Memorandum submitted by the State Veterinary
Service (DAR 11)
BACKGROUND
The attached questions are designed to provide
more detail about issues covered in the Committee's inquiry into
Defra's Departmental Report 2006 and Defra's 2006-07 budget. The
State Veterinary Service's response will be circulated to Members
in advance of the Committee's evidence session with Defra officials
in early December.
EFFECT OF
BUDGET CUTS
ON THE
STATE VETERINARY
SERVICE'S
WORK
Defra has announced cuts in the State Veterinary
Service's (SVS) 2006-07 resource budget of £3 million. This
represents a 3% cut in the SVS's expected resource budget for
that year.
1. Could the State Veterinary Service (SVS)
provide a detailed breakdown of which programmes and projects
are affected by the £3 million reduction in its resource
budget? Within these programmes and projects, what specific services
have been, or will be, affected, delayed or stopped altogether?
The Committee would like as much information about this as possible.
ANSWER
As part of Defra's review of its resource DEL
expenditure, the Department asked the State Veterinary Service
(SVS) to explore ways of reducing its expenditure for 2006-07.
SVS advised that £3 million of its internal Business Reform
Programme expenditure could be reclassified as capital, which
would reduce the Department's resource DEL expenditure by £3
million.
(DEL = Departmental Expenditure Limit)
The table below sets out SVS initial 2006-07
funding allocation and its subsequent movements:
|
| Resource
£'m
| Capital
£'m
| Total
£'m
|
|
Initial Funding | 94.3
| 7.3 | 101.6
|
Additional In-Year Funding | 3.2
| 0 | 3.2
|
| 97.5 |
7.3 | 104.8
|
Transfer to Capital | -3.0
| 3.0 | 0
|
| 94.5 |
10.3 | 104.8
|
|
The additional in-year funding was provided to finance additional
activities taken on in the yeareg rabies work transferred
from core Defra to SVS and additional avian influenza work as
agreed last year.
SVS' budget has not been reduced in total. The only change
has been in how the amount has been apportioned between resource
and capital accounts, in relation to an internal change programme.
The budget change has no impact on current front-line operations.
2. To what extent will the budget cuts affect the delivery
of its various programmes and projects, particularly those concerned
with security against animal disease? Which programmes and projects
are more at risk than others?
ANSWER
See answer to question 1 above.
3. How has the SVS attempted, or how does it intend, to
mitigate the effects of the budget cuts on the various programmes
and projects affected?
ANSWER
See answer to question 1 above.
There has been no cut in SVS' overall budget and no effect
on front line operations. However, SVS and Defra are continually
working together to improve planning and actively manage changes
in policy or work volumes.
4. How much discretion was the SVS given to determine which
programmes and projects would be affected by the cuts?
ANSWER
SVS has gone through the process of looking at where its
money is spent. As a delivery body, SVS cannot commit unilaterally
to reducing spend, but it can advise on the risks and impacts
of reductions in funding. As policy customers, it is for Defra
and the Devolved Administrations to decide if there are areas
that they wish to cut back on.
5. How many job losses are expected within the SVS as a
result of its budget cuts?
ANSWER
There are no job losses expected as a result of the budget
change.
EFFECT OF
BUDGET CUTS
ON NON-GOVERNMENTAL
ORGANISATIONS AND
SPONSOR ORGANISATIONS
AFFILIATED WITH
THE STATE
VETERINARY SERVICE
6. Which Non-Governmental Organisations, and other smaller
bodies and companies affiliated with the SVS, will experience
cuts in their respective budgets owing to the SVS's resource budget
cuts, and to what extent?
ANSWER
Not applicable, but see answer to question 7 below.
7. To what extent has the SVS, or Defra, provided advice
to those bodies affected about their situation? What measures
have been taken to assist such bodies in coping with cuts in their
budgets?
ANSWER
SVS spends around a quarter of its budget on services provided
by private vets acting as Local Veterinary Inspectors (LVI). SVS
is currently working closely with the British Veterinary Association
(BVA) to introduce new contractual arrangements with the practices
that provide these services. Any proposal to reduce LVI expenditure
would affect these negotiations.
BUDGET CERTAINTY
FOR 2006-07
In evidence to the Committee on 25 May 2006, Defra's Permanent
Secretary said that the Department had "failed in our aim
to give our delivery agencies enough warning" about the cuts
in the 2006-07 budgets.
