House of Commons - Communities and Local Government Committee

Select Committee on Communities and Local Government Committee Written Evidence

Revised Explanatory Memorandum by the Department for Communities and Local Government—

Winter Supplementary Estimates, 2006-07 (AR 03)

1 December 2006

At our evidence session on Monday, I undertook to provide the Committee with a revised explanatory memorandum covering the Department's Winter Supplementary Estimates ahead of the Secretary of State's appearance before you on Monday. I am sorry that during Monday's session we were not able to answer your questions on this subject as fully as I would have wished.

The Committee raised a number of points about the £1.35 billion request for provision made in the estimates. Of this total, £147 million represents a proposed increase in the spending within Departmental Expenditure Limits: this includes £111 million End Year Flexibility drawn down in respect of previous years' underspends; £2 million is Invest to Save Budgets awarded by HM Treasury; and £33.5 million is a call on the reserve for Housing Market Renewal Pathfinders. If it would be of assistance to you and your colleague on the Committee on considering the estimates, I have agreed with the Secretary of State that we would be very happy to arrange for officials here to brief members of the Committee, or your clerks, on the detail.

INTRODUCTORY NOTE

1. The changes to Departmental Expenditure Limits which are referred to below were announced by the Secretary of State on 21 November, Official Report, columns 23WS to 26WS. Changes to Departmental Expenditure Limits, of which the Department has two (Main Programmes and Local Government), are not always identical to the changes to the Estimates described below. This is because:

(a) some expenditure within Departmental Expenditure Limits (DEL) is non-Voted while some Voted expenditure is outside Departmental Expenditure Limits; and

(b) the Departmental Expenditure Limit includes expenditure by Trading Funds, Non Departmental Public Bodies (NDPBs) and Public Corporations and supported capital expenditure to local authorities which are not included in the Estimate. The Estimate records expenditure by the Department and its Executive Agencies only, which includes grant in aid to NDPBs and capital grants to Public Corporations.

END YEAR FLEXIBILITY

2. The end of year flexibility (EYF) entitlements were included in the Public Expenditure 2005-06 Provisional Outturn White Paper (Cm6883) which was presented to Parliament by the Chief Secretary to the Treasury in July 2006.

MACHINERY OF GOVERNMENT CHANGES

3. As a result of the Machinery of Government Changes on 5 May 2006, the Department for Communities and Local Government was formed to take on most of the responsibilities of the Office of the Deputy Prime Minister and to take on responsibilities for Race, Cohesion and Faith from the Home Office and for gender and equality policy from the Department of Trade and Industry.

4. In addition:

(a) the responsibility for the work of the Deputy Prime Minister was transferred to the Deputy Prime Minister's Office;

(b) the responsibility for parts of the Social Exclusion Unit was transferred to the Cabinet Office Social Exclusion Task Force; and

ORGANISATION OF INFORMATION

5. The memorandum is structured as follows:

Paragraphs 6 to 10:

Paragraphs 11 to 29:

Paragraphs 30 to 63:

Paragraphs 64 to 66:

Paragraphs 67 to 84:

SUMMARY OF CHANGES SOUGHT IN ESTIMATE

6. The Department for Communities and Local Government's Winter Supplementary Estimate requests additional net resource provision above Main Estimates totals of £1,351.5 million (£885.208 million for RfR1 and £466.292 million for RfR2).

7. Impact on Public Expenditure

Of the overall increase in net resource provision:

(i) £844.530 million (62%) does not lead to any change in public expenditure because it largely reflects the impact on the Estimates of transfers between existing budgets in Departmental Expenditure Limits (DEL).

(ii) £360.298 million (27%) reflects a net drawdown from the unallocated Annually Managed Expenditure (AME) budget held by Treasury (as the AME margin) as a consequence of latest estimates of demand led spending.

(iii) £146.672 million (11%) is an increase in spending within DEL funded by a combination of drawdown of entitlement to End Year Flexibility (EYF) (£111.240 million); drawdown from the Treasury's Invest to Save Budget (ISB) (£1.932 million) in respect of successful bids; and an agreed claim on the DEL Reserve (£33.5 million) towards the resource costs of the Housing Market Renewal Pathfinders.

Main reasons for increase

8. Under 7(i) above, the overall increase in net resource provision is principally a consequence of:

(a) A net transfer from non-voted to voted spending of £291.532 million on RfR1, primarily reflecting a switch from borrowing approvals (Supported Capital Expenditure) for local authorities to payments of capital grant to Registered Social Landlords (RSLs). This follows the advice of the Regional Housing Boards (RHBs) and does not add to public expenditure as it is already covered within the Departmental Expenditure Limit (DEL) set by the Treasury; and

(b) An increase in non-budget—grant-in-aid of £467.369 million on RfR1, of which around £311 million is for the Housing Corporation. Of this, only £0.8 million, which is funded from end year flexibility, adds to public expenditure. The remainder is split broadly between £200 million as a result of a transfer between spending programmes, and £100 million due to timing differences where expenditure is incurred in one year, but the actual cash payments are made in a subsequent year neither of which adds to public spending.

