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
3 Not printed. Back
|