Memorandum submitted by the Department for Business,

Innovation and Skills

 

Winter Supplementary Estimates Memorandum 2009-10

 

I am enclosing the Department for Business Innovation and Skills (BIS's) Memorandum for the forthcoming Winter Supplementary Estimate. This Memorandum has been prepared in accordance with the "Guide to Preparing Estimate Memoranda" and has been approved by the Departmental Accounting Officer.

 

I acknowledge the comments made during the recent Select Committee hearing on BERR's Annual Report and Accounts, and will be responding to the need to make the information we present to you simpler and clearer. However, in the meantime, this Winter Supplementary Memorandum represents bringing together the two former Departments into BIS ensuring continuity of information.

 

Presentation and publication of the forthcoming Winter Supplementary Estimate will be in week commencing 23 November 2009.

 

As mentioned at the hearing, we are rationalising BIS's Departmental Strategic Objectives from eleven to seven and are in the process of agreeing a revised set with HM Treasury (currently awaiting approval by Chief Secretary). The Memorandum makes reference to the Department's intention to realign the 2010-11 Main Estimate with this revised set of Departmental Strategic Objectives, once these have been agreed with the Committee. I would be most grateful if the Committee will give this realignment some consideration and let me have their approval.

 

We would welcome a discussion on whether or not the Committee considers the current construction of three Requests for Resources useful.

 

 

Department for Business Innovation and Skills

Winter Supplementary Estimate 2009-10

Select Committee Memorandum

 

 

1. Following an announcement by the Prime Minister on 5 June 2009, about the way in which Government is organised, the Department for Business, Innovation and Skills (BIS) was formed through a merger between the Department for Business, Enterprise and Regulatory Reform (BERR) and the Department for Innovation, Universities and Skills (DIUS). BIS is taking forward the work of the two former Departments in helping the UK build on its strengths and develop new capabilities that will enable everyone to exploit these changes fully.
BIS is creating the policy critical to grow the economy, from higher education, skills and science to innovation, enterprise and business. A strong and growing economy means new industries and new jobs, improved public finances and supportive public services.

2. BIS's Winter Supplementary Estimate for 2009-10 seeks the necessary resources and cash to support the functions of the Department and its Non Departmental Public Bodies (NDPBs). The purpose of this Memorandum is to provide the Select Committee with an explanation of how the resources and cash sought in the Supplementary Estimate will be applied to achieve Departmental objectives. A contents list may be found at Annex A and a glossary of terms used within the Supplementary Estimate at Annex B.

 

3. For a fuller picture of the Department's planned expenditure in 2009-10, with comparison figures for prior and forward years, the Committee is referred to the BERR and DIUS entries in HM Treasury's Main Supply Estimates and Supplementary Budgetary Information. Prior years' figures have been adjusted to remove the budgets transferred to other Departments through Machinery of Government changes, mainly to the Department of Energy and Climate Change (DECC). Information was also provided earlier in the year in the annual Departmental Report and Resource Accounts for BERR and DIUS.

 

4. The structure of the Estimate for BIS currently includes three Requests for Resources (RfRs):

 

o RfR 1: To help ensure business success in an increasingly competitive world

 

o RfR 2: Increasing Scientific excellence in the UK and maximising its contribution to society

 

o RfR 3: To help build a competitive economy by: creating opportunities for everyone to develop their learning and skills and creating excellence in science, research and innovation

 

5. The former BERR had five Departmental Strategic Objectives (DSOs), which were reflected in the way in which the information was presented in its Estimate. These were:

 

o DSO 1: Promote the creation and growth of business and a strong enterprise economy across all regions.

o DSO 2: Ensure that all Government departments and agencies deliver better regulation for the private, public and third sectors.

o DSO 3: Deliver free and fair markets, with greater competition, for businesses, consumers and employees.

o DSO 4: Ensure that Government acts as an effective and intelligent shareholder, and provide a source of excellent corporate finance expertise within Government.

o DSO 5: Provide the professional support, capability and infrastructure to enable BERR's objectives and programmes to be successfully delivered.

 

6. The former DIUS had six DSOs which were:

 

o DSO 1: Accelerate the commercial exploitation of creativity and knowledge, through innovation and research, to create wealth, grow the economy, build successful businesses and improve quality of life.

o DSO 2: Improve the skills of the population throughout their working lives to create a workforce capable of sustaining economic competitiveness, and enable individuals to thrive in the knowledge economy.

o DSO 3: Build social and community cohesion through improved social justice, civic participation and economic opportunity by raising aspirations and broadening participation, progression and achievement in learning and skills.

o DSO 4: Pursue global excellence in research and knowledge, promote the benefits of science and society, and deliver science, technology, engineering and mathematics skills in line with employer demand.

o DSO 5: Strengthen the capacity, quality and reputation of the Further and Higher Education systems and institutions to support national economic and social needs.

o DSO 6: Encourage better use of science in Government, foster public service innovation, and support other Government objectives which depend on DIUS expertise and remit.