9. Under 7(ii) above, the overall increase in Annually Managed Expenditure (AME) of £408 million on RfR2, is mainly due to an increase of £316 million for payments to reflect the difference between estimated and actual contributions to the National Non-Domestic Rate (NNDR) Pool by local authorities. Each year local authorities make contributions to the NNDR pool based on their estimate of the amount of non-domestic rates they will collect for the year. At the year end, adjustments are made involving further payments by authorities to the pool, or payments by the Department to authorities, to reflect the difference between the estimated and actual amounts due to the pool. These adjustments amounted to £316 million against a total NNDR pool of £18,000 million in 2005-06.

  10.  The changes in paragraph 7 are shown in tabular form below.

(all figures £ million) RfR1 RfR2 Total

Changes that do not increase Public Expenditure

a.  Transfer from non-voted to voted 291.532 -4.524

b.  Non Budget (Grant in Aid) 467.369 0.161

c.  Transfers to/from OGDs including MOG changes 91.142

d.  Transfers between RfRs -0.900 0.900

e.  Transfer from Resource to Capital within RfR -1.150

Sub Total 847.993 -3.463 844.530

Changes between Departmental AME and Treasury's Unallocated AME Margin

f.  Annually Managed Expenditure (AME) -47.702 408.000 360.298

Changes that increase Public Expenditure

g.  End Year Flexibility (EYF) & Invest to Save Budget (ISB) 51.417 61.755

h.  Drawdown from Reserve 33.500

Sub Total 84.917 61.755 146.672

Total 885.208 466.292 1,351.500

(Figures in table above reflect net changes)

ALL SIGNIFICANT CHANGES BY ESTIMATE SECTION

RFR1

Section L (Housing Supply and Demand)

11. The main programme affected on this section is the Regional Housing Pot which is receiving £384.191 million (this change is included line (a) of the table at paragraph 10 above). The Regional Housing Pot (RHP) brings together funding for three activities; new supply of affordable housing; activity to bring local authorities' own housing stock to the decent homes standard; and a range of initiatives to support private sector decent homes, regeneration and mixed communities.

12. The £384 million represents a switch from borrowing approvals (Supported Capital Expenditure) for local authorities to payments of capital grant which is a result of a change in the way the programme is being delivered. Previously it was undertaken by local authorities (and supported by non-voted supported capital expenditure). However, following the advice of the Regional Housing Boards (RHBs), some of the expenditure will now be undertaken by Registered Social Landlords (RSLs) and will therefore need to be funded by voted capital grants.

13. The RHBs identified two issues, the problem of debt-free authorities not making full use of their allocation, and projects involving more than one authority where the need to share an approval to borrow was a barrier to delivery. We therefore sought Treasury agreement to convert borrowing approvals to capital grant primarily to address these. This does not represent a net increase in public spending.

14. The RHBs have two main roles:

(a) preparation of Regional Housing Strategies (RHS). These identify priorities to be addressed (both national and regional) in each region, and include (and are informed by) a clear evidenced base picture of the current state of housing in the region. The RHS provides the basis on which the advice to Ministers is put; and

(b) advising Ministers on how the region's allocation of funding for housing capital works (the Regional Housing Pot) should be spent.

Section U (Housing Supply and Demand—Non Budget)

15. This section is for the grant-in-aid which is given to Non Departmental Public Bodies to cover the provision they have in their DEL budgets. It basically covers their cash expenditure. The increase is mainly due to increases in grant-in-aid to the Housing Corporation (£311.411 million); London Urban Development Corporation (£42.4 million); Thurrock Urban Development Corporation (£32.125 million) and English Partnerships (£29.5 million) (all included within the totals figures in line (b) of the table at paragraph 10 above).

16. The Housing Corporation's targets currently set for its Affordable Housing Programme is 49,000 social rented homes and 35,000 low cost home ownership homes. These completions will go towards achieving the Department's targets of providing 30,000 social rented homes per year by 2008 and over 100,000 low cost home ownership homes by 2010. The transfer to the Housing Corporation at Winter Supplementaries should ensure the delivery of the first year's milestones for the Corporation's programme and will also fund some schemes which will not complete until 2007-08 and 2008-09 within the original public expenditure provision for the current (SR04) spending review period.

17. The increase of £42.4 million for the London Thames Gateway Development Corporation (LTGDC) reflects a transfer of funding from the Department's Thames Gateway programme. This should help enable the Corporation to deliver on its objective of regenerating its area.East of London, including the Lower Lea Valley, through bringing land and buildings into effective use, encouraging the development of existing and new industry and commerce, and ensuring that housing and social facilities are available to encourage people to live and work in the area. The LTGDC's remit includes playing a part, in partnership with others, in developing proposals for investment to complement the Olympics legacy programme.

18. The increase of £32.125 million to Thurrock Thames Gateway Development Corporation follows a transfer of funding from the Department's Thames Gateway programme to help enable the Corporation to deliver on its objective of regenerating the Thurrock area through bringing land and buildings into effective use, encouraging the development of existing and new industry and commerce, and ensuring that housing and social facilities are available to encourage people to live and work in the area.

