EXPLANATORY

MEMORANDUM

 

 

Spring Supplementary Estimate

2008-09

 

 

 

 

Table of Contents

 

 

 

Section	Page
Introduction	3
A. Summary of Changes Sought in the Estimate	4
B. Detailed Explanation of Changes	8
C. Impact on Strategic Objectives (DSOs)	17
D. Departmental Expenditure Limits (DEL)	22
E. End Year Flexibility (EYF)	27
F. Administration Budget	30
G. Provisions and Contingent Liabilities	31
H. Approval of Memorandum	35
Annex A: Homes and Communities Agency	36
Annex B: Contribution to fiscal stimulus	39
Annex C: Explanation of Key Terms and Glossary of Abbreviations	40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTRODUCTION

 

1. The changes to Departmental Expenditure Limits (DELs) which are referred to below were announced by the Secretary of State on 12 February 2009. Changes to DELs, of which the department has two (Main Programmes and Local Government), are not always identical to those to the Estimate described below. This is because:

 

· some expenditure within DEL is non-Voted, while some Voted expenditure is outside DEL; and

 

· the DELs consolidate expenditure of the Department with that of the Non-Departmental Public Bodies (NDPBs) which the Department sponsors. The Estimate records expenditure by the Department and its executive agencies only, which includes grant in aid to NDPBs, but not NDPB expenditure itself.

 

End Year Flexibility

 

2. The End Year Flexibility (EYF) entitlements were included in the Public Expenditure Outturn White Paper 2007-08 (Cm 7419) which was presented to Parliament by the Chief Secretary to the Treasury in July 2008.

 

 

 

SECTION A: SUMMARY OF CHANGES SOUGHT IN ESTIMATE

 

 

3. The Department for Communities and Local Government Spring Supplementary Estimate requests additional net resource provision, above Winter Supplementary Estimate totals, of:

 

· RFR1 £316.994 million

· RFR2 £18.541 million

And increase in provision for

· Voted Capital £47.096 million

 

4. The Department also seeks an increase of £372.644 million to the Net Cash Requirement, resulting from these changes to the RFRs.

 

5. The main policy reasons for taking a Spring Supplementary Estimate are to:

 

· reallocate resources within the DEL limits, particularly to:

a) ensure that voted and non-voted totals reflect the application of merger accounting to the Homes and Communities Agency (see Annex A);

b) meet a shortfall in pooled capital housing receipts and temporary pressures arising from taking Fire Regional Control leases onto the Department's balance sheet at year end; and

c) adjust budgets for bad debts, utilisation of existing balance sheet provisions and creation of new provisions in respect of European Regional Development Fund losses and write offs;

· draw down end year flexibility for Local Government programmes, particularly for the Local Government PSA performance fund;

· draw down funding from the Olympics programme contingency;

· adjust the AME forecasts for Housing Revenue Account subsidy and fire service superannuation;

· adjust non-budget provision for grant in aid and deemed grant in aid to the Homes and Communities Agency, including additional provision to support non-voted capital spending brought forward from 2010-11 to 2008-09 (see Annex B), for grant in aid to the Tenant Services Authority and for overhanging debt repayment on disposal of local authority housing stock;

· effect small transfers to and from other Government departments;

· effect small transfers between the RfRs;

· adjust levels of appropriations in aid and related expenditure;

· make a number of transfers between sections within the RfRs.

 

6. A summary of the DEL impacts of the changes is set out in section D below.

 

7. The increases in the Net Resource Requirement sought in this Supplementary Estimate relate to:

 

· Increases outside public expenditure (£725.521 million);

· Increases in Annually Managed Expenditure (£38.838 million);

· Draw down of End Year Flexibility (£20.410 million);

· Take up of Departmental Unallocated Provision (£18.807 million);

· Reduction in Appropriations in Aid offset by decreases in non voted spending (£105.100 million);

· Switches within the RFR, across RFRs, within the DEL or across Government as a whole

(£1.200 million to the Estimate, but neutral in public expenditure terms);

 

offset against

 

· A movement of £561.841 million from voted to non voted programmes (but neutral in overall public expenditure terms); and

· A switch of £12.500 million within the Estimate from Resource (capital grants) to Capital.

 

8. The increase in voted capital sought relates to:

 

· A transfer of £34.596 million from non voted to voted programmes (but neutral in overall public expenditure terms); and

· A switch of £12.500 million within the Estimate from Resource (capital grants) to Capital.

 

9. These changes can be divided into those which increase public expenditure overall, and those which reallocate within the existing public expenditure totals or are outside public expenditure totals altogether. It is the increases that are outside public expenditure which make the biggest contribution to the changes in this Supplementary Estimate.

 

Changes sought which increase public expenditure

 

10. These are as follows:

 

· Increases in DEL totalling £20.410 million funded from the Department's draw down of entitlement to End Year Flexibility (EYF) (see table 1, item 1) and being used:

 

a. To provide £20.000 million for Local Government Public Service Agreements to cover planned spending over the amount provided in the Comprehensive Spending Review 2007; and

 

b. To provide £0.410 million for Invest to Save special grant to fund projects in the current financial year.

 

· Increases in Annually Managed Expenditure totalling £38.838 million (table 1, item 2) for:

 

· Fire service superannuation (£9.000 million) to adjust the forecast for fire fighters pensions top up grants; and

· Housing Revenue Account subsidy (£29.838 million) to reflect a revised forecast based on an economic model and taking account of accounting adjustments.

 

 

Changes sought which do not increase public expenditure, taken across government

 

11. These are as follows:

 

a. Increases to non budget spending totalling £725.521 million. (table 1, item 9) These relate to payments which the Department makes but which do not score in public expenditure because they are simply movements of money within Government. They comprise:

· An increase in grant in aid (£315.409 million) to the Homes and Communities Agency, mainly to reflect timing differences between cash transactions and accruals transactions under Resource Accounting and Budgeting;

· An increase in "deemed grant in aid" (£582.361 million) to the Homes and Communities Agency to reflect the accounting implications of the application of merger accounting to the establishment of the HCA (see Annex A);

· Adjustments to grant in aid to the Housing Corporation (£36.141 million increase) and English Partnerships (£138.000 million reduction) to reflect outturn as at 30 November 2008;

· Provision for grant in aid (£36.165 million) to the newly established Tenant Services Authority;

· Reductions in grant in aid to London UDC (£3.000 million) and Thurrock UDC (£3.000 million) to reflect reductions in current year non voted spending on the Thames Gateway;

· Reduction in grant in aid to the South East of England Development Agency (£1.250 million) to reflect a transfer of Thames Gateway responsibilities from the Department to the HCA;

· Increase in grant in aid (£2.500 million) to Firebuy to support non voted expenditure arising from litigation in connection with the integrated clothing project; and

· Reduction of £101.500 million in provision for overhanging debt repayment on disposal of local authority housing stock.

 

 

b. Decreases totalling £561.841 million resulting from net transfers of DEL from the RFRs to non voted budgets (table 1, item 8). The largest element is the transfer of £582.361 million to the Homes and Communities Agency to reflect the accounting implications of the application of merger accounting to the establishment of the HCA. A further £45.000 million will cover the near cash utilisation cost associated with the provision raised in the 2007-08 resource accounts in respect of financial corrections on 1997-99 ERDF programmes. Offsetting transfers from non-voted to voted budgets include £20.253 million (from the ringfenced Olympics programme contingency) for Olympics payments to the Department for Culture, Media and Sport, £54.693 million for the creation of new non-cash provisions for future liabilities (mainly for ERDF financial corrections) and to provide for bad debts on 2000-06 ERDF programmes.

 

c. Decrease of £105.100 million in voted appropriations in aid offset by reductions in non voted programmes (table 1, item 11). There has been a reduction in pooled housing capital receipts as a result of the economic downturn. This has necessitated current year reductions in the non voted budgets for Thames Gateway (£50.000 million) and Affordable Housing (£55.100 million).