 

7. The two former Departments had the following Public Service Agreement (PSA) targets, which are now the responsibility of BIS:

 

o PSA 1: Raise the productivity of the UK economy

o PSA 2: Improve the skills of the population, on the way to ensuring a world-class skills base by 2020

o PSA 4: Promote world-class science and innovation in the UK

o PSA 6: Deliver the conditions for business success in the UK

o PSA 7: Improve the economic performance of all English regions and reduce the gap in economic growth between regions

 

DEL Budget

 

8. Before the additional changes being made through the Winter Supplementary Estimate, the budget figures for BIS reflected the budgets agreed in the Comprehensive Spending Review (CSR)07 for BERR and DIUS, amended for all Machinery of Government changes and published in the two Main Estimates for 2009-10:

 

Figures published in the two Main Estimates	£'000	£'000	£'000
Near Cash	Non Cash	Capital
Amended CSR 07 Settlement (DEL) for BERR	1,443,826	141,040	338,054
CSR 07 Settlement (DEL) for DIUS	15,694,107	1,530,383	2,647,108
Revised 2009-10 Total	17,137,933	1,671,423	2,985,162
Including Admin of:
BERR	254,630	18,319
DIUS	69,299	1,600
Total	323,929	19,919

Estimate

 

Structure of the Estimate (DEL and AME)

 

9. The structure of BIS's three RfRs reflects the original eleven DSOs, although it is intended to restructure these in keeping with the revised DSOs in the 2010-11 Main Estimate. We would also like to fully reflect the DSO structure by discontinuing the current practice of detailing the Research Councils and the various Education and Skills Programmes individually on the face of the Estimate. Most of the detail would still be available in the Grants in Aid note to the Estimate, and we propose to give the Select Committee additional information via the Memorandum. Reducing the level of detail on the face of the Estimate to DSO level will allow a substantial shortening of note 2 to the Resource Accounts in future years (Annex D shows the impact of the change on the Estimate).

 

10. The details from Part I of the two Main Estimates are shown at Annex C to show the movement of funding between RfRs reflected in the combined Estimate. The voted funding, including the changes made through the Supplementary Estimate, is shown by RfR in Annex D.

 

Summary of Provision sought

 

11. The Winter Supplementary Estimate requests provision totals of: £'000

Request for Resources 1: To help ensure business success in an increasingly competitive world	2,672,251
Request for Resources 2: Increasing Scientific excellence in the UK and maximising its contribution to society.	3,688,205
Request for Resources 3: To help build a competitive economy by: creating opportunities for everyone to develop their learning and skills and creating excellence in science, research and innovation.	15,331,175
Total net resource requirement	21,691,631
Net cash requirement	24,942,458

12. Planned 2009-10 DEL expenditure is being increased through the Supplementary Estimate as follows:

 

Notes	Changes sought	Near Cash £'000	Non Cash £'000	Capital £'000
	2009-10 DEL Provision in Main Estimates for RfR 1	1,443,826	141,040	338,054
	Machinery of Government transfer from DIUS	541,682	12,982	24,211
(a)	Repayment of the balance of a Capital loan by Science			43,000
(b)	Transfer to the Department for Communities and Local Government (CLG) - contribution to the Housing Pledge			(25,000)
(c)	Transfer from the Department for Work and Pensions (DWP) for Business Link	5,759
(d)	Transfer from the Department of Energy and Climate Change (DECC) for Low Carbon Buildings			25,000
(e)	Transfer from DECC for Fuel Cells and Hydrocarbon demonstration			2,100
(f)	Virement from Strategic Investment Fund Capital to the Technology Strategy Board	7,300		(7,300)
(g)	Transfer from the Home Office (HO) for Migration Impact Funding	2,629
(h)	Virement from the Learning and Skills Council (LSC) RfR3 to the London Development Agency (LDA) and the Regional Development Agencies (RDAs) for the Skills Brokerage Service RfR1	37,000
(i)	Virement to RfR3 for the Annual Population Survey	(2,533)
(j)	Virement to RfR3 from the Departmental Unallocated Provision (DUP)	(384)
(k)	Virement to RfR1 DUP from RfR3 International programmes	60
	2009-10 DEL Provision in Supplementary Estimate for RfR 1	2,035,339	154,022	400,065

 

Notes:

(a) Part of the CSR07 Settlement included arrangements to repay a capital loan of £78m which was made by the former Department of Trade and Industry non-Science budget to the Science budget in 2007-08. Part repayment of £35m was made in 2008-09 with repayment of the balance of £43m being repaid through this Supplementary Estimate. £18m of this funding has been allocated to the budget for the Small Firms Loan Guarantee Scheme.

(b) The Secretary of State for BIS agreed that the Department would contribute £25m capital in 2009-10 and 2010-11 towards the Prime Minister's "Building Britain's Future" Housing Pledge. The 2009-10 contribution is being made from part of the loan repayment referred to above.

(c) Provision of Self-Employment support for DWP customers reaching six months of unemployment to be delivered through Business Link. This amount is part of the £360m funding allocation identified by DWP for the delivery of the "6 month offer" announced by the Prime Minister on 12 March 2009.

(d) DECC are transferring £25m from the Low Carbon Investment Fund budget to BIS' UK Innovation Investment Fund. On 29 June 2009, the Prime Minister announced the creation of this Fund to invest in technology-based businesses with high-growth potential.

(e) As announced in the 2009 Budget, the Government allocated funding for stimulating low carbon technologies in the UK. As part of this package, DECC has allocated a budget of £7.2m for capital funding for a Fuel Cells and Hydrogen Demonstration programme, which will be delivered by the Technology Strategy Board. £2.1m has been transferred for 2009-10 and £5.1m for 2010-11.

(f) BIS was provided with £395m capital in 2009-10 for a Strategic Investment Fund for "New Industry, New Jobs" to provide resources for the new competitiveness strategy published in May 2009. £7.3m of the Low Carbon element of this funding is being switched from capital to resource for research and technology funding to be provided to Rolls Royce through the Technology Strategy Board.

(g) In the 2009-10 Main Estimate, a loan of £8m was made to the Home Office towards the Migration Impacts Fund (£70m in total). The fund is to be financed by a levy on migrants and is being used to tackle illegal working practices and to reduce local pressure on public services. £2.629m is being repaid through this Estimate, with a further £5.371m to be transferred in the Spring Supplementary Estimate.

