Examination of Witnesses (Questions 240
- 248)
MONDAY 4 DECEMBER 2006
MS HELEN
GOSH AND
MR IAN
GRATTIDGE
Q240 Chairman: I just want to come
back to a previous point because of the £200 million of cuts,
we have identified £170 million that you had sorted out,
and £30 million you were hoping was going to come from natural
underspend within the Department's budget. Do you have any idea
yet where that might occur?
Ms Ghosh: You mean where we would
get it from if we needed it?
Q241 Chairman: Yes.
Ms Ghosh: Yes, we do.
Q242 Chairman: Would you like to
tell us?
Mr Grattidge: Basically we have
brought in a moratorium on new spending proposals through the
year, which gives us an early view of new spending priorities
as they are coming through. Those will be challenged as they arrive.
Q243 David Taylor: Core department
or agency?
Mr Grattidge: Basically the core
department, but the core department will oversee all delivery
body spending.
Q244 Chairman: What do you mean by
"new spending"? I thought these people were living within
the realms of tight budgets against defined programmes. "New"
is like saying, "we would not mind spending another 5 million
on X that we did not think of when we did our budget".
Mr Grattidge: It does not quite
work like that because a budget on day one will not be one hundred
per cent committed. It is true to say that in many areas of our
budget it is very heavily committed even from day one, but it
is not universally the truth that every line of our budget is
committed on 1 April.
Ms Ghosh: Contractually or statutorily.
Mr Grattidge: In many cases proposals
will emerge through the course of the year. These may be—
Q245 Chairman: This is your back-pocket
money, is it; the little bit that you keep back?
Ms Ghosh: To go back to the discussion
I was having earlier with Mr Taylor, it is the money that we do
control, over which we do have discretion within the Department,
as opposed to the money that is effectively committed particularly
through our delivery bodies through, for example, agreements with
farmers or contracts around flood management. That is an element
of our spend that we can track and monitor and agree bit by bit
as it goes along, to make sure that the flow of expenditure—again,
as a prudently-managed organisation would do—is control.
Q246 David Taylor: Control exit packages
for sacked RPA chief executives—is that one of the budget
heads that is within your control?
Ms Ghosh: If it were the case
it would fall under the HR, corporate services budget.
Q247 Sir Peter Soulsby: I want to
seek from you clarification as to what information we are going
to get from you on disallowance? Are we going to get information
from which we can discern a single figure? I am looking for the
impact of disallowance on the current year's Defra budget and
your prediction or your contingency for disallowance in each of
the next few years. Are we going to have information that will
enable us to put figures on each of those years?
Ms Ghosh: Certainly, if that is
what you would like. We will explain the provision we have made
in the 05-06 budget, the level of existing provision in the 06-07
and 07-08 and future years provision. The particular thing I said
it was worth explaining in writing because it was very complicated
is how, in the end, when the Commission or European Court of Justice,
or whichever, says the figure is X, how we effectively meet the
gap between what we had assumed we had in our budget for that
year, which would be a historic year—they might not say
for some years what the actual figure was for 05-06 and we would
long since have closed the books on 05-06. I was proposing to
explain how we would meet the costs of disallowance for 05-06
if it only became clear two years hence. That is the complicated
accounting issue. We can give an explanation about the point Ian
made about how we can provide between now and then for disallowance.
Q248 Chairman: One thing that comes
through very clearly from this afternoon's exchanges is that Defra's
customers would still find a vast amount of what we have been
hearing this afternoon opaque and difficult to understand. Bearing
in mind that mid-term courses of change of direction can come
as a bit of a surprise to people and the explanations that were
given by Ministers were literally all over the place—I was
struck by a paragraph in your evidence: "Regarding the inconsistency
and the oral debate"—referring to two occasions in
the House of Lords and the House of Commons—"it is
understandable that Ministers may have confused the direction
of travel on a technical or reclassification for one budget line
item, even more so given the general complexity of Government
finances and the compartmentalisation of expenditure." If
Ministers who take decisions and who have approved much of what
you have told us this afternoon can have that observation levelled
at them on one point of detail, it does raise some quite important
questions about the understanding levels both within the Department
and outside about how your budgetary processes operate. Accounting
is not easy, but explanation is something that those who do understand
it should concentrate on in trying to help outside lay people—and
in that, with no disrespect to my colleagues around the table—that
is us—understand what is going on. If there is a message
to convey back to your colleagues in the Treasury, it is that
they must be more transparent in terms of their language and the
rules, so that both your Department and us can understand the
basis on which the accounting world in which you operate, transpires
its business and monitors. We are grateful to you for your offer
of information about the way in which your management board is
presented with continuing finance information, but it is also
incumbent on us to acquire further expertise in understanding
the message that comes out of these documents. Thank you very
much for answering our questions. I think we have a little better
insight into some of the things that have underpinned the reductions
in budget; but I think it underscores the need to be clearer and
more transparent and understandable when it comes to explaining
to Defra's customers why these cuts have occurred and what they
mean, both in this year and in the year to come. Thank you very
much.
Ms Ghosh: Thank you very much.
Mrs Moon: Can I take it that my questions
now will be fully answered.
Chairman: With unbelievable clarity and
swiftness, I am sure.
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