19. The increase for English Partnerships (EP) (a key delivery agency for sustainable communities) is to support additional expenditure on physical regeneration programmes across England, involving increasing the supply of high quality affordable homes, for example for key workers, ensuring the best use of land, including brownfield and public sector sites, and encouraging the highest standards of design and construction to produce exemplar developments. Around £2.2 million of the £29.5 million relates to an increase in public expenditure offset by reductions on other programmes. The balance (£27.3 million) arises from a number of factors relating to EP's normal business operation, including income and timing of land sales and receipt of proceeds.

Sections Y and Z (Local Area Agreements)

20. This is a presentational change to enable the Department to better track expenditure on Local Area Agreements (LAAs), and meet NAO and Treasury requests for better transparency on LAA expenditure on the face of the Estimate. The two new sections show receipts by the Department (section Y) of £413 million (£353 million from DfES and £60 million from the Home Office) for their contribution to LAA programmes and spending (section Z) funded by a combination of the receipts (section Y) and a transfer of £110 million from the Department's own programmes. Section Z covers all expenditure on LAAs by the Department and there is, now therefore, no expenditure elsewhere on the Estimate for LAAs. There is no increase in the net resource requirement on the Estimate as a consequence of these changes.

21. A Local Area Agreement (LAA) is a three-year agreement, based on local Sustainable Community Strategies, that sets out the priorities for a local area agreed between Central Government, represented by the Government Office (GO), and a local area, represented by the lead local authority and other key partners through Local Strategic Partnerships (LSPs).

22. LAAs were conceived primarily as a means of capturing the wide range of area based funding streams, allowing for rationalisation of the funding and streamlining of the administration and monitoring that surrounds them. To allow this, funding from many existing programmes are merged, and outcomes across the four blocks below are agreed.

— Children and Young People.

— Healthier Communities and Older People.

— Safer and Stronger Communities.

— Economic Development.

23. Expenditure on LAAs will not result in cuts in other areas of departmental activity. LAAs are simply a different delivery vehicle for providing the outputs that would have been provided by the programmes contributing to LAAs. Given that the spending is funded by transfers from elsewhere, this change does not lead to additional public spending overall.

RFR2

Section I (Non-domestic Rates Outturn Adjustments and LABGIS)

24. There are two significant changes on this section, which together total £408 million in Annually Managed Expenditure (AME) (reflected in line (f) of the table at paragraph 10 above). £316 million is for an adjustment made to reflect the difference between estimated and actual contributions to the National Non-Domestic Rate (NNDR) Pool by local authorities. The total Outturn adjustment for 2005-06 (including payments and receipts) represents a difference of 3.1% between the provisional amount LAs forecast at the beginning of the year and what they actually collected. This is because changes in rateable valuations within the local authority area during the year result in some authorities having paid more or less than was due by way of interim contributions. The outturn settlement returns to them the amounts so overpaid or recovers amounts underpaid. Only the amounts paid to authorities are voted as amounts they pay to the department must be surrendered direct to the consolidated fund. So far around £192 million of receipts have been paid to the Department for surrender to the consolidated fund.

25. A 3.1% difference is higher in 2005-06 than in previous years, partly because of the effects of the transition scheme introduced to phase in the effects of increases in valuation arising out of the revaluation of NNDR properties in 2005. The 3.1% is subject to any further adjustments arising from the audit of authority's returns.

26. Local authorities have some control of their cash flows as they can apply for a downward revision of the provisional amount they said they would collect up to four times a year. This ensures that the NNDR they pay to the Department is as close as possible to what they are actually collecting, although there may be a time delay between, for example, the impact of a decision on a valuation appeal and their payments being adjusted.

27. Each authority is entitled to plan its expenditure on the basis of known assets and liabilities, and the outturn settlement enables them to meet those liabilities.

28. The £92 million is to increase provision for The Local Authority Business Growth Incentives Scheme (LABGIS) which is required because of modifications to the scheme which aim to simplify it and increase the level of reward available to local authorities in order to increase the incentive to maximise local economic growth.

29. The LABGI scheme is designed to give local authorities an incentive to maximise local economic growth by allowing them to retain a proportion of increases in local business rate revenues to spend on their own priorities in the local area. The scheme will allocate up to £1billion to eligible local authorities in England and Wales and is set to run for three years (2005-06 to 2007-08). The scheme is based on end year growth in rateable value and the money is genuinely additional and unringfenced (so local authorities are free to decide how to spend the reward).

OTHER SIGNIFICANT CHANGES BY ESTIMATE SECTION SPENDING IN DEPARTMENTAL EXPENDITURE LIMITS (DEL)

RFR1: IMPROVING THE QUALITY OF LIFE BY CREATING THRIVING, INCLUSIVE AND SUSTAINABLE COMMUNITIES IN ALL REGIONS

Central Government Spending

30. Section A—Housing Supply and Demand

Transfers to Section A

£2,800,000 from English Partnerships to the Planning Inspectorate and Valuation Office Agency to cover a shortfall in income from quality assuring local Authorities Local Development Frameworks.