(h) The Skills Brokerage Service, part of the "Train to Gain" programme, has been transferred from the Learning and Skills Council to the LDA and RDAs. The skills brokerage business model aims to facilitate business start-ups and enhance their chance of survival in the context of the networked economy.

(i) £2.533m was contributed from RfR3 budgets for the annual population survey. It was later agreed that this funding should have been made from RfR1 and this movement restores the budget to RfR3.

(j) A number of past transfers into DIUS made in respect of Government Skills should have been added to the Programme budget rather than the Administration budget. A total adjustment of £765k has now been corrected within RfR1. £384k of this adjustment is "owed" to RfR3.

(k) A £60k transfer has been made from RfR3's International programme to the DUP.

 

Notes	Changes sought	Near Cash £'000	Non Cash £'000	Capital £'000
	2009-10 DEL Provision in Main Estimates for RfR 2	-	-	-
	Machinery of Government transfer from DIUS	2,876,909	196,071	867,569
(a)	Repayment of balance of capital loan to RfR1			(43,000)
	2009-10 DEL in Supplementary Estimate for RfR 2	2,876,909	196,071	824,569

 

	2009-10 DEL in Main Estimates for RfR 3	-	-	-
	Machinery of Government transfer from DIUS	12,275,516	1,321,330	1,755,328
(l)	Transfer from the Department for Schools, Children and Families (DCSF) for the College Sector	400
(m)	Transfer from the Ministry of Justice (MoJ) for Government Skills	222
(n)	Transfer from MoJ for Offender Learning	24,073
(o)	Learning and Skills Council virement from resource to capital	(10,000)		10,000
(h)	Virement from the Learning and Skills Council RfR3 to the LDA and RDAs for the Skills Brokerage Service RfR1	(37,000)
(i)	Virement from RfR1 for the Annual Population Survey	2,533
(j)	Virement from RfR1 DUP for Government Skills	384
(k)	Virement to RfR1 DUP from International programmes	(60)
	2009-10 DEL in Supplementary Estimate for RfR 3	12,256,068	1,321,330	1,765,328

 

(l) BIS provides funding for the further education sector and DCSF is transferring £400k to make some money available to improve collaborative procurement, buying and contracting by the sector.

(m) BIS funds Government Skills, the sector skills council for central Government. The £222k represents a transfer from MoJ towards additional Government Skills funding.

(n) BIS provides learning facilities to offenders for which the need increases in alignment with an increased prison population. The National Offender Management Service is engaged in a significant and substantial programme of prison expansion; each expansion makes the demand for offender learning larger. MoJ provides additional funding on a regular basis to cover the extra need.

(o) There is a £10m increase to the Learning and Skills Council's capital budget as part of the plans to enable the Council to fund a limited number of further capital projects through the Building Colleges for the future programme. £10m is being transferred from resource funding into capital to cover this.

 

Notes	Changes sought	Near Cash £'000	Non Cash £'000	Capital £'000
	2009-10 AME Provision in Main Estimates for RfR1	468,352	105,753	550,000
(p)	Increased Redundancy Payments costs	77,218
(q)	Increased forecast for RDA impairments		5,098
(r)	Increased Corporation Tax in respect of the London Development Agency (LDA)	1,030
(s)	Increased UK Atomic Energy Authority (UKAEA) decommissioning costs		6,795
(t)	Increased Paternity Pay costs	200
(u)	Post Office Working Capital loan Interest receipts	(1,500)
(v)	British Nuclear Fuels Ltd (BNFL) super dividend			(32,000)
	2009-10 AME Provision in Supplementary Estimate for RfR1	545,300	117,646	518,000

 

 

(p) Updated forecasts for payments to be made by the Redundancy Payments Service have increased by £77.218m.

(q) Forecast impairments to be made to the value of land and buildings held by the RDAs (for development purposes) have increased by £5.098m.

(r) Corporation tax for the LDA has increased by £1.03m.

(s) Decommissioning costs for UKAEA have increased by £6.795m.

(t) The volume of claims for paternity pay is forecast to increase resulting in an increased cost of £200k.

(u) Interest receipts on the working capital loan provided to the Post Office are forecast to be £1.5m in 2009-10.

(v) A super dividend in respect of BNFL of £32m was received in April 2009.

 

 

Notes	Changes sought	Near Cash £'000	Non Cash £'000	Capital £'000
	2009-10 AME Provision in Main Estimates for RfR2	-	-	-
	Machinery of Government transfer from DIUS	42,543
(w)	Reduced forecast for Research Council pensions and National Endowments	(5,543)
	2009-10 AME in Supplementary Estimate for RfR 2	37,000	-	-

 

(w) Payments in respect of the Research Council pensions are forecast to be £5.543m less than the original budget.

 

Notes	Changes sought	Near Cash £'000	Non Cash £'000	Capital £'000
	2009-10 AME Provision in Main Estimates for RfR3	-	-	-
	Machinery of Government transfer from DIUS	(736,750)	917,362	4,813,745
(x)	Changes to forecasts for student loans	746,899	(731,826)	(639,054)
	2009-10 AME in Supplementary Estimate for RfR 3	10,149	185,536	4,174,691

 

(x) The change in the forecast for student loans (i.e. the near cash) is mainly due to income from interest payments received which has reduced by £731.826m to £181m due to the fall in interest rates. This is matched by offsetting non cash changes. This is also the main reason for the reduction in capital (i.e. additional student loans less loan repayments plus capitalised interest received) which has decreased by £639.054m to £4,174.691m.