 

d. Smaller transfers within DEL. Other changes which are relatively small in value and which lead to no change in total DEL are:

 

· Take up of non voted non-cash Departmental Unallocated Provision (£18.807 million) for new (voted) provisions for future liabilities for financial corrections in respect of old ERDF programmes (table 1, item 3);

 

· Transfers from resource to voted capital within the Estimate: decrease of £12.500 million in resource (capital grants), increase of £12.500 million in voted capital, of which £10.000 million is a switch to direct capital expenditure on fire regional control rooms from capital grants to local authorities within the same programme and £2.500 million is a transfer from capital grants to capital expenditure in respect of the regeneration monitoring and digital inclusion programme (table 1, item 4, and table 2, item 1);

 

· Net transfers of £1.200 million from other Government departments (table 1, item 5);

 

· Net transfers of £1.469 million from RfR2 to RfR1 (table 1, item 6);

 

· Changes that net out within the Estimate, involving either switches between sections or increases in Appropriations in Aid funding additional expenditure (table 1, items 7 and 10; and table 2, items 2 and 4).

 

e. Increase of £34.596 million resulting from a transfer from non voted spending to voted capital. This is to provide for the temporary acquisition of two regional fire control centre leases, pending the establishment of new local authority companies. (table 2, item 3)

 

f. A change to the net cash requirement of £36.909 million over and above the Net Resource Requirement. This mainly reflects the increase in voted capital and adjustments in respect of provisions.

 

 

12. These changes are summarised at tables 1 and 2 below:

 

Table 1 £M

 

Net Resource Requirement	RFR1	RFR2	Total
Changes which increase public expenditure
1)	End Year Flexibility	0.0	20.410	20.410
2)	Changes in Annually Managed Expenditure	38.838	0.0	38.838
Changes which do not increase public expenditure, taken across Government
3)	Take up of Departmental Unallocated Provision	18.807	0.0	18.807
4)	Transfers to voted capital from voted resource	-12.500	0.0	-12.500
5)	Transfers to/from other government departments	1.200	0.0	1.200
6)	Transfers between the RFRs	1.469	-1.469	0.0
7)	Transfers within the RFRs	0.0	0.0	0.0
8)	Transfers to non-voted spending	-561.841	0.0	-561.841
9)	Changes in non-budget spending	725.921	-0.400	725.521
10)	Changes in A in A, offset by voted spending	0.0	0.0	0.0
11)	Changes in A in A, offset by non voted spending	105.100	0.0	105.100
		316.994	18.541	335.535

 

 

Table 2 £M

 

Voted Capital	RFR1	RFR2	Total
Changes which do not increase public expenditure, taken across Government
1)	Transfers to voted capital from voted resource	12.500	0.0	12.500
2)	Transfers within the RFRs	0.0	0.0	0.0
3)	Transfers from non-voted spending	34.596	0.0	34.596
4)	Changes in A in A, offset by voted spending	0.0	0.0	0.0
		47.096	0.0	47.096

 

SECTION B: DETAILED EXPLANATION OF CHANGES (Amounts are in £s)

 

Changes to RFR1: Improving the quality of life by creating thriving, inclusive and sustainable communities in all regions

 

12. Changes in resources, and their implications for DEL and AME budgets, are as follows:

 

(DEL budget changes are indicated by an asterisk in the right hand column)

 

 

Changes in Annually Managed Expenditure DEL

 

£29,838,000	Increase in AME for Housing Revenue Account subsidy (section V) reflecting revised forecast which takes account of fluctuations in housing stock remaining in local authority ownership, inflation and costs of servicing local authority housing debt.
£9,000,000	Increase in AME for Fire service superannuation (section W) to reflect revised forecast of firefighters' pensions top up grants, based on information collected from fire and rescue authorities.
£38,838,000	Total change to Main Resource AME
£38,838,000	Total change to Main AME
£38,838,000	Total change to Estimate

 

Take up of Departmental Unallocated Provision

 

£18,807,000	Transfer of non-cash to European Regional Development Fund losses and write offs (section K) for new provisions in respect of future liabilities.	*
ZERO	Total change to Main Resource DEL
ZERO	Total change to Main DEL
£18,807,000	Total change to Estimate

 

 

Transfers from Resource spending (capital grants) to Capital spending

 

£10,000,000	Transfer to direct capital expenditure on fire regional control rooms (section F) from capital grants to local authorities within the same programme (section R) for the European Aeronautic Defence and Space (EADS) company contract. (See transfers within the RfR, below).	*
£2,500,000	Transfer from capital grants to capital expenditure on the Regeneration Monitoring and Digital Inclusion programme (section C). Funding in the current year is required for development of Phase 2 of a central focal point for IT connections (the HUB). (See transfers between the RfRs, below)	*
ZERO	Total change to Main Capital DEL
ZERO	Total change to Main DEL
ZERO -£12,500,000 resource +£12,500,000 capital	Total change to Estimate

 

 

 

 

 

Transfers of budgetary cover to/from other Government Departments

£1,240,000	Transfer from the Department for Business, Enterprise and Regulatory Reform to cover early exit costs of BERR staff in the Government Offices (section H, administration costs).	*
-£40,000	Transfer to the Cabinet Office from central administration (section G) for the Government Secure Zone Security Monitoring and Control Centre.	*
£1,200,000	Total change to Main Resource DEL
£1,200,000	Total change to Main DEL
£1,200,000	Total change to Estimate

 

 

Resource transfers to /from another Request for Resources

 

£2,500,000	Transfer from Local government management information systems (RfR2, section G) to Regeneration monitoring and digital inclusion (RfR1, section C) for development of Phase 2 of a central focal point for IT connections (the HUB), which is being used by Government departments, the inspectorates, the local authority community, local service provider partners, external observatories and the Government Offices.	*
£831,000	Transfer from Fire and Rescue Services improvement (RfR1, section F) to Best Value Inspection (RfR2, section B) to support Audit Commission Comprehensive Performance Assessment work on fire and rescue authorities.	*
£200,000	Transfer from Implementing planning reforms (RfR1, section E) to London governance (RfR2, section F) for grants to the Greater London Authority in support of the Mayor's new planning powers under the Greater London Authority Act 2007.	*
-£1,031,000	Total change to Main Resource DEL
£1,469,000	Total change to Main DEL
ZERO (+£1,469,000 RFR1 -£1,469,000 RFR2)	Total change to Estimate

 

 

Resource transfers within the Request for Resources

 

