Appendix 2: Correspondence with the
Secretary of State
Letter from the Chairman of the Committee to
the Secretary of State
My Committee is grateful to BERR for its response
to our recent Report on Funding the Nuclear Decommissioning
Authority, but would appreciate clarification on one extremely
important point.
When he appeared before the Committee, Sir Brian
Bender told us "what the Treasury have accepted is that we
insulate the department's budget for 2008-09 and subsequent years
from the NDA." (Q 63). The Government response says:
"The NDA's budget is ring-fenced within BERR's
budget. Current arrangements are that all BERR budgets (including
the NDA) are managed within the overall Departmental Expenditure
Limit. As such, should additional funding be needed for the NDA
in future years BERR will first look to non-ringfenced budgets
to make good the shortfall: this is a standard budgeting arrangement
and ensures resources are allocated as efficiently as possible
within the department and across Government and better enables
the Government to manage its total finances."
Given the inherent difficulty in predicting NDA's
budgetary requirements, we are extremely concerned that movements
in the NDA's financial position could have very serious effects
on the budget of the Department as a whole. We would be grateful
for an explanation of the apparent discrepancy between what Sir
Brian told us, and the subsequent Response.
Peter Luff, Chairman, Business and Enterprise Committee
17 June 2008
Letter from the Secretary of State to the Chairman
of the Committee
Thank you for your letter of 17 June 2008.
You sought clarification between comments which Sir
Brian Bender made when appearing before the Committee on 4 March
2008 and the Government response regarding the funding for any
shortfalls in the NDA and the impact on non-ringfenced areas of
the Departmental budget.
Sir Brian's comments were accurate, non-NDA budgets
were insulated in 2008-09 and were not cut, nor was there a delay
in issuing them as a result of the issues surrounding the NDA.
During the Committee hearing Sir Brian also explained
the process that would be involved in making good any future shortfall
within the NDA: "step one, have the NDA got the money; step
two is the money somewhere in the Department's books, including
the end-year flexibility cushion
..; step three, if neither
of us have got it can the Treasury find it from the reserve"
(Q 53).
Were the NDA unable to manage any shortfalls arising
in-year the Department would look to any internal underspends
in non-ringfenced budgets. These underspends represent money that
would not have been spentirrespective of any shortfalls
in the NDAand future budgets for those areas would be unaffected.
Finally, were the Department unable to meet shortfalls
from underspends we would approach Treasury for access to End
Year Flexibility or make a request for resources from the Reserve.
This is the standard mechanism for addressing such shortfalls
and is consistent with the response from the Government.
I hope this letter addresses your concerns and I
thank you for the opportunity to do so prior to publication of
the final response.
The Rt Hon John Hutton MP, Secretary of State for
Business
26 June 2008
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