 

Changes made through the Supplementary Estimate which have no impact on the overall Departmental Budget

 

13. A number of changes have been made which affect the balance between voted and non-voted expenditure or reflect movements between budget lines. These are as follows:

 

Notes	Changes between voted and non-voted expenditure	Voted £'000	Non Voted £'000
(a)	Virement from non-voted DUP to the Automotive Scrappage Scheme	43,700	(43,700)
(b)	Virement from voted Business Programmes to RDAs	(1,700)	1,700
(c)	Virement from voted funding to the LSC	(24,943)	24,943
(d)	Virement to voted from non-voted funding for the Higher Education Funding Council for England	374	(374)
(e)	Virement to voted from non-voted funding relating to the Student Loans Company	1,260	(1,260)
(f)	Virement from voted funding to the Higher UK Commission for Employment and Skills	(2,461)	2,461
(g)	Virement from voted funding to the Sector Skills Development Agency	(32)	32
	Other small movements	2,149	(2,149)
Notes	Movements between budget lines	Near Cash £'000	Non Cash £'000	Capital £'000
(h)	Virement from non-voted RDA capital to voted central programmes	2,500		(2,500)
(h)	Virement from voted programme underspend to non-voted RDA capital	(2,500)		2,500
(a)	Virement from underspends on the Small Firms Loan Guarantee Scheme to the Automotive Scrappage Scheme	56,300

 

 

Notes:

 

(a) An increase of £100m has been made to the temporary Automotive Scrappage scheme, increasing the budget for the scheme from £300m to £400m. The budget has been transferred from the DUP, and the Small Firms Loan Guarantee Scheme where a reclassification has resulted in the need for capital budget rather resource.

(b) Additional £1.7m of resource funding for the National Business Link marketing initiative transferring from Business Programmes to East Midlands Development Agency, who take the Enterprise lead role.

(c) Virement from voted central programmes to the LSC to bring alignment to allocations made since the Main Estimate. The figure of £24.943m is the net result of a number of movements, the most significant of which are: transfers to the LSC for adult careers advice and guidance, qualifications work, building and improving the capacity of the adult learning sector and delivering "Aim Higher" partially offset by transfers from the LSC to central programmes for a challenge fund for the Informal Adult Learning Revolution and the return of funds for Higher Education support costs

(d) Virement from non-voted Higher Education Funding Council for England to voted central programmes for supporting education internationally, less an offsetting transfer for graduate internships.

(e) Virement from the Student Loans Company to voted central programmes for the HM Customs and Revenue costs of administering student loans, partially offset by a transfer to fund work for which the Student Loan Company now has responsibility on student finance communications.

(f) Virement from voted central programmes to the Higher UK Commission for Employment and Skills for delivery of a number of policies including on national occupational standards, qualifications, apprenticeships and provision of labour market information.

(g) Virement from voted central programmes to the programme which meets early retirement costs of former staff of the Sector Skills Development Agency.

(h) Virement between central near cash funding and RDA capital to enable the delivery of a skills package for the Hybrid Auris and Toyota wider training plans.

 

 

Net Cash Requirement

 

14. The voted and non-voted Resource and Capital DEL (including the Administration Budget) are announced in a summary table in the Supplementary Estimate. The following table shows the reconciliation between the total Resource and Capital Budget figures shown above and the Net Cash Requirement. The revised Net Cash Requirement for 2009-10 is as follows:

 

	£'000
Resource DEL Budget (Total Near Cash and Non Cash)	18,839,739
Capital DEL Budget	2,989,962
Total DEL Budget	21,829,701
Plus AME[1]:
Voted Near Cash Resource AME	(98,700)
Voted Capital AME	4,719,000
Plus Consolidated Fund Extra Receipts (CFERs) - a technical adjustment to restore the cash requirement as CFERs are included as a negative figure within the budget	121,631
Plus adjustment for the Departmental Unallocated Provision	32,294
Plus Voted non-Budget Grant-in-Aid[2] to Non Departmental Public Bodies (NDPBs)	25,701,710
Plus Other voted non-Budget	1,300
Less Budget items with no cash requirement:
Non Cash DEL	(1,671,423)
Non-voted Near Cash Resource DEL and Capital DEL (NDPBs) [3]	(26,723,805)
Plus Non Budget Payments against provisions	36,750
Less adjustment for bad debts	(6,000)
Total Net Cash Requirement	24,942,458

 

RDA Budgets

 

15. The largest of BIS's NDPB budgets within RfR1 relates to the RDAs and the LDA. Following changes made through the Winter Supplementary Estimate, the 2009-10 the RDA and LDA budgets are as follows:

 

	Near Cash	Non Cash	Capital
DEL Budgets	£'000	£'000	£'000
RDAs (non-Voted) Main Estimate	883,093	57,029	940,428
Transfer from DWP for Business Link	4,732
Virement from ex-BERR budgets for Business Link	1,700
Virement from RfR3 for Train to Gain
Virement from capital to resource with offsets to ex-BERR budgets	2,500		(2,500)
RDAs (non-Voted) Winter Supplementary	892,025	57,029	937,928

 

LDA (Voted) Main Estimate	197,301		177,662
Transfer from DWP for Business Link	1,027
LDA (Voted) Winter Supplementary	198,328

 

Income from Other Government Departments (OGDs) Main Estimate	(757,579)		1,043,538
Removal of income from DIUS in Winter Supp	79,359
Income from Other Government Departments (OGDs) Winter Supplementary	(678,220)		1,043,538

 