8. Was the SVS given enough certainty at an early stage
about the extent of its 2006-07 resource budget cuts? If not,
what impact did this lack of certainty have on the SVS's work
and plans?
ANSWER
See answer at 9 below.
9. Could the SVS provide an approximate time-line to set
out what Defra told the SVS about the extent of its budget cuts
between the first warning that cuts would be made and its latest
position on the budget? What was the impact of these messages
on the SVS, in terms of planning and delivering its 2006-07 work
programme?
ANSWER
SVS submitted its bid for 2006-07 in January 2006. Notification
of the budget actually allocated was received in March. In June,
SVS was asked to consider how it could implement a 5% cut in its
budget allocation. SVS carried out a review in June and provided
advice to Defra on the risks and impacts of making cuts in the
SVS budget. At that time, SVS advised Defra that £3 million
of the SVS resource budget could legitimately be reclassified
as capital budget. This contributes to relieving the pressure
on Defra's overall resource budget, without actually reducing
SVS' overall budget or impacting on front-line delivery. This
latter course was accepted in August.
SVS was aware of the tightening financial situation in the
Department, the public finance position generally and the difficulties
caused by the Treasury changes to end of year flexibility.
10. Were there any discussions about the causes of the
cuts?
ANSWER
Yes. SVS has been kept informed about the reasons for seeking
cuts.
BUDGET CERTAINTY
FOR FUTURE
YEARS
11. Has the SVS been told by the Department about the likelihood
of further cuts in its budget in 2007-08, and beyond? What are
the current estimations about the size of the SVS's budget next
year, and beyond?
ANSWER
The SVS' initial resource allocation for 2007-08 is £101.9
million (prior to funding switches for transfers of functions
and work). This budget allocation excludes resources required
for:
Volume changes in work relating to current policies.
New work arising from new policies.
Hampton delivery landscape changes.
Necessary SVS organisational development to build
capacity and capability.
New legislation and the cost of complying with
regulations arising from other departments eg new employment legislation.
Emerging riskseg the prospect of a Bluetongue
outbreak and/or the the instigation of widespread surveillance
zones.
SVS has been asked to consider how it could reduce resource
expenditure in 2007-08 by 10%.
12. If further cuts are expected in 2007-08 and beyond,
which programmes and projects are likely to be affected? What
would be the impact of further significant cuts to the SVS's budget
next year?
ANSWER
In reviewing how the SVS' 2006-07 budget could be reduced,
it was recognised that a reduction in expenditure of the scale
sought, could only be achieved by reducing Local Veterinary Inspector
(LVI) costs, through the scaling down of work: LVI costs being
the only "tap" which could be turned off to release
sufficient cash in the time available. This translated into three
months LVI work. This risked EU Infraction Proceedings, GB Trade
Status, increased disease incidence (particularly bovine TB),
increased compensation payments and a breakdown in relations with
the British Veterinary Association (BVA), with whom SVS is trying
to establish a modern working relationship for LVI deployment.
It could also result in a reduction in the number of large animal
veterinary practices, which would erode the supplier base the
SVS can call upon in an emergency and would be irredeemable. Additionally,
PSA and SVS' own targets could be undermined and any short term
reduction in expenditure could generate additional future costs.
Ministers determined that SVS' 2006-07 budget should not be cut
and that the SVS' operational capacity should not be reduced.
Consideration needs to be given to the impact any budget
reduction would have on SVS' already thin footprint and on its
ability to respond in an emergency.
As SVS' cost drivers and cost base will be the same in 2007-08
as they are in 2006-07, reducing expenditure by 10% will continue
to incur the same risks. The likelihood of these risks being realised,
however, increases, as the reduction now being sought for 2007-08
translates into four months LVI work.
The one possible route out of this dilemma is to review the
policies which drive the work and therefore the costsit
is recognised that a review of these may determine that there
are sound reasons why policy should not change. Should policy
changes not be acceptable, SVS cannot reduce its 2007-08 expenditure
and avoid the risks outlined above. It is for SVS' policy customers
to determine which combination of policies they wish SVS to deliver
and which risks they wish to carry to achieve the budget reduction
goal.
State Veterinary Service
November 2006
|