£6,380,000 from Planning Delivery Grant to fund the Planning Inspectorate (£2,000,000), Planning Application Services, Advisory Team on Large Applications, and Planning Policy Statement 3 (£4,380,000).

Transfers from Section A

£208,000 transferred from Other Growth Areas to cover Other Growth Areas expenditure by Northamptonshire Urban Development Corporation.

£800,000 from Other Growth Areas to cover expenditure on work carried out for Other Growth Areas by English Partnerships.

£4,300,000 from Thames Gateway for non-voted expenditure by Thames Gateway London Urban Development Corporation.

£4,800,000 switched from Thames Gateway resource and £900,000 from Thames Gateway capital for expenditure by Thurrock Urban Development Corporation in the Thames Gateway.

£100,000 resource and £900,000 capital from Thames Gateway to fund expenditure by the East of England Development Agency in the Thames Gateway.

£290,000 from Planning to INTERREG for the Transactional ERDF and State Aid (TESA) system.

£444,000 from Regional Housing Board to Regional Chambers to support Regional Housing Board work by regional assemblies.

£200,000 from Landlord's Licensing and Safety Ratings programme to fund increased number of Social HomeBuy Local Authority pilot schemes.

£300,000 from Research to Departmental Unallocated Provision.

£2,045,000 from Other Growth Areas to fund expenditure on Other Growth Areas by Northamptonshire Urban Development Corporation.

£75,000 from research to cover expenditure on National Register of Social Housing project.

As a result of all changes there is a decrease in provision for Section A of £7,142,000 (decrease of £8,292,000 resource; increase of £1,150,000 capital).

31. Section B—Decent Places to Live

Transfers to Section B

£500,000 within section from Liveability to Housing Corporation to cover pensions pressures.

£2,255,000 drawdown from end year flexibility for expenditure by Housing Action Trusts to meet agreed capital commitments.

£3,790,000 capital from Departmental Unallocated Provision to cover capital expenditure on Groundwork.

£300,000 drawdown of end year flexibility and £75,000 from research to cover expenditure on the National Register of Social Housing.

Transfers from Section B

£3,790,000 resource from Groundwork to Departmental Unallocated Provision.

As a result of all changes there is an overall increase in provision for Section B of £2,630,000 resource.

32. Section C—Tackling Disadvantage

Transfers to Section C

£1,320,000 from non-voted Housing Corporation to Coalfields Regeneration Trust for capital expenditure.

£8,000,000 within Local Enterprise Growth Initiative (LEGI) from support for Local Authorities to central government grant to cover LEGI expenditure.

£3,500,000 from Other Growth Areas to Coalfields Regeneration Trust for capital expenditure on the Coalfields Respite Centre.

33. Section D—Better Services

Transfers to Section D

£600,000 from Local Government Capacity Building fund to Fire Services for the development of the leadership model of a FRS Centre for Leadership.

£1,230,000 from Fire Credit Approvals to Fire Services for capital expenditure on an Electronic Data Collection System.

Transfers from Section D

£1,500,000 from Fire Services to cover expenditure by the Audit Commission on performance assessment for the Fire and Rescue Authorities.

£240,000 from Fire Services to meet expenditure of FireBuy.

As a result of all changes there is an increase in provision for Section D of £90,000 (decrease of £1,140,000 resource; increase of £1,230,000 capital).

34. Section E—Development of English Regions

Transfers to Section E

£40,000,000 transfer from the Department of Trade & Industry to cover Regional Development Agency capital expenditure.

£19,300,000 drawdown of end year flexibility to cover £800,000 resource expenditure and £18,500,000 capital expenditure on the Northern Way.

£274,000 from Regional Housing Board to Regional Chambers to support Regional Housing Board work by regional assemblies.

£10,000 drawdown of end year flexibility to cover Regional Development Agency resource expenditure.

As a result of all changes there is an increase in provision for Section E of £59,584,000 resource.

35. Section F—Central Administration

Transfers to Section F

£7,147,000 from Home Office to reflect administration costs associated with Machinery of Government changes.

£3,036,000 from Department of Trade and Industry to reflect administration costs associated with Machinery of Government changes.

£120,000 from Department for Culture Media and Sport for the Minister for Women.

£520,000 from Cabinet Office for Parliamentary Counsel work.

£12,677,000 drawdown of end year flexibility to cover a transfer to Government Office administration expenditure (£10,572,000) and for planned central administration expenditure (£2,105,000).

£6,500,000 drawdown from end year flexibility to fund Early Exits.

£292,000 from the Cabinet Office for the Equalities Review Team.

£3,000,000 drawdown of capital end year flexibility to cover capital expenditure on e-business, of which £2,358,000 is for expenditure on Electronic Document and Records Management and telephony projects in the Government Offices.

Transfers from Section F

£1,160,000 from Central Administration to the Deputy Prime Minister's Office to reflect Machinery of Government changes.

£926,000 from Central Administration to the Cabinet Office to cover the work on Social Exclusion following Machinery of Government changes.

