Select Committee on Trade and Industry Minutes of Evidence


First supplementary memorandum by the DTI)

  At yesterday's committee, I promised you a note addressing questions and providing further clarification on the tables in the Annex to the 2006 Departmental Report.

  I set out below the answers and further clarification:

Why, in Annex A1, has DTI's planned 2005-06 Total Public Spending increased from £6,323 million in the 2005 Report to £7,526 million in the 2006 Report?

  The 2005 Report shows total planned spending of £6,323 million for 2005-06. This represents the Department's planned spend, as set out in the Main Estimate in May 2005 and were a "taut and realistic estimate" of the funds required for the year, at that time. As time moves on, we adjust our Estimate via the  Supplementary Estimates process. The 2006 Report shows the 2005-06 Estimated Outturn as £7,526 million.

  The attached Annex to this letter details the movements that have occurred. All of the movements between the two estimates, amounting to £1.2 billion, are detailed in the Winter and Spring Supplementary Estimates. The main changes, are as a result of transfers of funding from other government departments (£167 million from MoD for the NDA), use of our end-of-year flexibility, which arises from prior period underspends (Science £192 million; RDAs £51 million; British Shipbuilder provision £87 million), changes in our coal, health and nuclear related provisions (£240 million) and changes in the amounts available for drawdown as part of the Post Office's revolving loan facility (£430 million).

  We have previously notified the Committee of these changes, in our letters dated 11 November 2005 and 10 February 2006.

  For clarity, the explanation provided in Committee yesterday for the increase in the Department's spending related to the movements between the years, 2004-05 (£4,757 million) and 2005-06 (£7,526 million) as set out in the 2006 Report. The main movements resulted from increased allocations as part of the Spending Review 2004 (RDAs £343 million; Science £400 million); establishing the NDA (£1,027 million); and as noted above, movement in provisions (£327 million), the Post Office loan facility (£430 million) and transfers in from other government departments (£207 million).

What does "Increasing UK Competitiveness" relate to?

  The Department requests resources from Parliament under three broad headings, one for the non-Science related expenditure; one for Science and one for UKAEA Pensions schemes. The "Increasing UK Competitiveness" spending relates to all of our non-Science and non-UKAEA pension scheme expenditure, and is analysed in detail in Annexes A2, A3 and B1 of the 2006 Report.

An explanation of non-cash

  For government budgeting purposes our resource expenditure is classified as either near-cash or non-cash. Non-cash represents all of the transactions that are included to reflect the full economic cost of activities and the use of assets. As mentioned at the Committee, it includes depreciation, cost of capital charges, profit or loss on disposal of assets and new, or changes in, provisions.

Alistair Darling

25 October 2006

Annex

TOTAL PUBLIC SPENDING—ANALYSIS OF MOVEMENTS BETWEEN 2006 DEPARTMENTAL REPORT (DR) AND 2005 DEPARTMENTAL REPORT
Other Govt Departments £'000£'000
Transfers in
From DFES for National Council of Graduate Entrepreneurship 350
From Cabinet Office for ShEX1,250
From HMT for ShEX1,350
From ODPM for RDAs21,020
From DFES for OME, schools teachers review body 101
From ODPM for the Government Offices1,125
From MOD for NDA167,000
From Cabinet Office for Parliamentary Council 1,587
From DWP for CEHR229
From DCA for CEHR126
From HMT for MG Rover13,000
From DCA for CEHR38
207,176  
Transfers out
To DCA, ETS machinery of government transfer (78,149)
To ODPM for Government Offices(731)
To DFT for low carbon vehicle partnership (250)
To DCMS for transfer of Women's Minister (100)
To ODPM for the Government offices, from UKTI (210)
To Cabinet Office for equalities review, CEHR (224)
To Cabinet Office for equalities review, CEHR (165)
(79,829)
Use of EYF, using unspent balances brought forward from prior years
OST draw down to fund Research Councils 191,658
RDA drawdown50,507
Funding "2 roof" department relocation 10,600
Former Soviet Union cost6,500
Post Office Urban reinvention31,400
Efficiency Challenge Fund (for early staff exits) 3,095
Competition Commission cost of capital charges 3,000
Concessionary Fuel10,000
British Shipbuilders provisions87,000
Performance Innovation Fund (renewable energy) 2,000
SBS Enterprise Capital Fund6,000
Launch Investment—to meet shortfall in receipts 23,900
For the OFCOM loan6,190
To fund the Enemy Property scheme2,055
433,905  
Accounting/Adjustments
Post Office loan facility (AME)430,000
Coal and nuclear provisions, cost of capital (AME) 240,005
LDA corporation tax (AME)370
OST adjustment for depreciation(9,400)
BE related adjustment (cost capital credits etc) (29,179)
631,796  
UKAEA pensions (AME) 10,000
10,000  
1,203,048  
Budget Estimate—Departmental Report (DR) 2005 Annex A1 6,323,000
Estimated Outturn—Departmental Report (DR) 2006 Annex A1 7,526,000
Movement—DR 2006 vs DR 2005 1,203,000


Addendum

GLOSSARY OF TERMS

  DfES—Department for Education and Skills

  ShEX—Shareholders' Executive

  HMT—HM Treasury

  ODPM—Office of the Deputy Prime Minister (now Department of Communities and Local Government)

  RDA—Regional Development Agency

  NDA—Nuclear Decommissioning Authority

  CEHR—Commission for Equality and Human Rights

  DFT—Department for Transport

  UKTI—UK Trade and Investment

  DCA—Department for Constitutional Affairs

  EYF—End Year Flexibility

  OST—Office of Science and Technology (now Office of Science and Innovation)

  SBS—Small Business Service

  OFCOM—Office of Communications

  AME—Annual Managed Expenditure

  BE—British Energy

  LDA—London Development Agency

  UKAEA—United Kingdom Atomic Energy Authority

  OME—Office of Manpower and Economics

  MOD—Ministry of Defence

  DWP—Department for Work and Pensions

  ETS—Employment Tribunal Service

  DCMS—Department for Culture, Media and Sport





 
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