£18,205,000	Transfer within the New Dimension Search and Rescue programme from support for local authorities (section R) to central government spending (section F) because of a delay in the planned transfer of responsibilities to the fire & rescue services.	*
£13,962,000	Transfer within the Growth areas, new growth points and eco-towns programme from central government spending (section B) to support for local authorities (section N) to reflect Ministers' final decisions on allocations to local delivery vehicles in the growth areas.	*
£10,000,000	Transfer within the Fire regional control rooms programme from central government spending (section F) to support for local authorities (section R) for near cash grants to fire and rescue services under section 31 of the Local Government Act 2003.	*
£10,000,000	Transfer of capital grants within the Fire regional control rooms programme from support for local authorities (section R) to central government spending (section F) to support the Department's commitment to the European Aeronautic Defence and Space Company (EADS) contract for plant and machinery.	*
£9,200,000	Transfer of part of Regional assemblies programme from section C to section E to strengthen the link between the CLG Planning Directorate and regional partners in the context of a) working on the content of RSS/partial reviews; b) making progress on the housing requirement and c) working toward a new regional strategy.	*
£9,911,000	Transfer of part of Regional assemblies programme from section C to section Q, to strengthen the link between the CLG Planning Directorate and regional partners (as above).	*
£9,295,000	Transfer from Cohesion and race equality (section D) to Gypsy site grant (section C) to focus an element of expenditure formerly within the cohesion and faiths programme upon community empowerment.	*
£4,830,000	Transfer from Safer and Stronger Communities Fund and New Ventures Fund (section C) to Community empowerment (section D) to enable funding to be targeted at key areas in a more transparent way.	*
£4,685,000	Transfer from Area Based Grant (section S) to Implementing planning reforms (section Q) to facilitate the distribution of funds to National Parks and Broads Authority for the obligation to undertake implementation of the Habitats Directive requirement of Environmental Assessments.	*
£2,222,000	Transfers from Implementing planning reforms (£1,422,000) (section E) and Regional assemblies (£800,000) (section C) to voted provision for the Homes and Communities Agency (section B) to cover costs of the shortfall in the Housing Corporation pension fund held with Westminster City Council.	*
£1,878,000	Transfer from central administration (section G, administration costs) to Government Offices administration (section H, administration costs) to cover non-cash costs (depreciation, cost of capital, provisions).	*
£1,500,000	Transfer from Procurement efficiency and social housing (section B) to Disabled Facilities Grant (section N) as a consequence of demand led pressures on local authorities for mandatory disabled facilities.	*
£1,018,000	Transfer from central administration (section G, administration costs) to Government Office administration (section H, administration costs) to fund work undertaken by Local Government Directors of Practice (£977,000) and the establishment of a new unit dealing with the roll-out of the Civil Service in the English regions (£41,000)	*
£1,000,000	Transfer from Implementing planning reforms (section E) to Housing and planning delivery grant (section Q) to support the Community Involvement programme.	*
£830,000	Transfer from Regional chambers (section C) to Private housing renewal (section N) for a pilot scheme on equity release by Newham Council to fund improvements in housing conditions for vulnerable people.	*
£750,000	Transfers from Payments for mapping services (£500,000) (section L) and Building regulation (£250,000) (section B) to Research (section C) to restore funding that was transferred in the Winter Supplementary Estimate to cover financial corrections in respect of old ERDF programmes.	*
£666,000	Transfer from Regional chambers (section C) to Adults facing chronic exclusion (section D) to cover programme slippage from 2007-08.	*
£424,000	Transfer from Regional chambers (section C) to Homelessness and housing reform (section B) to help individuals gain sustainable employment and move out of hostels into private rented sector accommodation.	*
£400,000	Transfer from Payments for mapping services (section L) to ERDF INTERREG (section K) for MCIS (management control information system) and TESA (Transactional ERDF and State Aid) projects.	*
£300,000	Transfer from Cohesion and race equality (section P) to Homelessness and housing reform (section N) to provide funding to several London local authorities to help them tackle rough sleeping by 'A10' nationals.	*
-£101,076,000	Reductions in budgets to meet increases, as detailed above.
ZERO	Total change to Main Resource DEL
ZERO	Total change to Main Capital DEL
ZERO	Total change to Main DEL
ZERO	Total change to Estimate

 

 

Transfers to/from non-voted spending

 

-£582,361,000	Transfers from various voted programmes to the Homes and Communities Agency to reflect the accounting implications of the application of merger accounting to the establishment of the HCA. This contributes to the requirement for additional, non-budget, grant in aid under RfR1, section X. (See annex A for further information).	*
£39,393,000	Transfer of non-cash to European Regional Development Fund (section K) for bad debts on 2000-06 programmes (£8,000,000) and creation of new provisions for future liabilities in respect of financial corrections to old programmes (£31,393,000).	*
-£45,000,000	Transfers from European Regional Development Fund (section K) (£30,300,000 near cash) and Firelink (section F) (£14,700,000 near cash) to non voted ERDF for the near cash utilisation cost associated with the provision raised in 2007-08 in respect of financial corrections to 1997-99 programmes.	*
£20,253,000	Transfer from ringfenced Olympics programme contingency to Olympics contributions (section C) for payments to the Department for Culture, Media and Sport to cover risks outside the control of the Olympic Delivery Authority.	*
£12,300,000	Transfer of non-cash to Government Office administration (section H) for the creation of a new provision for early exits.	*
-£5,481,000	Transfers to the Homes and Communities Agency comprising £1,930,000 from HCA set up costs (section B) for IT, recruitment and other costs incurred by English Partnerships prior to vesting on 1 December, £3,100,000 from Mapping and data services (section L) for ATLAS (Advisory Team for Large Applications, hosted by the HCA), £251,000 from Stronger and Safer Communities Fund (section C) and £200,000 non-cash from e-planning (section E) to cover costs of CLG staff seconded to the HCA.	*
-£3,052,000	Transfers from Government Office administration (section H) (£1,552,000 near cash) and central administration (section G) (£1,500,000 non cash, administration costs) to non voted Government Office administration to adjust budgets for utilisation of provisions in respect of early exit costs.	*
£3,000,000	Transfer of non-cash to Mortgage support for homeowners (section B) for the creation of provisions for future liabilities under the Homeowners Mortgage Support Scheme.	*
-£2,500,000	Transfer from Firelink (section F) to Firebuy for costs arising from litigation in connection with the integrated clothing project.	*
£1,100,000	Transfer to Implementing planning reforms (section Q) to facilitate the distribution of funds for the Mine Waste Directive (£750,000) and Renewable Energy Strategy (£350,000.)	*
£800,000	Transfer to Fire Service College (section F) for the cost of capital charge on lending to the College.	*
-£722,000	Transfers from voted provision for the HCA (section B) (£502,000) and Housing Corporation Board remuneration (section B) (£220,000) to the Tenant Services Authority to contribute to internal set up costs over and above normal running costs.	*
£429,000	Transfer to New Dimension Mass Decontamination (section R) for depreciation charges on mass decontamination vehicles.	*
ZERO	Total change to Main Resource DEL
ZERO	Total change to Main Capital DEL
ZERO	Total change to Main DEL
-£561,841,000	Total change to Estimate

 

 

Changes in non budget spending

 

£897,770,000	Increase in grant in aid to the Homes and Communities Agency (section X), of which £315,409,000 relates to December 2008 -March 2009 and is mainly due to differences in timing, chiefly over (i) grants accrued at the end of one financial year but paid as cash early in the next, and (ii) income accrued from land sales in one financial year but received in cash terms in a different financial year. The remainder is "deemed grant in aid" in respect of April-November 2008 and reflects accounting implications for the Department and the HCA of the application of merger accounting to the HCA's 2008-09 accounts (see annex A for further details).
-£138,000,000	Decrease in grant in aid to English Partnerships (section X) to reflect outturn to the end of November 2008.
-£101,500,000	Decrease in provision for overhanging debt repayment on disposal of local authority housing stock (section X) reflecting the impact of the economic downturn in the housing sector.
£36,165,000	Creation of a budget for grant in aid to the Tenant Services Authority (section X), which was established under the Housing and Regeneration Act 2008, to cover the period December 2008 to March 2009.
£36,141,000	Increase in grant in aid to the Housing Corporation (section X) to reflect outturn to the end of November 2008.
-£6,000,000	Decrease in grant in aid to London UDC (£3,000,000) and Thurrock UDC (£3,000,000) (section X) to reflect reductions in Thames Gateway budgets to offset a shortfall in pooled capital housing receipts.
£2,500,000	Increase in grant in aid to Firebuy (section AA) to support non voted budget allocation (see transfers to/from non voted spending, above).
-£1,215,000	Decrease in grant in aid to the South East of England Development Agency (section X) to reflect the transfer to the HCA of responsibility for payment of Thames Gateway grants to SEEDA.
£50,000	Provision, following passage of the Planning Act 2008, to repay an advance from the Contingencies Fund for expenditure on recruitment of the Chair of the Infrastructure Planning Commission.
£10,000	Provision for loss on disposal of assets (Green Goddess fire tenders). Income from the disposal was included in the Winter Supplementary Estimate.
ZERO	Total change to Main DEL
£725,921,000	Total change to Estimate