£11,072,000 from Central Administration for the Government Offices' work on various schemes including emergency planning (£2,309,000); planning review (£2,132,000); local area agreements (£1,000,000) and street wardens (£394,000).

£2,358,000 from Central Administration capital provision to cover Government Offices expenditure on Electronic Document and Records Management and telephony projects.

As a result of all changes there is an increase in provision for Section F of £17,776,000 (£17,134,000 resource; £642,000 capital).

36. Section G—Government Offices

Transfers to Section G

£3,000,000 from Department for Education and Skills towards the costs of early exits in the Government Offices.

£7,051,000 from Department for Environment Food and Rural Affairs, including towards the costs of early exits in the Government Offices (£2,071,000); additional core funding (£3,519,000); Countryside Agency (£941,000); SR2002 (£520,000).

£1,257,000 from Department of Trade and Industry towards the costs of early exits in the Government Offices.

£66,000 from Department for Culture Media and Sport towards the costs of early exits in the Government Offices.

£2,358,000 capital provision from Central Administration for Electronic Document and Records Management and telephony projects.

Transfers from Section G

£993,000 to HM Treasury in respect of efficiency savings required under SR04.

As a result of all changes there is an increase in provision for Section G of £23,811,000 (£21,453,000 resource; £2,358,000 capital).

37. Section H—European Structural Funds (net)

No change.

38. Section I—European Structural Funds (Communities and Local Government)

Transfers to Section I

£5,000,000 from non-voted English Partnerships to cover European Regional Development Fund's interpretation provision.

£290,000 from Planning to INTERREG for the Transactional ERDF and State Aid (TESA) system.

£962,000 drawdown of end year flexibility (£682,000 resource and £280,000 capital) for European Regional Development Fund for the Transactional ERDF and State Aid (TESA) system.

As a result of these changes there is an increase in provision for Section I of £6,252,000 (£5,972,000 resource; £280,000 capital).

39. Section J—Ordnance Survey

No change.

40. Section K—Queen Elizabeth II Conference Centre Executive Agency

Transfers to Section K

£117,000 drawdown from end year flexibility to correct an error in the Main Estimate figures. As a result of this change there is an increase in provision for Section K of £117,000 resource.

Support for Local Authorities

41. Section L—Housing Supply and Demand

Transfers to Section L

£800,000 drawdown of end-year flexibility for Housing Market Renewal Fund capital expenditure on grant payments.

£818,000 drawdown of end year flexibility for capital expenditure on Choice Based Lettings.

£398,191,000 transfer from non-voted Local Authority Supported Capital Expenditure to Regional Housing Pot (£384,191,000) and Gypsy and Travellers' Sites (£14,000,000).

£33,500,000 drawdown from DEL Reserve for Housing Market Renewal Fund to cover resource expenditure.

£200,000 from Landlord's Licensing and Safety Ratings programme to increase the number of Social Homebuy Local Authority Pilot Schemes.

Transfers from Section L

£20,000,000 from the Housing Market Renewal Fund to non-voted English Partnerships.

£3,200,000 from Other Growth Areas to English Partnerships to carry out work on Other Growth Areas.

£38,100,000 from Thames Gateway to non-voted expenditure by London Urban Development Corporation in the Thames Gateway.

£26,425,000 from Thames Gateway to cover expenditure by Thurrock Urban Development Corporation in the Thames Gateway.

£2,800,000 transfer within Thames Gateway to cover expenditure by the English Partnerships in the Thames Gateway.

£1,200,000 transfer within Thames Gateway to cover non-voted expenditure by the South East England Development Agency in the Thames Gateway.

£3,500,000 from Other Growth Areas to Coalfields Regeneration Trust to cover expenditure on the Coalfields Respite Centre.

£6,380,000 from Planning Delivery Grant to fund the Planning Inspectorate (£2,000,000), Planning Application Services, Advisory Team on Large Applications and Planning Policy Statement 3 (£4,380,000).

£10,000,000 from Other Growth Areas to non-voted Other Growth Areas to cover cost of work carried out by Northamptonshire Urban Development Corporation.

£1,500,000 transfer within Thames Gateway to non-voted Thames Gateway to cover expenditure by the East of England Development Agency.

As a result of all changes there is an increase in provision for Section L of £320,404,000 resource.

42. Section M—Decent Places to Live

Transfers to Section M

£745,000 drawdown of end year flexibility to meet Private Housing Renewal planned expenditure.

As a result of this change there is an increase in provision for Section M of £745,000 resource.

43. Section N—Tackling Disadvantage

Transfers to Section N

£40,300,000 transfer from Local Area Agreements for expenditure on New Ventures Fund projects.

£30,000,000 transfer of provision from Tackling Disadvantage for expenditure on Safer and Stronger Communities.

£4,232,000 drawdown of end year flexibility for Disabled Facilities Grant (£200,000 resource and £4,032,000 capital) to meet demands on Local Authorities for mandatory grants.

£3,600,000 transfer from non-voted Departmental Unallocated Provision to Local Enterprise Growth Initiatives to cover capital needed by local authorities.

£2,100,000 drawdown of end year flexibility to cover expenditure on the New Deal for Communities programme.