AME Budgets
RDAs (non-Voted) Main Estimate		112,440
Increased forecast for RDA impairments		5,098
RDAs (non-Voted) Winter Supplementary		117,538

 

LDA (Voted) Main Estimate	1,970
Increased LDA Corporation Tax	1,030
LDA (Voted) Winter Supplementary	3,000
Total Budgets	415,133	174,567	72,052

 

Science Budgets

 

16. The budgets within RfR2 are allocated as follows:

 

	Near Cash	Non Cash	Capital
DEL Budgets	£'000	£'000	£'000
The Royal Society	45,823
Royal Academy of Engineering	12,138
British Academy	25,062		2,000
RB Initiatives	6,065
Science and Society	15,441
Economic Impact	12,500
Research Capital Investment Fund			48,676
Biotechnology and Biological Sciences Research Council	345,468	19,364	110,728
Arts and Humanities Research Council	101,338	850	3,113
Economic and Social Research Council	156,249	400	20,838
Engineering and Physical Sciences Research Council	717,804	13,931	85,161
Medical Research Council	550,453	49,028	108,132
Natural Environment Research Council	326,895	30,688	58,197
Science and Technology Facilities Council	462,673	81,810	137,994
Higher Education Funding Council for England	99,000		216,184
Large Facilities Capital Fund			33,546
AME Budgets
Research Councils' Pension Schemes	37,000
Total Budgets	2,913,909	196,071	824,569

 

Universities and Skills Budgets

 

17. The budgets within RfR3 are allocated as follows:

 

	Near Cash	Non Cash	Capital
	£'000	£'000	£'000
DEL Budgets
Improving skills and building social and community cohesion	4,713,788	1,334,409	11,845
of which Learning and Skills Council	3,354,603
Strengthening further and higher education	7,512,937	(13,079)	1,753,483
of which Higher Education Funding Council for England	6,590,361	-28,906	938,663
of which Learning and Skills Council	542,008	15,294	812,500
Encouraging science and innovation in the public sector	29,343
AME Budgets
Loans to Students	(181,000)	181,001	4,169,000
Construction Industry Training Board	178,326	3,516	5,265
Engineering Construction Industry Training Board	16,895	1,019	426
Total Budgets	12,270,289	1,506,866	5,940,019

 

 

Extra Receipts payable to the Consolidated Fund

 

18. These mainly consist of income from Launch Investments and the OFCOM trading surplus, with small sums relating to the Post Office Working Capital loan and also to Companies House (which was mainly dividend).

 

Administration Budget

 

19. The Administration Limits in the Main Estimates for BERR and DIUS were as shown in the following table. The table also shows changes made through the Supplementary Estimate:

 

	Near Cash	Non Cash
	£'000	£'000
BERR Admin Limits in the Main Estimate	254,630	18,319
DIUS Admin Limits in the Main Estimate	69,299	1,600
Changes made through the Supplementary Estimate:
Switch from Programme to Admin funding	13,625
	337,554	19,919

 

 

 

 

 

 

 

AME Budget

 

20. The Department's AME budget is as follows:

 

	Description	Near Cash £'000	Non Cash £'000	Capital   £'000
Voted	Post Office Working Capital loan	(1,500)		550,000
	Loans to Students	(181,000)	181,001	4,169,000
	Paternity Pay	43,800
	LDA Corporation Tax	3,000
	UKAEA decommissioning costs		1,035
	Science Research Council pensions	37,000
Non Voted	Redundancy Payments Service	500,000
	RDA Impairments		117,538
	UKAEA decommissioning costs		(927)
	BNFL Special Dividend			(32,000)
	National Endowments for Science, Technology and the Arts	(4,072)
	Construction Industry Training Board	178,326	3,516	5,265
	Engineering Construction Industry Training Board	16,895	1,019	426
	Total AME Budget	592,449	303,182	4,692,691

 

Impact on PSA and DSO delivery

 

21. BIS leads on five of the Government's PSA targets (listed at paragraph 8), and has inherited eleven DSOs from BERR and DIUS (listed at paragraphs 5 and 6). In the Annual Reports of BERR and DIUS progress was reported on three of these five PSAs (two were not yet assessed), all five former BERR DSOs, and one of the six former DIUS DSOs (five were not yet assessed). An update on PSA and DSO delivery will be included in BIS's 2009 Autumn Performance Report.

 

23. Against a total DEL Resource budget of £18,840 million Resource DEL, and £2,990 million Capital DEL, the changes to budgets effected through this Supplementary Estimate are relatively minor, giving the Department an extra £30 million Resource DEL and £5 million Capital DEL to fund spending plans in support of the Departments' PSAs and DSOs. The individual changes which make up this aggregate, (with the exception of £25 million Capital DEL transferred to the Department for Communities and Local Government as a contribution to the Prime Minister's Housing Pledge), support overall delivery of these PSAs and DSOs

 

End Year Flexibility (EYF)

 

22. BIS' stocks of EYF as at 31 March 2009 are shown at Annex E. The totality of planned usage, including up to £375m resource and up to £107m capital in 2009-10, is shown in the table, although any, and all usage, is subject to final agreement with Treasury subject to normal scrutiny on the basis of need and realism, and the wider fiscal position

 

Provisions and Contingent Liabilities

 

23. The Department provides for legal or constructive obligations, which are uncertain in respect of either timing, or amount, on the basis of the best estimate of the expenditure required to settle the obligation. Details of the Department's main provisions and contingent liabilities as at 31 March 2009 are shown in the 2009 annual Departmental Reports and Resource Accounts of BERR and DIUS. Tables showing provisions (as shown in the 2008-9 Resource Accounts) and contingent liabilities (as shown in the 2009-10 Main Estimates) as at post balance sheet dates are included at Annex F.