 

Changes in Operating Appropriations in Aid fully offset by changes in voted spending

 

Spend: £11,400,000 Receipts: -£11,400,000 (net change zero)	Changes in budgets reflecting contributions from the Scottish and Welsh devolved administrations in respect of payments by the Department for Firelink (section F).	*
Spend: -£10,300,000 Receipts: £10,300,000 (net change zero)	Decrease in expenditure on New Deal for Communities (section O) to offset a decrease in pooled capital housing receipts (section N) as a result of the economic downturn in the housing sector.	*
Spend: £4,200,000 Receipts: -£4,200,000 (net change zero)	Increase in expenditure on central administration (section G) in respect of outward secondees from the Department to local authorities and other organisations (£3,500,000) and work provided for other Government Departments.	*
Spend: £2,069,000 Receipts: -£2,069,000 (net change zero)	Increase in expenditure on Fire regional control rooms (section F) offset by receipts from Regional Control Centres' lease premiums.	*
Spend: £1,170,000 Receipts: -£1,170,000 (net change zero)	Increase in expenditure on Government Office administration (section H) to reflect additional work being undertaken on behalf of the Department of Health on the "You're Welcome" programme.	*
Spend: £1,000,000 Receipts: -£1,000,000 (net change zero)	Increase in expenditure on Community empowerment (section D) to take account of an expected receipt from the Office of the Third Sector as a contribution to the Community Builders Fund.	*
Spend: -£648,000 Receipts: £648,000 (net change zero)	Changes to reflect the transfer of budget for Growth areas, new growth points and eco towns (section N) to the Homes and Communities Agency as a consequence of the application of merger accounting to the establishment of the HCA.	*
Spend: -£622,000 Receipts: £622,000 (net change zero)	Adjustment to grant in aid receipts from English Partnerships, and related expenditure, (section X) as a consequence of the application of merger accounting to the establishment of the HCA.	*
Spend: £500,000 Receipts: -£500,000 (net change zero)	Changes in budgets reflecting contributions from other Government Departments to the cross government project on adults facing chronic exclusion (section D).	*
Spend: £100,000 Receipts: -£100,000 (net change zero)	Changes in budgets to reflect a contribution by the Homes and Communities Agency to a pilot scheme on overcrowding and worklessness (section B).	*
Spend: £79,000 Receipts: -£79,000 (net change zero)	Changes in budgets reflecting a repayment by Rushcliffe Borough Council of unutilised grants paid in 2007-08 for choice based lettings (section B).	*
ZERO	Total change to Main DEL
ZERO	Total change to Estimate

 

 

Changes in Operating Appropriations in Aid fully offset by changes in non voted spending

 

Spend: -£105,100,000 Receipts: £105,100,000 (net change zero)	Shortfall in pooled capital housing receipts (section N) as a result of the economic downturn, offset by reductions in the non voted budgets for Thames Gateway (£44,000,000 from the HCA, £6,000,000 from London and Thurrock UDCs) and the HCA Affordable Housing programme (£55,100,000).	*
ZERO	Total change to Main Capital DEL
ZERO	Total change to Main DEL
£105,100,000	Total change to Estimate

 

 

 

13. Changes in voted capital, and their implications for DEL and AME budgets, are as follows:

 

Transfers to/from non-voted spending

 

£34,596,000	Transfer from the Homes and Communities Agency to the FiReControl project (section F, capital). The Department will temporarily acquire two Regional Control Centre leases pending the formation of new local authority companies. When formed, the local authority companies will take over responsibility for the leases, enabling a repayment of capital budget to be made to the HCA in 2009-10.	*
ZERO	Total change to Main Resource DEL
ZERO	Total change to Main Capital DEL
ZERO	Total change to Main DEL
£34,596,000	Total change to Estimate

 

 

Transfers from Capital spending to/from other resource (capital grants)

 

£10,000,000	Transfer to direct capital expenditure on fire regional control rooms (section F) from capital grants to local authorities within the same programme (section R) for the European Aeronautic Defence and Space (EADS) company contract.	*
£2,500,000	Transfer from capital grants to capital expenditure on the Regeneration Monitoring and Digital Inclusion programme (section C). Funding in the current year is required for central development of Phase 2 of a central focal point for IT connections (the HUB).	*
ZERO	Total change to Main Capital DEL
ZERO	Total change to Main DEL
ZERO +£12,500,000 capital -£12,500,000 resource	Total change to Estimate

 

 

Capital transfers within the Request for Resources

 

£3,262,000	Transfer from central administration (section G) to European Regional Development Fund INTERREG programme (section K) (£2,600,000), for MCIS (management control information system) and TESA (Transactional ERDF and State Aid) projects, and to Government Office administration (section H) (£662,000).	*
-£3,262,000	Reductions in budgets to meet increases, as detailed above.
ZERO	Total change to Main Capital DEL
ZERO	Total change to Main DEL
ZERO	Total change to Estimate

 

 

Changes in Operating Appropriations in Aid fully offset by changes in voted spending

 

Spend: £150,000 Receipts: -£150,000 (net change zero)	Changes in central administration budgets (section G) reflecting a book value receipt from the sale of land transferred to the Building Research Establishment but in which the Department retains an interest.	*
ZERO	Total change to Main DEL
ZERO	Total change to Estimate

 

 

Changes to RFR2: Providing for effective devolved decision making within a national framework

 

14. The changes to RfR2, and their implications for DEL and AME budgets, are as follows:

 

Take up of End year Flexibility

 

£20,000,000	Draw down of EYF for the Local Government Public Service Agreement performance fund (Section G) to cover planned spending in excess of the amount provided in the Comprehensive Spending Review 2007.	*
£410,000	Draw down of EYF for Invest to Save special grant (section G) to support projects in the current year.	*
£20,410,000	Total change to Local Government Resource DEL
£20,410,000	Total change to Local Government DEL
£20,410,000	Total change to Estimate

Resource transfers to/from another Request for Resources

 

£2,500,000	Transfer from Local government management information systems (RfR2, section G) to Regeneration monitoring and digital inclusion (RfR1, section C) for development of Phase 2 of a central focal point for IT connections (the HUB).	*
£831,000	Transfer from Fire and Rescue Services improvement (RfR1, section F) to Best Value Inspection (RfR2, section B) to support Audit Commission Comprehensive Performance Assessment work on fire and rescue authorities.	*
£200,000	Transfer from Implementing planning reforms (RfR1, section E) to London governance (RfR2, section F) for grants to the Greater London Authority in support of the Mayor's new planning powers under the Greater London Authority Act 2007.	*
£1,031,000	Total Change to Local Government Resource DEL
-£1,469,000	Total change to Local Government DEL
ZERO (-£1,469,000 RFR2 +£1,469,000 RFR1)	Total change to Estimate

 

 

Resource transfers within the Request for Resources

 

£85,000	Transfer from Valuation services (section A) to Improvement and efficiency (section G) towards the costs of business rate revaluation leaflets.	*
£79,000	Transfer from Valuation services (section A) to Interest payments to local authorities (section G) to compensate a local authority for a late refund relating to business rates.	*
£15,000	Transfer from Valuation services (section A) to Council Tax Flood Discount programme (Section G) to compensate Local authorities for flood related discounts on Council Tax.	*
-£179,000	Reductions in budgets to fund increases as listed above.	*
ZERO	Total change to Local Government DEL
ZERO	Total change to Estimate

 

 

Changes in non budget spending

 

-£400,000	Reduction in grant in aid for Valuation Tribunal Services (Section I) to reflect an expected cash underspend in 2008-09.
ZERO	Total change to Local Government DEL
-£400,000	Total change to Estimate