£684,000 from Safer Stronger Communities element of New Ventures fund to cover Supporting People administration grant.

Transfers from Section N

£120,860,000 transfer of baseline to new Estimates section Z—Local Area Agreements.

£11,970,000 transfer from New Ventures Fund to cover expenditure on Local Area Agreements.

£5,000,000 from Local Enterprise Growth Initiatives to Departmental Unallocated Provision.

£8,000,000 transfer within Local Enterprise Growth Initiatives from support for Local Authorities to central government grant to cover LEGI expenditure.

£2,000,000 transfer within Homelessness to cover expenditure by voluntary bodies.

£21,250,000 from Local Government Grants to Current Grants within New Ventures Fund programme.

As a result of all changes there is a decrease in provision for Section N of £88,164,000 resource.

44. Section O—Better Services

Transfers from Section O

£330,000 drawdown from Invest to Save Budget for expenditure on the Fire Reducing Exclusion, Starting Positive Engagement with Children Together (RESPECT) Project.

As a result of this change there is an increase in provision for Section O of £330,000 resource.

45. Section P—Development of English Regions

Transfers to Section P

£5,000,000 from non-voted Departmental Unallocated Provision for capital expenditure on Combined Universities of Cornwall.

£170,000 from Regional Housing Boards to Regional Chambers to support Regional Housing Board work by regional assemblies.

£551,000 drawdown from end year flexibility to cover expenditure by the London Development Agency.

As a result of these changes there is an increase in provision for Section P of £5,721,000 resource.

46. Section Q—European Structural Funds—net

No change.

SPENDING IN ANNUALLY MANAGED EXPENDITURE (AME)

Central Government Spending

47. Section R—Decent Places to live

Transfers from Section R

A decrease of £47,702,000 required to meet Housing Revenue Account subsidy.

As a result of this change there is a decrease in Section R of £47,702,000 resource.

48. Section S—Better Services

No change.

Support for Local Authorities

49. Section T—Better Services

No change.

NON-BUDGET

50. Section U—Housing Supply and Demand

Transfers to Section U

£439,149,000 increase in grant in aid to cover expenditure by the Housing Corporation (£311,411,000); Thames Gateway: London Urban Development Corporation (£42,400,000); Thames Gateway: Thurrock Urban Development Corporation (£32,125,000); English Partnerships (£29,500,000); Other Growth Areas: West Northamptonshire Urban Development Corporation (£12,253,000); Other Growth Areas: English Partnerships (£4,000,000) Thames Gateway: English Partnerships (£2,800,000); Thames Gateway: East of England Development Agency (£2,500,000); Thames Gateway: South East England Development Agency (£1,200,000) and Leasehold Enfranchisement Advisory Service (£960,000).

As a result of these changes there is an increase in provision for Section U of £439,149,000 resource.

51. Section V—Better Services

Transfers to Section V

£240,000 increase in grant in aid for FireBuy.

As a result of this change there is an increase in provision for Section V of £240,000 resource.

52. Section W—Decent Places to Live

No change.

53. Section X—Tackling Disadvantage

£20,624,000 increase in grant in aid from the Home Office resulting from Machinery of Government changes.

£7,356,000 increase in grant in aid from Department of Trade and Industry resulting from Machinery of Government changes.

As a result of these changes there is an increase of provision for Section X of £27,980,000 resource.

SPENDING IN DEPARTMENTAL EXPENDITURE LIMITS (DEL)

Central Government Spending

54. Section Y—Local Area Agreements

Receipt of £413,067,000 from other government departments for Local Area Agreements—£353,367,000 from the Department for Education and Science and £59,700,000 from the Home Office.

As a result of this change there is a decrease in provision for Section Y of £413,067,000 resource.

Support for Local Authorities

55. Section Z—Local Area Agreements

An increase of £523,296,000 fully offset by receipts on section Y and transfers from other sections.

RFR2: PROVIDING FOR EFFECTIVE DEVOLVED DECISION MAKING WITHIN A NATIONAL FRAMEWORK

SPENDING IN DEPARTMENTAL EXPENDITURE LIMITS (DEL)

Central Government Spending

56. Section A—Valuation Services

Transfers from section A

£2,371,000 from Valuation Office Agency to Standards Board for England (non voted) to support the costs of its relocation to Manchester.

As a result of this change there is a decrease in provision for Section A of £2,371,000 resource.

57. Section B—Best Value Inspection

Transfers to Section B

£1,500,000 from Fire Services to cover expenditure by the Audit Commission on performance assessment for Fire and Rescue Authorities.

£3,271,000 from Capacity Building (section H) to Best Value Intervention to fund in year spending pressures for a number of intervention projects.

As a result of these changes there is an increase in provision for Section B of £4,771,000 resource.

58. Section C—Local Government Research, Publicity, Mapping and Electoral Costs

Transfers to Section C

£519,000 drawdown of end year flexibility for Local Government on Line.

£365,000 from Mayoral Referendums (section D) to Local Government Research to support Research for Lyons and Business Improvement Districts.

£194,000 from Capacity Building (Section H) to Local Government Research to pay for Capacity Building Research.

