Supplementary memorandum submitted by
HM Treasury
NIGERIA DEBT
The UK Government has made significant progress
in 2005 in the fight against poverty. The Gleneagles summit agreed
on an ambitious multilateral debt deal that will cancel up to
$55 billion of debts owed to the IMF, World Bank and the African
Development Bank. Many countries have made commitments to substantially
increase their aid levels. DFID has committed £1.1 billion
in bilateral assistance to Africa for 2005-06, and has committed
almost twice that amount in aid though multilateral institutions,
a significant proportion of which will help Africa to meet the
MDGs. We are working hard to make a success of the Doha round,
the success of which is essential if millions of people are to
have a chance to escape poverty.
The 20 October Paris Club debt deal was done
at the request of the Nigerian Government, based on and in support
of its own economic reforms and development strategy. The UK worked
very hard to help deliver this fair solution to Nigeria's debt
problems. Paris Club creditors will write off about 60% of Nigeria's
debt. The UK alone will cancel £2.8 billion. In return Nigeria
will use part of its oil windfall to pay off the remaining debt.
This represents the largest debt relief package
ever in sub-Saharan Africa. DFID has been working hard with the
Nigerian authorities to ensure that all the savings from the debt
cancellation are effectively targeted on reducing poverty. The
deal will free up at least an additional $1 billion a year for
Nigeria to spend on poverty reduction, helping to employ an extra
120,000 teachers and put 3.5 million children into school. In
addition to the £2.8 billion debt cancellation, DFID is in
the process of doubling its assistance to Nigeria to £100
million.
If the UK were now to return the money being
repaid by Nigeria back to Nigeria it would require DFID to finance
it from its development budget. This would mean reallocating DFID's
budget at the expense of other poor countries. Nigeria is not
a HIPC, and given its relative financial position and oil resources,
for the UK to go further and provide one hundred per cent debt
cancellation for Nigeria would not be an appropriate allocation
of our aid resources.
The President of Nigeria and his Finance Minister
have both welcomed the Paris Club debt deal. The UK Government
believes it is important to support the ownership, sovereign right
and accountability of the elected Nigerian Government.
What counts as efficiency gains in local authorities?
The Local Government Efficiency Technical Note
sets out the criteria. It is available at: http://www.odpm.gov.uk/index.asp?id=1135505
In concurrence with the Gershon Review, the
Local Government ETN states:
Efficiency is not about cuts, but about raising
productivity and enhancing value for money. Efficiency gains accrue
when projects achieve one or more of the following:
— (E1) reducing inputs (money,
people, assets, etc) for the same outputs;
— (E2) reducing prices (procurement,
labour costs, etc) for the same outputs;
— (E3) getting greater outputs
or improved quality (extra service, productivity, etc) for the
same inputs; or
— (E4) getting more outputs or
improved quality in return for an increase in resources that is
proportionately less than the increase in output or quality.
Certain types of activity are not acceptable
as efficiency gains:
— Re-labeling of activity (eg reclassifying
inspection as advice);
— Cuts that result in poorer services
for the public; or
— Increased income purely from
higher prices in fees and charges to the public.
PUBLIC SPENDING
IN IRAQ
The net additional costs of operations in Iraq,
as recorded in the Ministry of Defence's Annual Reports and Accounts
(voted against Request for Resources 2) total £3,068 million
as follows:
|
| Financial Year | £ million
|
|
| 2002-03 | 847
|
| 2003-04 | 1,311
|
| 2004-05 | 910
|
|
The costs of operations in Iraq in 2005-06 will depend on
force levels and operational tempo.
SINGLE INTELLIGENCE
ACCOUNT ALLOCATION
The provision for the Security and Intelligence Agencies
is subject to the same scrutiny and accountability as for other
Government departments. However for security reasons these figures
are presented as a single allocation known as the Single Intelligence
Account. The 2004 Spending Review White Paper (cm 6237) shows
their budgets as:
|
| £ million | 2005-06
| 2006-07 | 2007-08
|
|
| Single Intelligence Account | 1,205
| 1,327 | 1,397
|
|
In addition Parliament votes the Estimates for the Security
and Intelligence Agencies at the aggregate level. The Winter Supplementary
Estimate currently before Parliament seeks authority for spending
in 2005-06 to rise to £1,306 million through the draw down
of End of Year Funding. We expect this to rise further during
this year by £23m following the Chancellor's announcement
in the 2005 Pre Budget Report of an additional £85 million.
GOVERNMENT'S
RESPONSE TO
THE BARKER
REVIEW: HOUSING
NUMBERS
The Barker Review's final report set out three illustrative
scenarios for future house building rates, taking as a baseline
gross house building levels in 2002-03.[4]
However, it is important to recognise that the Review's first
scenario of an additional 20,000 homes per annum represented existing
Government plans—in the form of the Sustainable Communities
Plan commitment to deliver an additional 200,000 homes by 2016.
The Review's two other scenarios of an additional 70,000 homes
pa and an additional 120,000 homes p.a. are therefore equivalent
to an additional 50,000 and an additional 100,000 homes pa on
top of existing Government plans.
The modelling which informed the Barker Review scenarios,
and which was subsequently commissioned by ODPM to inform the
Government's response,[5]
considered the impact on affordability of building additional
owner-occupied houses (a gross house building figure). However,
within the planning system, the number of additional houses is
expressed in terms of net additions to the total stock—ie
new build less demolitions plus gains in dwelling numbers from
conversions, which subdivide properties, minus losses in dwelling
numbers from conversions which combine existing properties (or
undo previous subdivisions). The ambition set out in the Government's
response is therefore a net additions figure.
Achieving the Government's aim to improve affordability and
help future generations of homebuyers to get a foot on the housing
ladder will require housing supply to become much more responsive
to demand. The Government's response to the Barker Review drew
on current ODPM projections which suggest that if Government is
to meet its aim to improve affordability, new housing supply in
England will need to increase over the next decade from 150,000
to 200,000 net additions per year—within the range of house
building exemplified by Kate Barker, and exceeding the projected
average household formation rate of at least 190,000 per year
up until 2021.[6]
The speed at which this increase can be achieved, and thus
the precise timescale over which affordability benefits will be
realised, will depend on the provision of investment in the infrastructure
necessary to support housing growth, reform to the mechanisms
by which new housing and infrastructure are delivered, and a positive
response from the house building industry. Detailed plans will
be set out in the 2007 Comprehensive Spending Review, taking into
account progress on the wider proposals set out in the Government's
overall response.
DEPARTMENTAL BREAKDOWN
OF THE
REALLOCATION OF
FUNDING FROM
CENTRAL PROGRAMMES
TO THE
LOCAL GOVERNMENT
FINANCE SETTLEMENT
Full departmental spending allocations will be available
through the publication of the Main Supply Estimates, which take
place in due course.
12 January 2006
4
See pp 20-23 of the Barker Review final report. Back
5
See Government Response to Kate Barker's Review of Housing Supply:
The Supporting Analysis; and Affordability Targets: Implications
for Housing Supply, ODPM, December 2005. Back
6
ODPM Interim 2002-based household projections, based on 2002-based
population projections. Back
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