 

 

 

Changes in Operating Appropriations in Aid fully offset by changes in voted spending

 

Spend: £1,500,000 Receipts: -£1,500,000 (net change zero)	Changes in budgets for PFI Special Grant (section D) reflecting increased receipts from other Government Departments.	*
ZERO	Total change to Main DEL
ZERO	Total change to Estimate

SECTION C: IMPACT ON THE DEPARTMENT'S STRATEGIC OBJECTIVES

 

15. DEL expenditure against the Department's Strategic Objectives will change as set out in the following table:

 

Table 3 £M

Departmental Strategic Objective	DEL at Winter Supple- mentary Estimate	EYF / Brought forward funds	Transfers to/from DUP	Transfers to/from OGDs	Transfers between DSOs	New DEL at Spring Supple-mentary Estimate
1. Supporting local government	24,898.3	20.4	0.0	0.0	-1.5	24,917.2
2. Improving the supply and quality of housing	7,438.0	149.7	0.0	0.0	-6.4	7,581.3
3. Building prosperous communities, promoting regeneration and tackling deprivation	2,499.3	0.0	0.0	0.0	-35.5	2,463.8
4. Developing communities that are cohesive, active and resilient to extremism	39.7	0.0	0.0	0.0	-4.1	35.6
5. Providing a more efficient and transparent planning system	166.7	0.0	0.0	0.0	17.3	184.0
6. Ensuring safer communities by providing the framework to prevent and respond to emergencies	307.0	0.0	0.0	0.0	20.3	327.3
Not assigned to a DSO (see note iii below), including administration and other costs	1,075.7	0.0	0.0	1.2	9.9	1,086.8
Total Main and Local Government DEL change (before depreciation)	36,424.7	170.1	0.0	1.2	0.0	36,596.0
Less administration costs (before depreciation)	289.7	0.0	0.0	1.2	0.0	290.9
Total change (excluding administration costs)	36,135.0	170.1	0.0	0.0	0.0	36,305.1

 

 

Notes:

 

i. Amounts may not sum exactly due to rounding.

 

ii The Local Government DEL contributes entirely to DSO 1 (Supporting local government).

 

iii. The 'not assigned' section of the table comprises Area Based Grant, European Regional Development Fund, departmental unallocated provision, central administration costs, Government Offices administration costs and CLG re-structuring, payments for Ordnance Survey mapping data and services and the Queen Elizabeth II Conference Centre.

 

16. The main budget changes which lead to increases in 2008-09 DEL expenditure against DSOs are:

 

· draw down of end year flexibility for DSO1 to increase provision for the Local Government PSA performance fund (£20,000,000) and the Invest to Save Budget Special Grant (£410,000);

· increase in budget of £149,700,000 for DSO2 as a result of the changes announced in the Pre Budget Report in November 2008 (see Annex B for further details).

 

17. These additional resources have been provided either by bringing forward planned expenditure from 2010-11 or by using EYF. Neither increases the planned spend to deliver targets above what was expected over the Comprehensive Spending Review years.

 

18. Further detail of changes by DSO is set out below. Changes relate to DEL and may not therefore match the totals shown in Estimates - some funding will relate to non voted expenditure. Full details of changes to voted budgets are given in Section B above.

 

 

DSO1 - Supporting local government

 

 

Drawdown of End Year Flexibility

 

· £20,000,000 (of which half is resource DEL and half is capital DEL) for the Local Government PSA performance fund; and

· £410,000 for Invest to Save Budget Special Grant

 

Transfers between DSOs

 

There is a net decrease of £1,500,000 comprising a decrease of:

 

· £2,500,000 from Local Government Management Information Systems to Regeneration Monitoring and Digital Inclusion programme (DSO3) for the central development of Phase 2 of a central focal point for IT connections (the HUB).

 

offset against increases of:

 

· £831,000 from Fire and Rescue Services Improvement programme (DSO6) to Best Value Inspection to support Audit Commission Comprehensive Performance Assessment work on fire and rescue authorities; and

· £200,000 from Implementing Planning Reforms (DSO5) to London Governance for grants to the Greater London Authority in support of the Mayor's new planning powers under the Greater London Authority Act 2007.

 

 

 

 

 

 

DSO 2 - Improving the supply and quality of housing

 

Funds Brought Forward

 

There is a non voted capital increase of £149,700,000 as a result of the changes announced in the Pre Budget Report in November 2008. This forms part of the fiscal stimulus package aimed at supporting the economy through the current economic downturn, and has been allocated to Gap funding for large scale voluntary transfers (£43,000,000), Arms Length Management Organisations (£87,000,000) and the Community Infrastructure Fund (£19,700,000). (See Annex B for further information).

 

Transfers between DSOs

 

There is a net decrease of £6,400,000 comprising a decrease of:

 

· £34,596,000 from the Homes and Communities Agency (former Housing Corporation) to Fire control rooms (DSO6) for the temporary acquisition of two Regional Control Centre leases;

 

offset against increases of:

 

· £9,295,000 from Cohesion and Race Equality (DSO3) to Gypsy site grant to focus an element of expenditure formerly within the cohesion and faiths programme upon community empowerment;

· £2,222,000 from DSO5, comprising £1,422,000 from Implementing planning reform and £800,000 from Regional assemblies, to voted provision for the Homes and Communities Agency to cover costs of the shortfall in the Housing Corporation pension fund held with Westminster City Council;

· £3,551,000 to the Homes and Communities Agency comprising £3,100,000 from Mapping and data services (not assigned to a DSO) for ATLAS; and £251,000 from Safer and Stronger Communities Fund (DSO3) and £200,000 from E- Planning (DSO 5) to cover costs of CLG staff seconded to the HCA;

· £1,286,000 from Academy for Sustainable Communities (DSO3) to the Homes and Communities Agency to reflect the accounting implications of the application of merger accounting to the establishment of the HCA.(see annex A)

· £1,254,000 from Regional Chambers (DSO3) comprising £424,000 to Homelessness and Housing Reform to help individuals gain sustainable employment and to move out of hostels into private rented sector accommodation and £830,000 to Private Housing Renewal to fund improvements in housing conditions for vulnerable people;

· £10,300,000 from New Deal for Communities (DSO3) to pooled capital housing receipts to cover a shortfall following the economic downturn in the housing sector; and

· £300,000 from Cohesion and Race Equality (DSO4) to Homelessness and Housing Reform, to provide funding to several local authorities to help them tackle rough sleeping by A10 nationals.

.

 

DSO 3 - Building prosperous communities, promoting regeneration and tackling deprivation

 

Transfers between DSOs

 

There is a net decrease of £35,500,000 comprising decreases of:

 

· £4,830,000 to Community Empowerment (DSO4) to enable funding to be targeted at key areas in a more transparent way;

· £19,911,000 to Regional Assemblies (DSO5) to strengthen the link between the CLG Planning Directorate and regional partners in the context of a) working on the content of RSS/partial reviews; b) making progress on the housing requirement and c) working toward a new regional strategy;

· £1,537,000 to Homes and Communities Agency (DSO2) comprising £1,286,000 from Academy for Sustainable Communities to reflect the accounting implications of the application of merger accounting to the establishment of the HCA and £251,000 from Safer and Stronger Communities Fund to cover costs of CLG staff seconded to the HCA;

· £1,920,000 from Regional Chambers comprising £424,000 to Homelessness and Housing Reform (DSO2) to help individuals gain sustainable employment and to move out of hostels into private rented sector accommodation; £830,000 to Private Housing Renewal (DSO2) to fund improvements in housing conditions for vulnerable people and £666,000 for Adults Facing Chronic Exclusion to cover slippage from 2007-08 (DSO4); and

· £10,300,000 to pooled capital housing receipts from New Deal for Communities (DSO3) to cover a shortfall following the economic downturn;

 

offset against increases of:

 

· £500,000 to Research from Payments for Mapping Data and Services (not assigned to a DSO) to restore funding that was transferred in the Winter Supplementary Estimate to cover financial corrections in respect of old ERDF programmes; and

· £2,500,000 to the Regeneration Monitoring and Digital Inclusion programme from Local Government Management Information Systems (DSO1) for the development of Phase 2 of a central focal point for IT connections (the HUB).

