Select Committee on Environment, Food and Rural Affairs Written Evidence


Memorandum submitted by HM Treasury

Letter to the Chairman of the Committee from the Chief Secretary to the Treasury

  1.  Thank you for your letter of 21 November requesting clarification of Treasury budgeting rules in connection with your inquiry into Defra's Departmental Report 2006 and Defra's budget.

  2.  You asked me to explain the Treasury's position on the withdrawal of Defra's End of Year Flexibility in July 2005. As Defra's response to the Committee's questions shows, we did not withdraw departments' entitlements to EYF. We agreed a limit to EYF draw down for Defra and other departments in 2006-07 in line with the requirement for "Tautness and Realism" in Parliamentary Estimates. Defra had a stock of £120 million near cash in 2005, and my predecessor agreed that the department could spend £65 million last year, £50 million in 2006-07 and £5 million next year.

  3.  You also asked for the Treasury's position on reclassifications of near and non-cash spending. The Treasury has been controlling near-cash budgets since 2003-04. Officials have drawn the Committee's attention to the relevant sections of the Consolidated Budgeting Guidance, and the letter to Departmental Finance Directors of 11 August 2005 explained that we are clarifying these arrangements and not changing them. I attach a copy of this letter.[3]

  Let me know if I can provide the committee with any further information.

Rt Hon Stephen Timms MP

Chief Secretary to the Treasury

11 December 2006





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