF RECLASSIFYING
BRITISH COUNCIL
AS A
PUBLIC CORPORATION
9. This change was also explained in the 2005-06 Memorandum.
This is a baseline change which carries forward to 2006-07 and
2007-08. The reclassification of the British Council from a Non-Departmental
Public Body (NDPB) to a Public Corporation has been reflected
in the FCO's Resource & Capital Departmental Expenditure Limits
since the 2004 Spending Review. As an NDPB the resource and capital
expenditure of the British Council was included in the FCO's Resource
and Capital DELs and the Resource DEL included an element for
British Council non-cash costs such as depreciation. As a Public
Corporation only the grant-in-aid paid to the British Council
needs to be recorded in the FCO's Resource DEL. The total of grant-in-aid
payable to the British Council is unaffected by this change in
classification.
DEPARTMENTAL EXPENDITURE
LIMIT (DEL) & ADMINISTRATION
BUDGETS
10. The tables below show a comparison of the 2006-07
DEL (Table 3) and Administration (Table 4) budgets with the 2002-03,
2003-04 and 2004-05 outturn, the forecast for 2005-06 and plans
for 2007-08.
11. The breakdown between Resource and Capital differs
from the table in the 2005-06 Spring Supplementary memorandum
because the figures have been restated to reflect the changes
to capital grants in Treasury's budgeting framework (explained
in paragraph 5 above).
Table 3
DEL COMPARISON
| 2002-03 | 2003-04
| 2004-05 | 2005-06
| 2006-07 | 2007-08
|
| Actual | Actual
| Actual | Forecast
| Budget | Plan |
| Resource DEL1 | 1,535.100 |
1,548.388 | 1,714.849 | 1,967.072
| 1,818.141 | 1,680.678 |
| Capital DEL | 101.971 | 86.621
| 112.467 | 152.497 | 150.003
| 148.003 |
| Less Depreciation2 | 126.597
| 103.538 | 70.043
| 138.716 | 151.624
| 166.624 |
| Total | 1,510.474
| 1,531.471 | 1,757.273
| 1,980.853 | 1,816.520
| 1,662.057 |
| | |
| | | |
1 Resource DEL figures for 2006-07 and 2007-08 are understated
because they do not include all of the conflict prevention expenditure,
which will be transferred at the time of the 2006-07 and 2007-08
Main and Supplementary Estimates. In addition 2005-06 included
expenditure on a number of one off items (Tsunami expenditure,
Efficiency Challenge Fund & G8 & EU presidencies).
2 Depreciation, which forms part of Resource DEL, is excluded
from the total DEL, since Capital DEL includes the purchase cost
of capital assets. To add on the depreciation of those assets
would double count their cost.
Table 4
ADMINISTRATION BUDGET COMPARISON £ MILLION
| 2002-03 | 2003-04
| 2004-05 | 2005-06
| 2006-07 | 2007-08
|
| Actual | Actual
| Actual | Forecast
| Budget | Plan |
| Administration budget | 763.007
| 745.715 | 752.907 | 857.677
| 862.101 | 883.101 |
| | |
| | | |
1 As mentioned in recent correspondence, the reclassification
of the core DUP as administration has not yet been finalised with
Treasury so will be reflected in a Supplementary Estimate. Forecast
administration outturn for 2005-06 is £858 million, which
includes £43 million of provision for impairments (compared
to £3 million expenditure on impairments in 2004-05).
DEPARTMENTAL UNALLOCATED
PROVISION (DUP) 2006-07
12. At the time of the Main Estimate, the FCO has £64
million of unallocated resource provision and £1 million
unallocated capital provision which is broken down as follows:
Table 5
2006-07 DEPARTMENTAL UNALLOCATED PROVISION
| Resource | Capital
|
| RfR1 Ringfenced Impairments DUP (non-cash) |
£35.0m | — |
| RfR1 DUP to met unforeseen requirements arising in-year
| £19.0m | £1.0m |
| RfR2 Global Conflict Prevention Pool | £10.0m
| — |
| Total | £64.0m
| £1.0m |
| | |
END YEAR
FLEXIBILITY (EYF)
13. The Public Expenditure Outturn White Paper published
in July 2005 showed a total figure of £111.991 million for
carry forward of 2004-05 DEL underspending into 2005-06 under
the DEL EYF scheme. Table 5 below shows how this figure was made
up from a mixture of adjustment for 2003-04 final outturn, forecast
2004-05 underspend and unused Departmental Unallocated Provision.
14. £44.904 million of this EYF was drawn down in
the 2005-06 Spring Supplementary, and we anticipate making a reduction
of £36.924 million to adjust for final 2004-05 outturn when
the 2005-06 EYF is calculated. This leaves the FCO with £30.613
million accumulated EYF for RfR1. This is made up of £3 million
admin and £3 million programme rolling forward from unused
DUP in 2004-05 and £24.163 million capital from 2004-05 underspend.
15. For 2005-06 we are currently forecasting full spend
against the Resource budget and an underspend of £23 million
against the capital budget. The FCO did not draw down its RfR1
DUP of £1 million capital in 2005-06 and anticipates rolling
this forward under the end year flexibility scheme as well as
the £23 million underspend. These figures are not reflected
in the table below. EYF availability from 2005-06 will be confirmed
in the Public Expenditure Outturn White Paper to be published
in July.
16. The remaining EYF is planned to be used in 2006-07
to help meet forecast pressures including: International subscriptions
increases, Flu Contingency Planning, restructuring of the Senior
Management Structure and the Professional Skills in Government
programme. Capital pressures include Lancaster House dilapidations
and the cost of altering the ICT infrastructure design as a result
of changes in Government Security Standards and implementation
of the solution.
Table 5
ACCUMULATION OF EYF £ MILLION
| RfR1 |
RfR2 | |
| Administration |
Programme | Capital
| Programme | Total
|
| Adjustment for 2003-04 final outturn | (6.306 )
| — | 5.297 |
| (1.009 ) |
| Forecast voted underspend 2004-05 | 30.000
| — | 25.000 | 26.000
| 81.000 |
| Ringfenced Impairments DUP 2004-05 not used |
20.000 | — | —
| | 20.000 |
| FCO Core DUP 2004-05 not used | 8.000
| 3.000 | 1.000 | 12.000
| |
| Total FCO EYF Entitlement in Public Expenditure Provisional Outturn July 2005 (table 6—Cm 6639)
| 51.694 | 3.000
| 31.297 | 26.000
| 111.991 |
| EYF drawn Down in Winter Supplementary
| — | —
| — | | —
|
| EYF Drawn down in Spring Supplementary | 28.092
| — | 10.000 | 6.812
| 44.904 |
| of which: | |
| | | |
| Voted underspend | 3.092
| — | 10.000
| 6.812 | 19.904
|
| Ringfenced Impairments DUP 2004-05 not used
| 20.000 | —
| — | | 20.000
|
| FCO Core DUP 2004-05 not used | 5.000
| — | |
| 5.000 |
| Adjustment for final 2004-05 outturn |
20.602 | — |
2.866 | (19.188) |
(36.924) |
| Balance of Accumulated End Year Flexibility |
3.000 | 3.000 | 24.163
| — | 30.163 |
| | |
| | |
PUBLIC SERVICE
AGREEMENTS
17. Full details of the FCO's Public Service Agreements
for 2006-07 can be found in the 2006 Departmental Report (Cm 6823).
D R Todd
Finance Director
2 May 2006
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