 

 

DSO 4 - Developing communities that are cohesive, active and resilient to extremism

 

Transfers between DSOs

 

There is a net decrease of £4,100,000 comprising a decrease of:

 

· £9,595,000 from Cohesion and Race Equality comprising £9,295,000 to Gypsy Site grants (DSO2) as additional support for the Gypsy and Travellers Unit and £300,000 to Homelessness and Housing Reform to provide funding to several local authorities to help them tackle rough sleeping by A10 nationals.

 

offset against increases of:

 

· £4,830,000 from Safer and Stronger Communities Fund (DSO3) to enable funding to be targeted at key areas in a more transparent way; and

· £666,000 from Regional Chambers (DSO3) to Adults Facing Chronic Exclusion to cover programme slippage from 2007-08.

 

 

DSO 5 - Providing a more efficient and transparent planning system

 

Transfers between DSOs

 

There is a net increase of £17,300,000, comprising decreases of:

 

· £2,422,000 to the Homes and Communities Agency (DSO2) comprising £1,422,000 from Implementing planning reform and £800,000 from Regional assemblies to cover costs of the shortfall in the Housing Corporation pension fund held with Westminster City Council and £200,000 from E-Planning to cover costs of CLG staff seconded to the HCA; and

· £200,000 to London Governance (DSO1) from Implementing Planning Reforms for grants to the Greater London Authority in support of the Mayor's new planning powers under the Greater London Authority Act 2007.

 

offset against an increase of:

 

· £19,911,000 from Regional Chambers (DSO3) to Regional Assemblies to strengthen the link between the CLG Planning Directorate and regional partners in the context of a) working on the content of RSS/partial reviews; b) making progress on the housing requirement and c) working toward a new regional strategy.

 

DSO 6 - Ensuring safer communities by providing the framework to prevent and respond to emergencies

 

Transfers between DSOs

 

There is a net increase of £20,300,000 comprising decreases of:

 

· £831,000 to Best Value Inspection (DSO1) from Fire and Rescue Services Improvement programme to support Audit Commission Comprehensive Performance Assessment work on fire and rescue authorities; and

· £14,700,000 to European Regional Development Fund (not assigned to a DSO) from Firelink for the near cash utilisation cost associated with the balance sheet provision raised in 2007-08 and 1997-99 programmes;

 

offset against increases of:

 

· £34,596,000 to Fire control rooms from Homes and Communities Agency (former Housing Corporation) (DSO2) for the temporary acquisition of two Regional Control Centre leases; and

· £1,229,000 from European Regional Development Fund (not assigned to a DSO) comprising £800,000 for the cost of capital charge on lending to the Fire Service College and £429,000 to New Dimension for depreciation charges on Mass Decontamination vehicles.

 

Not assigned to a DSO

 

Transfers to/from Other Government Departments;

 

There is a net increase of £1,200,000 comprising a decrease of:

· £40,000 to Cabinet Office for the Government Secure Zone Security Monitoring and Control Centre;

 

offset against an increase of:

 

· £1,240,000 from the Department of Business Enterprise and Regulatory Reform to cover early exit costs for BERR staff in the Government Offices.

 

Transfers between DSOs

There is a net increase of £9,900,000 comprising decreases of:

 

· £3,600,000 from Payments for Mapping Data and Services comprising £500,000 to Research (DSO3) and £3,100,000 to the Homes and Communities Agency (DSO2) for ATLAS; and

· £1,229,000 from European Regional Development Fund comprising £800,000 for the cost of capital charge on lending to the Fire Service College and £429,000 to New Dimension for depreciation charge on Mass Decontamination vehicles (both DSO6);

 

offset against an increase of:

 

§ £14,700,000 from Firelink (DSO6) to European Regional Development Fund for the near cash utilisation cost associated with the balance sheet provision raised in 2007-08 and 1997-99 programmes.

SECTION D: DEPARTMENTAL EXPENDITURE LIMITS (DEL) and ANNUALLY MANAGED EXPENDITURE (AME)

 

 

19. Departmental Expenditure Limits - which are set in Spending Reviews - represent a share of total public expenditure which Departments are expected to manage. They cover a wider boundary than the RFRs, as they include NDPB expenditure and supported capital expenditure of local authorities. Increases can only be sought in RFRs if extra DEL is available - transferred from elsewhere (non voted or another Department) or drawn down as EYF - or if a particular budget is outside the DEL.

 

20. Annually Managed Expenditure covers a few specific programme areas where spend is more difficult to control and forecast. For AME programmes, increases may be made in year and between Spending Reviews, with Treasury agreement. AME is within overall public expenditure.

 

21. The following is a summary of DEL and AME changes consistent with the RFR changes sought. The Department has two DELs - Main and Local Government - which broadly mirror the programme areas of RFR1 and RFR2 respectively.

 

 

Main DEL

 

22. The changes to the key budgetary figures for Main DEL are:

 

Table 4 £M

 

Main Departmental Expenditure Limit

Resource DEL increases by 0.169

Of which

Near cash 0.169

Administration 1.240

The net increase in Resource DEL is the effect of:

§ Voted increase of £1.240m for Administration Costs. This is a transfer from the Department for Business Enterprise and Regulatory Reform for early exit costs of BERR staff in the Government offices; partially offset by

§ Voted decreases of £1.031m for transfers from Main DEL to Local Government DEL and a transfer of £0.040m to Cabinet office (see section B).

Capital DEL increases by 152.200

The increase is a result of the changes (£149.700m) announced in the Pre Budget Report (more information is at Annex B) and a transfer of £2.500m from Local Government DEL for the Regeneration Monitoring and Digital Inclusion programme (see section B).

 

 

 

 

 

 

 

 

 

Table 5 £M

 

Changes to the Departmental Expenditure Limit in 2008-09
	Voted	Non voted	Total DEL
Resource
1 April	4,046	280	4,327
Change announced with winter supplementary estimate	-20	69	49
Change announced with spring supplementary estimate	-22	22	0
Total resource Departmental Expenditure Limit	4,004	371	4,375
Capital
1 April	2,837	4,138	6,975
Change announced with winter supplementary estimate	-356	556	200
Change announced with spring supplementary estimate	-379	531	152
Total capital Departmental Expenditure Limit	2,102	5,225	7,327
Less depreciation at the start of the year	-38	-13	-51
Less change in depreciation at winter supplementary estimate	1	-1	0
Less change in depreciation at Spring supplementary estimate	1	9	10
Total depreciation	-36	-5	-41
Total Departmental Expenditure Limit	6,070	5,591	11,661

 

A reconciliation from CSR07 to the 1 April DEL position is set out in table 5 of the Explanatory Memorandum to the Main Estimate 2008-09.

 

Amounts may not sum exactly due to rounding.