 

Process for Preparation and Approval of Memorandum

 

24. This Memorandum has been prepared in accordance with the suggested format as set out in "A Guide to Preparing Estimate Memoranda" and Annex D to PES circular 2004(14) and has been approved by the Departmental Accounting Officer.

 

 

 

Paragraph	TABLE OF CONTENTS	Page number
1 - 3	Introduction	2
4	Requests for Resources	2
5 - 6	Departmental Strategic Objectives	2-3
7	Public Service Agreements	3
8	Departmental Expenditure Limits Budget	3
9	Structure of the Estimate	4
10 - 12	Summary of Provision and planned DEL budgets	4-8
13	Changes which have no impact on the overall budget	8
14	Net cash requirement	9-10
15 - 17	Largest NDPB budgets	10-12
18	Consolidated Fund Extra Receipts	12
19	Administration budget	12
20	Annually Managed Expenditure budget	13
21 -22	PSA and DSO Delivery	13
23	End year flexibility	13
24	Provisions and contingent liabilities	13-14
25	Process for preparation and approval of Memorandum	14
Annex A	Table of Contents	15
Annex B	Glossary of Terms	16
Annex C	Original Main Estimate figures for BERR and DIUS	17
Annex D	Voted funding by DSO	18
Annex E	End Year Flexibility Table	19
Annex F	Provisions for Liabilities and Charges	20
Annex G	Contingent Liabilities	21

 

Explanation of key terms used in the Memorandum and Main Estimate

 

Departmental Expenditure Limit (DEL)

This is spending within the Department's direct control and which can therefore be planned over an extended period, such as the costs of its own Administration.

Annually Managed Expenditure (AME)

Annually Managed Expenditure is primarily demand led expenditure. It is generally less predictable and controllable than expenditure in Departmental Expenditure Limit. Annually Managed Expenditure spending does not fall within the Departmental Expenditure Limit.

Request for Resources

This is the functional level at which the Departmental Estimates are allocated in support of the Department's objectives. The Department currently has three RfRs:

 

§ Request for Resources 1: To help ensure business success in an increasingly competitive world.

 

§ RfR 2: Increasing Scientific excellence in the UK and maximising its contribution to society

 

§ RfR 3: To help build a competitive economy by: creating opportunities for everyone to develop their learning and skills and creating excellence in science, research and innovation

 

Consolidated Fund Extra Receipts (CFERs)

 

Receipts not authorised to be Appropriated-in-Aid paid over to HM Treasury without benefit to the Department.

 

Departmental Unallocated Provision

A Departmental reserve, which can be accessed, where necessary, by means of a Main or Supplementary Estimate. Where this is a negative figure, it indicates the proposed use of EYF to fund allocated budgets.

End of Year Flexibility (EYF)

A mechanism that enables the Department to plan the use of resources over Spending Review years, and therefore, carry-forward unspent provision in the Departmental Expenditure Limit in one year to subsequent years.

Voted and Non-Voted Funds

The term Vote applies to the process by which Parliament formally approves the Supply of funds to the Department. Non-voted funds have, by definition, not been through that process. These may include, for example, the resource consumption of Non Departmental Public Bodies, which features within the Departmental Expenditure Limit. Expenditure funded by the National Insurance Fund is also non-Voted.

Part I
			Original Main Estimates	Combined Estimate	Difference
Request for Resources 1: To help ensure business success in an increasingly competitive world	1,996,271,000	2,527,070,000	530,799,000
Request for Resources 2: Increasing Scientific excellence in the UK and maximising its contribution to society.	3,584,149,000	3,584,149,000	-
Request for Resources 3: To help build a competitive economy by: creating opportunities for everyone to develop their learning and skills and creating excellence in science, research and innovation.	15,871,729,000	15,340,930,000	-530,799,000
Total net resource requirement	21,452,149,000	21,452,149,000	-
Net cash requirement	24,603,850,000	24,603,850,000	-

 

 

 

 

 

 

NB: The movement of £530.799m relates to Innovation programmes which were moved from RfR 3 to RfR1.

Total Voted Funding after the Winter Supplementary Estimate Changes

 

Voted funding shown in Part II (subhead detail) of the Estimate for RfR 1 (net total Resource of £2,672,251k + net total Capital of £630,346k) is allocated as follows:

 

RfR1	Voted DEL Funding £'000	Voted AME Funding £'000
Innovation and Research Accelerate the commercial exploitation of creativity and knowledge, through innovation & research, to create wealth, grow the economy, build successful businesses & improve quality of life.	454,178
Business Creation and Growth: Promote the creation and growth of business and a strong enterprise economy across all regions	1,483,025	3,000
Better Regulation: Ensure that all Government Departments and agencies deliver better regulation for the private, public and the third sector	4,737
Free and Fair Markets: Deliver free and fair markets, with greater competition, for businesses, consumers and employees	262,873	43,800
Government as a Shareholder: Ensure that government acts as an effective and intelligent shareholder, and provide a source of excellent corporate finance expertise within Government	181,414	549,535
Professional Support and Infrastructure: Provide the professional support, capability and infrastructure to enable BERR's objectives and programmes to be successfully delivered	330,535
Totals	2,716,762	596,335

 

Voted funding shown in Part II (subhead detail) of the Estimate for RfR 2 (net total Resource of £3,688,205k + net total capital of £2,000k) is allocated as follows:

 

