Memorandum submitted by BERR
WINTER SUPPLEMENTARY ESTIMATES 2007-08
I am writing in response to your letter of 7
December 2007 in which you raised a number of points for clarification
in relation to the changes sought in the Winter Supplementary
Estimate.
For ease of reference, I am answering the points
for clarification in the order in which they appeared in your
letter:
1. INCREASES
IN DEL
(a) Financial Inclusion Fund—Additional
ring-fenced near cash programme funding amounting to £2.762
million was added to the Department's DEL budget for 2007-08 following
agreement by the Economic Secretary and Chief Secretary to the
Department for Business, Enterprise and Regulatory Reform's (BERR's)
proposal to fund nine regional projects to tackle illegal lending
in England, Scotland and Wales.
Some limited funding had been made available
to BERR in 2006-07 to set up a pilot scheme to deal with illegal
money lending and the additional budget was sought once the outcome
from that scheme was seen to be successful. Any underspend at
the end of the project will be returned to the Exchequer.
(b) Parliamentary Counsel Office—The
amount of £1.7 million transferred in respect of the Parliamentary
Counsel Office relates to an agreement between the Cabinet Office
and other Departments on how the work of the Parliamentary Counsel
should be funded.
Originally all such work was funded directly
by the Cabinet Office but in view of increasing costs, it was
decided that the existing budget would be divided between Departments
using the service, with the balance of costs to be found by the
Departments themselves. The budget is transferred annually from
the Cabinet Office.
The amount transferred is less than the actual
cost of the services provided, and the budget shortfall (£650k
for 2007-08) has to be funded by BERR from its other resources.
(c) Global Threat Reduction programme—The
£4 million transferred to BERR forms the MoD's agreed contribution
to the new Global Threat Reduction Programme which was formed
last year to provide greater Ministerial oversight of the UK's
Global Partnership Programme.
The Global Threat Reduction Programme combines
planned expenditure on BERR's "Support for Former Soviet
Union" and MoD's "Chemicals Weapons Destruction"
and Biological programmes.
The new governance arrangements put in place
provide for the two budgets to be merged and centrally held by
BERR as ring-fenced funds, managed by a single programme oversight
board (chaired by the Foreign and Commonwealth Office who have
policy lead on these issues) and headed by a Ministerial oversight
board. MoD will continue to take the lead in delivering their
Chemical Weapons Destruction and Biological Weapons programmes
and the £4 million transferred to BERR has been allocated
for these programmes.
The actual costs incurred by the MoD will be
reimbursed by BERR at the year-end.
This arrangement provides for greater flexibility
in managing funding and allows for any slippage of expenditure
on MoD-led programmes to be re-allocated to other programmes within
the Global Threat Reduction Programme.
(d) Post Office Restructuring—The
budget for Post Office restructuring was reclassified from AME
to DEL for 2007-08 as a result of a decision by Treasury to ensure
consistency going into the Comprehensive Spending Round period.
This has no impact on BERR as the payment of £68 million
has already been made to the Post Office with no further payments
due this year.
2. REFUNDS FROM
DIUS
(a) Repayment of DIUS Expenditure—The amount
of cash expended by BERR in respect of DIUS to the end of November
was c£2.6 billion. Repayment by DIUS was made late December.
(b) Timing of Repayment of EYF Loan—The
wording of the £78 million loan agreement between BERR and
DIUS is intended to limit the amount repaid in 2008-09 rather
than to extend the period of the loan. In fact, the full £78
million has to be repaid by the end of 2009-10.
3. END YEAR
FLEXIBILITY
BERR's access to end year flexibility (EYF)
has been under discussion with Treasury. BERR is planning to utilise
c£50 million to cover planned expenditure which was subject
to slippage in 2005-06, and expenditure which is vital but was
unplanned and therefore unbudgeted.
Additionally, an amount will be needed to provide
budgetary cover for the Nuclear Decommissioning Authority which
is subject to a high degree of uncertainty in relation to the
timing of commercial income streams. The relevant income is due
for receipt in March 2008 but may slip into 2008-09. Due to the
timing and the degree of uncertainty, it is likely that BERR will
need to access up to c£200 million of EYF to provide cover
for the Nuclear Decommissioning Authority.
The remaining balance of EYF will be carried
forward to CSR07.
4. TRANSFERS
FROM NON-VOTED
TO VOTED
EXPENDITURE
As advised in Annex C to the memorandum, the
transfer of £50 million was needed to help to fund DTI's
pressures. Within the Main Estimate the shortfall was aligned
to two sub heads (A3 Sustainability £38.755 million and E2
Business £11.245 million). However, the budget allocation
process took place after publication of the Main Estimate and
the actual budget allocation of the £50 million was as follows:
| Budget | £ million
|
| Related to the Science budget which had to be fully funded by BERR before the transfer to DIUS took place
| 13.0 |
| Waste Electrical and Electronic Equipment directive, a sustainability programme (with the balance of £5.2m to be funded through use of EYF)
| 11.1 |
| Payments from provision in relation to British Energy (the balance of a total budget amounting to £200m)
| 10.0 |
| Payments from provision in respect of British Shipbuilders
| 6.5 |
| MG Rover (balance of the task force ex-employee support programme and the ongoing costs of Inspectors appointed under section 432 of the Companies Act)
| 4.0 |
| Cash payments made against provisions for voluntary early requirement schemes designed to cut staff costs in the longer term within ACAS, Competition Commission & National Consumer Council
| 2.5 |
| Costs of OFCOM undertaking ex-post competition casework as required under concurrent Competition Act powers in respect of telecoms associated matters
| 1.5 |
| Cost implications of the introduction of Additional Paternity Leave and Pay to HMRC and DWP
| 1.4 |
| Total | 50.0 |
5. IMPACT ON
PSAS
BERR's PSAs address key long-term policy challenges. With
regard to the three PSAs referred to in the Department's Estimates
Memorandum, PSA 1 targets the productivity gap between the UK
and its major competitors, PSA 4 covers the main goals of Government
energy policy and PSA 7 addresses the longstanding differences
in the economic performance of the English regions.
It is very difficult to make an assessment of the impact
on PSA delivery of the often technical changes in the funding
of particular BERR activities set out in the Estimates memorandum,
but it is likely to be very small. However in light of the
areas covered by the changes sought to the Department's Estimates
in the November Memorandum, it was thought relevant to acknowledge
the possibility of some slight, unquantifiable impact
on these PSAs.
6. RECONCILIATION BETWEEN
WINTER SUPPLEMENTARY
ESTIMATES AND
THE WRITTEN
STATEMENT
The figures for Non-Departmental Public Bodies (NDPBs) shown
in the Written Ministerial Statement reflect the related budgets
on an accruals basis and include non cash.
The figures for the NDPBs shown in the Estimates represent
Grant-in-Aid (ie cash payments made by the Department to the NDPBs
to support cash flow needs) and are voted. These amounts usually
equal the NDPB's total budget less income received and non cash
items. However, in the case of the Research Councils, a prudent
approach was taken to the initial calculation of Grant-in-Aid
and only approximately 90% of that cash need was included in the
Main Estimate.
Finally, I have taken on board the Committee's comments and
will include a more comprehensive narrative explanation in future
memoranda.
8 January 2008
| 