 

23. The expenditure against Main DEL for this Department and its predecessors for the financial years since 2005-06 is set out in the table below:

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 6 £M

Previous years' expenditure against Departmental Expenditure Limits
Year	Voted	Non voted	Total DEL	Outturn	Variance	%
Resource
2005-06	4,139.9	1,815.9	5,955.8	5,856.2	-99.6	-1.7%
2006-07	3,544.7	120.9	3665.6	3503.6	-162.0	-4.4%
2007-08	4,118.2	218.4	4,336.6	4,323.7	-12.9	-0.3%
Capital
2005-06	1,312.8	2,242.2	3,555.0	3,450.4	-104.6	-2.9%
2006-07	2,208.0	3,587.9	5,795.9	5,634.7	-161.2	-2.8%
2007-08	2,444.5	3,624.3	6,068.8	6,070.7	1.9	0.0%
Total
2005-06	5,452.7	4,058.1	9,510.8	9,306.6	-204.2	-2.1%
2006-07	5,752.7	3,708.8	9,461.5	9,138.3	-323.2	-3.4%
2007-08	6,562.7	3,842.7	10,405.4	10,394.4	-11.0	-0.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annually Managed Expenditure (Main Programmes)

 

24. The increase of £38.838 million in Main Programmes AME reflects revised forecasts of Housing Revenue Account subsidy and fire fighters pension top up grants (see section B).

 

 

Local Government DEL

 

25. The changes to the key budgetary figures for Local Government DEL are:

 

Table 7 £M

 

Local Government Departmental Expenditure Limit

Resource DEL increases by 11.441

Of which

Near cash 11.441

The increase in Resource DEL is funded by

· a take up of end year flexibility of £10.000m for Local Government PSAs and £0.410m for Invest to Save Budget special grant and

· a net transfer of £1.031m from the Main DEL.

Details are set out in section B.

Capital DEL increases by 7.500

The increase in Capital DEL is the net effect of a draw down of £10.000m EYF for Local Government PSAs and a transfer of £2.500m to the Main DEL. Details are given in section B.

 

 

 

 

 

 

 

 

Table 8 £M

 

Changes to the Departmental Expenditure Limit in 2008-09
	Voted	Non voted	Total DEL
Resource
1 April	24,602	103	24,705
Change announced with winter supplementary estimate	1	0	1
Change announced with Spring supplementary estimate	11	0	11
Total resource Departmental Expenditure Limit	24,614	103	24,717
Capital
1 April	86	1	87
Change announced with winter supplementary estimate	81	0	81
Change announced with Spring supplementary estimate	8	0	8
Total capital Departmental Expenditure Limit	175	1	176
Less depreciation at the start of the year	0	0	0
Less change in depreciation at winter supplementary estimate	0	0	0
Less change in depreciation at Spring supplementary estimate	0	0	0
Total depreciation	0	0	0
Total Departmental Expenditure Limit	24,789	104	24,893

 

A reconciliation from CSR07 to the 1 April DEL position is set out in table 8 of the Explanatory Memorandum to the Main Estimate 2008-09.

 

Amounts may not sum exactly due to rounding.

 

26. The expenditure for the Local Government DEL for this Department and its predecessors for the financial years since 2005-06 is set out in the table below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 9 £M

 

Previous years' expenditure against Departmental Expenditure Limits
Year	Voted	Non-voted	Total DEL	Outturn	Variance	%
Resource
2005-06	46,187	106	46,293	46,244	-49	-0.1%
2006-07	22,460	106	22,566	22,551	-15	-0.1%
2007-08	22,711	104	22,815	22,755	-60	-0.3%
Capital
2005-06	379	9	388	316	-72	-18.6%
2006-07	260	6	265	223	-42	-15.9%
2007-08	126	4	130	34	-96	-74%
Total
2005-06	46,566	115	46,681	46,560	-121	-0.3%
2006-07	22,720	112	22,831	22,774	-57	-0.3%
2007-08	22,838	107	22,945	22,789	156	0.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: from 2006-07, there was a large change in funding mechanisms for education, reducing grant paid by this Department and increasing that paid by the Department for Children, Schools and Families.

 

 

Annually Managed Expenditure (Local Government Programmes)

 

27. There are no changes to the AME forecast for local government programmes.

 

 

 

 

 

SECTION E: END YEAR FLEXIBILITY (EYF)

 

Main DEL (RFR1 and non voted)

 

28. The Department's EYF has been accumulated by underspends in previous years. The department uses its EYF to fund ongoing programmes where slippage has occurred and for the management of unbudgeted pressures which arise.

 

Table 10 £M

	Resource	Capital	TOTAL
Administration	Other Resource	Total Resource	of which:
Near cash	Non cash
EYF entitlement set out in Public Expenditure: Provisional Outturn, July 2007 (table 6 - Cm 7156)	60	85	145	90	55	604	749
Amount drawn down in 2007-08	-12	-56	-68	-65	-3	-241	-309
Balance of accumulated EYF at 31 March 2008	48	29	77	25	52	363	440
EYF entitlement from unused resources in 2007-08	+26	+112	+138	+106	+32	0	+138
Adjustments to 2006-07 outturn	-5	-1	-6	+13	-19	+14	+8
Adjustment to remove underspend on Reserve claim for Housing Market Renewal in 2007-8	0	-25	-25	0	-25	0	-25
Adjustment for Community Infrastructure Fund	0	0	0	0	0	+20*	+20
Entitlement set out in Public Expenditure: Provisional Outturn, July 2008 (table 6 - Cm 7419)	69	115	184	144	40	397	581
EYF drawn down in winter supplementary estimates	-9	0	-9	-9	0	0	-9
EYF drawn down in spring supplementary estimates	0	0	0	0	0	0	0
Balance of accumulated end year flexibility	60	115	175	135	40	397	572

 

* Capital EYF was increased by £19.7m by HM Treasury to reflect the transfer of programme responsibility for the Community Infrastructure Fund from the Department for Transport to CLG between SR04 and CSR07.

 

 

 

 

 

 

 

Table 11 £M

Allocation of accumulated end year flexibility
	Resource	Capital	Total
Central department (Programme & Administration)	175	397	572
of which Ring-fenced*	3	9	12

 

*Ring-fencing for Regional Development Agencies

 

 

Local Government DEL (RFR2 and non voted)

 

29. The Department's EYF has been accumulated by underspends. The Department uses its EYF to fund ongoing programmes where slippage has occurred and for the management of unbudgeted pressures which arise.

 

Table 12 £M

 

	Resource	Capital	TOTAL
Administration	Other Resource	Total Resource	of which:
Near cash	Non cash
EYF entitlement set out in Public Expenditure: Provisional Outturn, July 2007 (table 6 - Cm 7156)	0	57	57	57	0	322	379
Amount drawn down in 2007-08	0	0	0	0	0	0	0
Balance of accumulated EYF at 31 March 2008	0	57	57	57	0	322	379
EYF entitlement from unused resources in 2007-08	0	50	50*	50	0	96	146
Entitlement set out in Public Expenditure: Provisional Outturn, July 2008 (table 6 - Cm 7419)	0	107	107	107	0	418	525
EYF drawn down in winter supplementary estimates	0	0	0	0	0	-82	-82
EYF drawn down in Spring supplementary estimates (see section B)	0	-10	-10	-10	0	-10	-20
Balance of accumulated end year flexibility	0	97	97	97	0	326	423

 

* Resource EYF entitlement from 2007-08 understated by £10m due to error in published version of PEOWP.

 

 

 

 

 

 

 

 

Table 13 £M

 

Allocation of accumulated end year flexibility
	Resource	Capital	Total
RfR2 (Local Government Programmes)	97	326	423
of which Ring-fenced*	71	291	362

 

* The majority of this ring-fencing (£66m resource; £291m capital) is for PSA Reward Grant.

.

.

 

 

 

SECTION F: ADMINISTRATION BUDGET

 

Table 14 £M

 

Changes to the Administration budget in 2008-09
	Limit
1 April	280.3
Change announcement with winter supplementary estimate	9.4
Change announcement with spring supplementary estimate	1.2
Administration Budget	290.9

 

30. The changes to the overall Administration Budget in the Spring Supplementary Estimate are the result of a net transfer of £1.2m from other Government Departments which is explained in section B above.