Transfers from Section C

£250,000 from Mapping Costs to Emergency Financial Assistance (Section H) to increase provision for payments under the Bellwin scheme.

As a result of these changes there is an increase in provision for Section C of £828,000 resource.

59. Section D—Local Governance

Transfers from Section D

£30,000 from Mayoral Referendums to make up the funding gap for Best Value Parish Councils Grant (section H).

£365,000 from Mayoral Referendums to Local Government Research (section C) to support Research for Lyons and Business Improvement Districts.

£219,000 from Mayoral Referendums to Standards Board for England (non voted) to support the costs of its relocation to Manchester.

As a result of these changes there is a decrease in provision for Section D of £614,000 resource.

Support for Local Authorities

60. Section E—Revenue Support Grant

Transfers to Section E

£35,000,000 drawdown of end year flexibility for Private Finance Initiative Special Grant as agreed with the Chief Secretary last year, to reflect higher anticipated take up of grant in 2006-07.

As a result of this change there is an increase in provision for Section E of £35,000,000 resource.

61. Section H—Other Grants and Payments

Transfers to Section H

£8,000,000 drawdown of end year flexibility for Capacity Building to reflect a switch in spending needs between 06-07 and 07-08. Monies are to be repaid to the consolidated fund in 2007-08.

£10,000,000 drawdown of end year flexibility reassigned from DCA for Local Government on Line to fund capital expenditure on Government Connect.

£6,634,000 drawdown of end year flexibility for Local Government on Line capital expenditure to fund programme slippage from 2005-06.

£250,000 from Mapping Costs (section C) to Emergency Financial Assistance to increase provision for payments under the Bellwin scheme.

£30,000 from Mayoral Referendums (section D) to make up the funding gap for Best Value Parish Councils Grant.

An additional £1,602,000 from the Treasury funded Invest to Save programme to provide cover for all 2006-07 claims.

Transfers from Section H

£1,934,000 from Emergency Financial Assistance to Standards Board for England (non voted) to fund an agreed budget increase.

£600,000 from Local Government Capacity Building fund to Fire Services for the development of the leadership model of a FRS Centre for Leadership.

£194,000 from Capacity Building Local Government Research (section C) to pay for Capacity Building Research.

£3,271,000 from Capacity Building to Best Value Intervention (section B) to fund in year spending pressures for a number of intervention projects.

As a result of these changes there is an increase in provision for Section H of £20,517,000 (£3,883,000 resource: £16,634,000 capital).

SPENDING IN ANNUALLY MANAGED EXPENDITURE (AME)

Local Government

62. Section I—Non-domestic Rates Outturn and Adjustments and LABGIS

Transfers to Section I

Increase of £316,000,000 for National Non-domestic Rates outturn adjustments to provide for expected local authority claims.

An additional £92,000,000 for Local Authority Business Growth Incentive Scheme required due to slippage in 2005-06.

As a result of these changes there is an increase in provision for Section I of £408,000,000.

NON-BUDGET

63. Section J—Non-departmental public bodies

Increase in Grant in Aid of £3,661,000 for the Standards.

A reduction of Grant in Aid of £3,500,000 for the Valuation Tribunal Service.

As a result of these changes there is an increase in provision for Section J of £161,000.

NET CASH REQUIREMENT, ADMINISTRATION COST LIMIT AND END YEAR FLEXIBILITY

64. Net cash requirement

As a result of the changes in the Estimates the Net Cash Requirement is to be increased by £1,357,195,000 from £32,068,455,000 to £33,425,650,000.

65. Administration cost limit

The change to the Administration Cost Limit arises from a net transfer as a result of Machinery of Government changes (£8,805,000); a draw down of EYF (£12,677,000); and a net transfer from other government departments (£10,381,000).

66. Changes to end year flexibility

(a) Main Programmes DEL

END YEAR FLEXIBILITY (£m) 2006-07

	Start of Year	Take up in Winter Supps	Remaining EYF
Resource: Ringfenced	12.294	1.977	10.317
Non Ringfenced	43.041	7.928	35.113
Administration	58.076	12.677	45.399
Sub total	113.411	22.582	90.829
Capital: Ringfenced	79.458	24.912	54.546
Non Ringfenced	297.702	4.675	293.027
Administration	32.913	3.000	29.913
Sub total	410.073	32.587	377.486
Total:
Ringfenced	91.752	26.889	64.863
Non Ringfenced	340.743	12.603	328.140
Administration	90.989	15.677	75.312

(b) Local Government Programmes DEL

End Year Flexibility (£m) 2006-07

	Start of Year	Re-Assigned from DCA	Take up in Winter Supps	Remaining EYF
Resource: Ringfenced	109.613		43.519	66.094
Non Ringfenced	3.012		0	3.012
Sub total	112.625		43.519	69.106
Capital: Ringfenced	259.148	10.000	16.634	252.514
Non Ringfenced	27.323		0	27.323
Sub total	286.471	10.000	16.634	279.837
Total:
Ringfenced	368.761	10.000	60.153	318.608
Non Ringfenced	30.335		0	30.335
Total	399.096	10.000	60.153	348.943