RfR2*	Voted DEL Funding £'000	Voted AME Funding £'000
Encourage better use of science in Government, foster public service innovation, and support other Government objectives which depend on DIUS expertise and remit:
The Royal Society	45,823
Royal Academy of Engineering	12,138
British Academy	27,062
RB Initiatives	6,065
Science and Society	15,441
Economic Impact	12,500
Research Capital Investment Fund	48,676
Biotechnology and Biological Sciences Research Council	457,000
Arts and Humanities Research Council	104,000
Economic and Social Research Council	179,000
Engineering and Physical Sciences Research Council	784,000
Medical Research Council	657,000
Natural Environment Research Council	385,000
Science and Technology Facilities Council	602,000
Fees payable under the Animals (Scientific Procedures) Act 1986	500
Higher Education Funding Council for England	317,000
Research Councils' Pension Schemes		37,000
Totals	3,653,205	37,000

 

 

 

RfR3*	Voted DEL Funding £'000	Voted AME Funding £'000
Higher Education	131,413
Higher Education Support for Students	2,498,150
Further Education, Skills and International Programmes	295,221
Further Education Receipts from DCSF	(7,829,350)
Loans to Students		4,169,001
Higher Education Funding Council for England	7,528,703
Office for Fair Access	476
Student Loans Company	50,111
Investors in People UK	4,957
Learning and Skills Council	12,573,062
UK Commission for Employment and Skills	78,371
Other	60
Totals	15,331,174	4,169,001

 

* The following tables show the impact of bringing RfR2 and RfR3 into line with RfR1 (i.e. making the disclosure by DSO):

 

RfR2	Voted DEL Funding £'000	Voted AME Funding £'000
Increasing Scientific excellence in the UK and maximising its contribution to society	3,653,205	37,000
Totals	3,653,205	37,000

 

RfR3	Voted DEL Funding £'000	Voted AME Funding £'000
Improve the skills of the population through excellent further education and world-class universities, to build a more socially mobile, economically competitive and cohesive society.	15,331,174	4,169,001
Totals	15,331,174	4,169,001

 

Provisions for Liabilities and Charges

 

Consolidated (ex-BERR)	UKAEA Restructuring   £'000	UKAEA Decommissioning   £'000	Early Departure Costs £'000	British Shipbuilders   £'000	Onerous Leases   £'000	Other     £'000	Total     £'000
(Restated) Balance as at 1 April 2008 Amortisation of one year's discount Increase/(decrease) in provision Expenditure in year	29,326     645   (787)   (3,063)	166,412     3,661   (15,670)   -	32,275     711   (660)   (10,592)	115,558     2,542   (101)   -	193,186     4,251   (41,863)   (8,175)	12,479     (70)   15,828   (2,322)	552,236     11,740   (43,253)   (24,152)
Balance as at 31 March 2009	26,121	154,403	24,734	117,999	147,399	25,915	496,571
Consolidated (ex-DIUS)	Disposal of Radiological Sources £'000	Demolition and Decontamination   £'000	Other     £'000				Total     £'000
Balance as at 1 April 2008 Provided in the year Provisions not required written back Provisions utilised in the year Unwinding of discount	1,222   - -   (51)   -	4,631   - -   (1,598)   -	110   10 (19)   (71)   -				5,963   10 (19)   (1,720)   -
Balance as at 31 March 2009	1,171	3,033	10				4,234

 

Contingent Liabilities as shown in the Main Estimate

 

