Supplementary submission from Research
RESPONSE TO THE SUPPLEMENTARY QUESTIONS ON
RESEARCH COUNCILS EXPENDITURE DATA 2004-05
"an explanation of the difference of
some £17 million between the EYF surplus (or underspend)
of £34.8 million quoted on page 9 [of the RCUK response]
and the figure of £52 million quoted in the report of the
Times Higher Education Supplement on 4 November 2005, and apparently
provided by MRC."
The EYF surplus of £34.8 million quoted
on page 9 of the RCUK response relates to the expenditure in 2004-05
against all categories of DEL (cash resource, non-cash resource
and capital) compared to the allocation for the year. It does
not include any brought forward surpluses from previous years,
and is based on provisional, pre-audit outturns as published by
OST. The figures are in line with those provided by the other
The £52 million figure provided to and
quoted in the THES is the difference between the MRC's actual
resource expenditure in 2004-05 and the total available to be
spent including resource EYF from previous years. Capital expenditure
was excluded as the THES journalist was inquiring about the funding
of grants. The estimated over-allocation of non-cash resource
DEL was also excluded.
£8 million of the £52 million difference
was non-cash resource underspend and therefore not relevant to
grant funding. Of the remaining £44 million, £30 million
resulted from delays in universities taking up new awards already
committed. MRC had expected that those grants already awarded
would start in 2004-05 but they will now do so in 2005-6. This
£30 million is not available for other purposes. A further
£9 million was the result of money being returned by universities
after grants had finished because it had not been spent. The remaining
£5 million was the result of a variety of other factors.
"BBSRC provided £14.8 million for
institute restructuring... The Committee would like a little more
detail on the nature of this expenditure. It would also like to
know for what reason these requirements were not considered at
the time of the 2004-05 spring supplementary estimates and the
appropriate funds made available then."
BBSRC was indicating during 2004-05 that a large
provision would need to be established principally because it
had decided to withdraw funding from the Silsoe Research Institute.
During the year AEA Technology Ltd had expressed an interest in
the business and it took some time and much effort before their
interest eventually foundered. The Silsoe change was not significant
in overall resource terms for the Science Budget and an increase
in cash was not immediately required in that year so no spring
supplementary adjustment was required.
The timing of costs for institute restructuring
can vary considerably. The provision required in the accounts
for restructuring costs is dependent upon when the decision to
restructure becomes confirmed and the actual cost varies according
to the individuals affected and other disposal assumptions. Staff
affected may alter through redeployment, resignation or transfer
through the restructuring process. Another variable is whether
the cost falls entirely to BBSRC or whether part of the liability
is shared with the institute affected. In the case of major change,
such as BBSRC withdrawing funding from the Silsoe Research Institute,
the Council agreed to meet the full cost and helped to secure
an orderly closure process over two to three years, ensuring that
priority areas of science could be continued elsewhere or concluded.
The actual cash cost of restructuring is spread
over a period of up to 10 years as annual compensation payments
for early retirees can continue for that time.
The provision of £14,800,000 related to
three institutes as follows:
Silsoe Research Instituteclosure£10,800,000.
Institute for Animal Healthrestructuring£2,500,000
John Innes Instituterestructuring£1,500,000
Less than £1 million was spent against
this provision in 2004-05.
"CCLRC provided £22.9 million for
the closure of the Synchrotron Radiation Source. The Committee
would like a little more detail on the nature of this expenditure.
It would also like to know for what reason these requirements
were not considered at the time of the 2004-05 spring supplementary
estimates and the appropriate funds made available then."
On 7 March 2005, the Secretary of State for
Trade and Industry formally announced the closure, at the end
of December 2008, of the Council's Synchrotron Radiation Source
(SRS) at Daresbury. Based on an internal technical assessment,
CCLRC has estimated the costs of the SRS closure as £27.6
million after allowing for inflation. The estimated costs are
made up of:
|Staff redundancy costs (240 posts)||22.4
|Beamline, machine and building demolition and decommissioning
This amount has been discounted at the Council's notional
cost of capital (3.5%) to arrive at the 2004-05 provision of £22.9
million. The anticipated cash flows associated with this provision
are as follows:
Parliament votes the cash grant-in-aid. There was no reference
to the closure costs in the Spring Supplementary because the cash
consequences do not arise until 2006-07 and beyond.