67. Affect on Communities & Local Government PSA Targets

  As a result of the Estimates the expenditure against the Department's PSA targets will change as set out in the following table:

PSA Target EYF
including
Invest to
Save Budget Machinery
of
Government Drawdown
from
Reserve Transfer
from DUP Transfer
from OGD Transfers
between
targets
Total

1.  Tackle social exclusion and deliver neighbourhood renewal working with departments to help them meet their PSA floor targets—by 2010
6,072 0 8,00 -1,107 12,965

2.  Sustainable improvements in economic performance of English Regions—by 2008
7,913 0 14,000 5,316 27,229

3.  Reduce the number of accidental fire-related deaths in the home by 20% and the number of deliberate fires by 10%—by 2010
330 0 -900 -570

4.  Improving effectiveness and efficiency of local government in leading and delivering services to all communities—by 2008 0 0 145 145

5.  Achieving better balance between housing availability and demand 11,334 0 33,500 67,900 18,000 128,405 259,138

6.  Planning system deliver sustainable development outcomes and to achieve best value standards for planning by 2008 0 0 1,230 1,230

7.  Bring all social housing into decent condition by 2010 7,256 0 2,100 -129,649 -120,293

8.  Lead delivery of cleaner, safer, greener public spaces, and improvement of built environment in deprived areas with measurable improvement by 2008 300 0 5,000 75 5,375

9.  By 2008, working with other departments, bring about measurable improvements in gender equality across a range of indicators, as part of the Government's objectives on equality and social inclusion. 0 16,083 0 16,083

10.  Reduce race inequalities and build community cohesion. 44,805 0 44,805

     Total 33,205 60,888 33,500 75,000 40,000 3,515 246,108

Notes

1. The figures in the Table do not include costs not attributable to the Office's PSAs ie administration costs and the Queen Elizabeth II Conference Centre.

2. The LG DEL of £22.8 billion contributes to PSA 4.

3. The figures for transfers between non-voted and voted expenditure are not included in the above table unless they result in a switch of resources between targets.

The main effects on programmes as a result of these changes are:

PSA 1

68. The EYF has been drawn down for work to be carried out by the New Deal for Communities programme and for work being carried out by the RDAs and the LDA including work on the Northern Way. There is also a transfer from the Department of Trade and Industry for work to be carried out by the RDAs and the LDA.

69. In addition to the figures in the table a further £413 million (£353m from DfES and £60 from the Home Office) was received to fund those Department's funding streams in Local Area Agreements. The figures do not appear in the table as the amounts are invoiced for by the Department and therefore do not appear in the DEL because the increased provision is offset by receipts.

PSA 2

70. The EYF has been drawn down for work to be carried out by the RDAs and the LDA including work on the Northern Way. There is also a transfer from the Department of Trade and Industry for work to be carried out by the RDAs and the LDA.

71. The other changes consist mainly of a transfer from EP to the ERDF programme.

PSA 3

72. The drawdown was for the Fire Services and contributes towards the Reducing Exclusion, Starting Positive Engagement with Children Together (RESPECT) project.

73. The decrease in expenditure consists of a transfer to the LG DEL for a contribution towards the payment of Audit Commission bills in relation to performance assessment work for the Fire & Rescue Authorities.

PSA 4

74. The transfer in was for the work on the Transactional ERDF and State Aid (TESA) system.

PSA 5

75. The EYF drawdown covered work by the RDAs and LDA including work on the Northern Way. In addition EYF was also drawn down for the Housing Corporation; the funding of pilot letting schemes and for the Housing Market Renewal Fund for the existing pathfinder projects. Resources from the Departmental Unallocated Provision were transferred for use by the Housing Corporation.

76. There is also a transfer from the Department of Trade and Industry for work to be carried out by the RDAs and the LDA.

77. The Reserve drawdown was for the Housing Market Renewal programme to cover a resource spending pressure previously covered by capitalisation by local authorities.

78. The Transfers include extra resources for the Housing Corporation and the Regional Housing Pot Grant.

PSA 6

79. The small change in resources is a result of transfer within Planning and a transfer to the Planning Inspectorate.

PSA 7

80. The main drawdown of EYF is for funding mandatory Disabled Facilities Grant and work carried out by Housing Action Trusts.

81. The main transfer out is to the Housing Corporation but within the PSA there is an increase for Gypsy Site grants.

PSA 8

82. The EYF is for the National Register of Social Housing (NROSH) project. Resources from the Departmental Unallocated Provision have been transferred for use by Combined Universities in Cornwall.

PSA 9

83. The amount for this PSA is for the resources transferred by the Home Office for the responsibilities taken over by the Department for Race, Faith and Cohesion. It includes expenditure on the Commission for Racial Equality and the Community Development Foundation.

PSA 10

84. The amount for this PSA is for the resources transferred by the Department of Trade and Industry for the responsibilities taken over by the Department for Equality issues and includes expenditure on the Equal Opportunities Commission.



© Parliamentary copyright 2007	Prepared 19 March 2007