Nature of Liability	£'000
As at 31 March 2009 the following liabilities fell to be met from the Department's Estimate:
Statutory Liabilities Charged to Resource Estimates:
The Department will meet the accrued Civil Service redundancy entitlement to date of secondees who resigned from the Department to take up Training and Enterprise (TEC) employment on or after 1 January 1993 in TECs in England and Wales if:	1,000
a) Their TEC makes them redundant due to direct government action during their first five years of employment;
b) A court or tribunal ever ruled that TEC and civil service employment were continuous
for redundancy calculation purposes.
Accrued civil service redundancy costs for secondees who resigned from the Department to join
a TEC on or after 1 Jan 1993.
The Department has and will continue to give indemnities to Training and Enterprise Councils (TECs), Chamber of Commerce, Training and Enterprise Councils (CCTEs), their representative TEC bodies and those concerned with the wind up, transfer or continuation of TEC delivered activity, where this will facilitate the conclusion of the working and contractual relationship between TECs, CCTEs and Government, thereby ensuring the continuation of essential discretionary activity and the reserves owing to the Secretary of State at the earliest opportunity. The indemnities will include:
a) Liabilities that arise from the audit work carried out in respect of the delivery of activities funded	3,500
funded through European Union initiatives or through single Regeneration Budget and other
schemes sponsored by Government Departments other than the former DfES and DTI;
b) Liabilities that arise from the transfer of TEC/CCTE functions to successors, including from	2,000
staff who have transferred or been made redundant, and who as a result of the transfer seek redress through the Employment Tribunal;
c) Liabilities arising from properties leased by TECs/CCTEs that they have been unable to dispose	10,000
of by the time they wind up. The Department may take over these leases and dispose of them on behalf of the TECs/CCTEs.
In order to ensure that the Croydon Local Learning and Skills Council (LLSC) commenced operations in April 2001 and because no suitable training and Enterprise Council (TEC) or Chamber of Commerce Training and Enterprise (CCTE) property exists in the Croydon LLSC area an indemnity to give a landlord a guarantee that, in the event of the LSC ceasing to exist the Secretary of State will take over the lease. This is because, to the landlord, the LSC is an unknown body with no financial history.	4,452
In order to ensure that the Learning and Skills Council (LSC) commenced operations in April 2001 and because no suitable Training and Enterprise Council (TEC) or Chamber of Commerce Training and Enterprise (CCTE) property exists in the Brighton, Manchester or Coventry area an indemnity to give landlords a guarantee that, in the event of the LSC ceasing to exist the Secretary of State will take over the lease. This is because, to the landlord, the LSC is an unknown body with no financial history.	33,471
Liability to pay rent in respect of a lease that would arise if the current tenant defaults.	3,153
Arrangement to allow the appointment of a receiver to any TEC we believe necessary.	6,000
Arrangement to allow the appointment of a receiver to manage the affairs of Merseyside Training and Enterprise Council (MTEC).	2,000
European Patent Office (EPO): the UK as one of the contracting states has a potential liability	Unquantifiable
under Article 40 of the European Patent Convention of 1973.
World Intellectual Property Organisation the UK, as a contracting state to the Patent Co-operation Treaty of 1970, has a potential liability under Article 57 of the Treaty	Unquantifiable
Liabilities relating to the issue of licences to operators of satellites and other space objects.	Unquantifiable
The department has an outstanding legal claim for an early termination of a service contract delivering best practice and monitoring services to a third party.	Unquantifiable
Home Shipbuilding Credit Guarantee Scheme	19,000
A guarantee has been given to the Financial Reporting Council that if the amount held in the Legal Costs Fund falls below £1 million in any year, an additional grant will be made to cover legal costs subsequently incurred in that year	Unquantifiable
Any liabilities imposed by section 68, Telecommunications Act 1984	Unquantifiable
Any liabilities imposed by section 9, British Aerospace Act 1980	Unquantifiable
Local Network Indemnities	9,375
Callable capital subscription for the Common Fund for Commodities	1,960
Paid in capital subscription for the Common Fund for Commodities	2,240
Indemnities given to UKAEA by the Secretary of State to cover certain indemnities given by UKAEA to carriers and British Nuclear Fuels PLC against certain claims for damage caused by nuclear matter in the course of carriage	Unquantifiable
Indemnities equivalent to those given to civil servants under the Civil Service Management Code have been given to persons appointed to the Board of the Office of Fair Trading, including the Chairman	Unquantifiable
Indemnities given to Bankers of the Insolvency Services against certain liabilities arising in respect of non-transferable "account payee" cheques due to insolvent estates and paid into the Insolvency Service's account	Unquantifiable
The Police Information Technology Organisation (Home Office) provides BIS with access to data from the Police National Computer (PNC). BIS has indemnified the police against any liabilities which they might incur as a result of providing that access.	Unquantifiable
Non-Statutory Liabilities Charged to Resource Estimates:
Postal Services Limited: The department has made available to Post Office Limited, through an agreement reached on 17 October 2003, a revolving loan facility based on commercial terms of up to £1.15 billion. This is to help the company fund its working capital cash requirements in branch. The package was agreed against the background of the migration of State benefits payments to a system of direct payment, alongside a Government commitment that benefit recipients will still be able to collect their benefit, in cash and in full, from Post Office branches. Post Office Limited began utilising this facility on 1 December 2003. The facility matures on the 31 March 2011 by when any outstanding loans will need to have been repaid.	Unquantifiable
British Shipbuilders: There are contingent liabilities that arise from the department's assurances and guarantees to British Shipbuilders. Following a legal ruling in respect of pleural plaques claims (valued at £22.5m) on 17 October 2007, the House of Lords announced that compensation cannot be made on pleural plaques. This is the current position in England and Wales as the House of Lords judgement still stands. However, the Scottish Executive passed a Bill that is now an Act and appears on the statute book. The Scottish Ministers have made a commencement order providing for the Act to come into force on 17 June 2009. Until then, the Act is not law and plaques claims can continue to be resisted in Scotland.	Unquantifiable
Industrial Development Act 1982: In the event of a confined downturn in the UK High Technology Investment Fund performance, the department has a liability to pay back to the Fund redemptions of £1.12million previously received	Unquantifiable
On 14 January 2009, the Secretary of State announced a support package designed to leverage £21.3bn of lending - made to the Enterprise Finance Guarantee Scheme (£1.3bn), the Capital for Enterprise Fund (£75m) and the Working Capital Scheme (£20bn) (the latter amended in Budget 09 to reflect the requirement for a Trade Credit Insurance "Top-up" Scheme) - to help companies struggling to access finance for working capital and investment in the current economic climate. The schemes are intended to support viable businesses that have been impacted through a combination of the credit crunch and economic downturn, during which lending conditions have tightened and payment periods extended:
- Enterprise Finance Guarantee Scheme (which is planned to run to 31 March 2010, with exposures not exceeding 31 March 2020).	Up to 100,000
Support enabling increased access to finance for SMEs, through the Working Capital Scheme (which is planned to run to and with exposures not exceeding 31 March 2011) and the Trade Credit Insurance "Top-up" Scheme (which is planned to run to 31 December 2009, with exposures not exceeding 30 June 2010).	Up to 10,000,000
On 27 January 2009, the Secretary of State announced support for the automotive sector, including the loan guarantees which could enable up to £2.3bn in lending to Britain's automotive manufacturers and suppliers. Under State Aid rules, guarantees must be granted before 31 December 2010 and cannot exceed 90% of the loan.	Up to 2,300,000

 

---

[1] AME figures reflect the voted totals shown in the table at paragraph 13 less Non Cash of £117,646k.

[2] Cash payments up to the limit of the voted grant-in-aid will be made by the Department to its NDPBs.

 

[3] This total reflects the NDPBs' budget - the cash requirement relates to the grant-in-aid.