 

31. The Administration Budget and outturn for the financial years since 2005-06 are set out in the table below:

Administration Budget (previous years)

 

Table 15 £M

Year	Budget	Outturn	Variance	%
2005-06	336	311	-25	-7.5%
2006-07	324	298	-26	-8.1%
2007-08	304	278	-26	-8.6%

 

 

 

 

 

 

 

SECTION G: PROVISIONS AND CONTINGENT LIABILITIES

 

Provisions

 

32. The department provides for legal or constructive obligations, which are of uncertain timing, or amount, at the balance sheet date on the basis of the best estimate of the expenditure required in settling the obligation. The following table sets out the provisions made at the start of 2008-09 and the use that has been made of them. Below the table is an explanation of the provisions which have been made.

 

Table 17 £M

 

Position from 1 April 2008	Early Departure	Other	Total
Opening Balance at 1 April 2008	-20.857	-85.004	-105.861
Provided in year	-1.514	-2.281	-3.795
Provisions not required written back	0.067	0	0.067
Provisions used in year	4.023	1.549	5.572
Pre-funding	0.041	0	0.041
Unwinding of discount	-0.214	0	-0.214
Closing Balance at 31 December 2008	-18.453	-85.736	-104.189

 

 

Early Departure Costs

The department meets the additional costs of benefits beyond the normal Principal Civil Service Pension Scheme (PCSPS) benefits in respect of employees who retire early, by paying the required amounts annually to the PCSPS over the period between early departure and normal retirement date. The department and its agency provide for this in full when the early retirement programme becomes binding by establishing a provision for the estimated payments discounted by the Treasury discount rate of 2.2 per cent in real terms. In past years the department paid in advance some of its liability for early retirement by making a payment to the Paymaster General's Account at the Bank of England for the credit of the Civil Service Superannuation Vote. The balance remaining is treated as a prepayment.

 

Other Costs

 

European Regional Development Fund Correction (£72.9m)

 

The European Commission have concerns relating to some specific projects within the 1997-99 and 2000-06 tranches of programmes and they have extrapolated across the whole programme to reach a total potential disallowance ineligible for grant payments. Following consideration of potential ineligible grant payments the Department has raised provisions totalling £72.9m. It is expected that half of these cases may be settled in this financial year. None of this provision has been drawn down so far in 2008-09.

 

Compensation Payments (£4.3m)

 

These relate to claims made by staff and third parties against the department. The majority represent claims by ex Property Services Agency employees who have contracted lung disease due to industrial exposure. It is expected that a third of these cases may be settled during this financial year with the remainder settled in the following two years. £1.3m of provision has been drawn down so far in 2008-09.

 

 

Dilapidations (£6.4m)

 

The provision relates to complying with lease clauses for buildings which are occupied by the Government Offices. £0.1m of this provision has been drawn down so far in 2008-09.

 

Firefighters' Pensions (£2.1m)

 

The Firefighters' Pension Scheme is a small scheme, with similar conditions to the Principal Civil Service Pension Scheme, for 17 former firefighters and their widows. The scheme was inherited from the Home Office. The Treasury real rate for this pension scheme is 2.5%. £0.1m of this provision has been drawn down so far in 2008-09.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent liabilities

 

Table 18 £M

 

Statutory
Fire Service Act 1947 s17 and the Fire Service (Discipline Regulations) 1985. Liability to litigation by Fire Authorities resulting from delays in processing appeals to the Secretary of State.	220
Housing Association Act 1987, s84 Indemnity of building society mortgages for shared ownership schemes.	175
Indemnity given for the Land Stabilisation Project to proceed in Northwich under Section 1 of the Derelict Land Act 1982	25,000
Non-Statutory
Possible administrative irregularities (Article 4 and 10 checks) in respect of the European Regional Development Fund Programme, where approximately 50% of the total irregularities value would not be recovered due to insolvency occurring.	24,900
Three Local Authorities (Corby, Slough and Cannock Chase) have launched legal action against the Department for underpayment of the Local Authority Business Growth Incentive Scheme grant. There is a chance that the Court will rule in favour of the Local Authorities. This would result in an additional payment to the Local Authorities.	101,700
Possible obligations from Employment Tribunal decision including asbestos claims against the Department.	4,200
Potential payments under the Housing Revenue Account Subsidy (HRAS ) scheme relating to outstanding liabilities.	Unquantifiable
Liability to pay grant in future years relating to the annual gap-funding agreements for negative values transfers of council housing stocks	561,944
Ex-gratia payments which may possibly be made to appellants or other appeal parties who have incurred abortive costs following an error made by the Planning Inspectorate.	50
Possible ex-gratia payments in relation to Housing and Planning	Unquantifiable
Possible obligations from Employment Tribunal decisions	Unquantifiable
Other Employment Tribunal decisions.	10
Charging of VAT on building rental	182
Indemnity given to the Nationwide Building Society as lender for claims relating to the treatment or removal of asbestos in connection with housing stock transfers.	Unquantifiable
Indemnity given to the Fire and Rescue Services in respect of possible incidents as a result of mass decontamination	Unquantifiable
Where bodies outside boundary (see Note 33 of resource accounts) are unable to meet their own liabilities, then there is no reason to believe that the department's future sponsorship and future Parliamentary approval will not be forthcoming.	Unquantifiable
Possible obligations to repay EC funds in respect of the 1994-1999 European Regional Development Fund programmes for projects which were formally closed by 31st March 2003.	76,000
Possible financial corrections for irregularities with EC funds in respect of the 2000-2006 European Regional Development Fund programmes.	62,000
Possible financial corrections in relation to the INTERREG programme and for European Regional Development Fund projects undertaken by Business Links.	11,000
Litigations costs possibly due to unsuccessful attempts to resist High Court challenges.	450

 

 

 

 

SECTION H: APPROVAL OF MEMORANDUM

 

 

33. This Memorandum has been prepared with reference to guidance in the Estimates Manual provided by the Treasury and that found on the House of Commons Scrutiny Unit website. The information in this Memorandum has been approved by the Departmental Accounting Officer.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ANNEX A

 

Homes and Communities Agency

 

1. The Homes and Communities Agency was established on 1 December 2008, incorporating English Partnerships and parts of the Housing Corporation and the Department for Communities and Local Government (CLG). The HCA will need to prepare Annual Accounts for the period to 31 March 2009.

 

2. While there are clear rules governing mergers between Government departments, CLG is unaware of any precedent for a merger between a Department and one of its Non Departmental Public Bodies. We have therefore considered, with the Treasury and the National Audit Office, the accounting, Estimate and budgeting implications of the incorporation of activities previously undertaken by CLG into the HCA.

 

3. The Treasury has ruled that this is not a machinery of government change for Estimates purposes, as there is no requirement for Supply provision to be reallocated between departments presenting UK supply estimates.

 

Merger Accounting

 

4. When entities merge the applicable accounting standard is FRS6 - Acquisitions and Mergers. The Government Financial Reporting Manual (FReM) states that this applies in full to all entities covered by the FReM. Acquisition accounting, which normally applies to private sector 'mergers' involves the purchase of the net assets of one body by another whereas merger accounting, which generally applies in central government, implies equal partners where the accounts of the entities are combined.

5. Merger accounting requires that the HCA accounts record expenditure on the transferred programmes for the full year (ie, as though they had transferred on 1 April 2008) and that the accounts of both the Department and the HCA properly and consistently reflect the accounting and financial impacts of the transfer.

 

6. The approach agreed by the Department, Treasury and NAO is for CLG to identify transactions in the April to November period, reverse the balances in the operating cost statement and, instead of invoicing the HCA for the net total (as would happen for a Machinery of Government change), debit a 'deemed grant in aid' account in the Operating Cost Statement. A 'deemed' grant in aid account is needed because grant cannot be paid to an organisation before it exists. As part of this, resource to cash adjustments are needed to reflect the fact that grant in aid is cash based.

 

Supplementary Estimate Changes

7. In the Winter Supplementary Estimate, changes were made to effect the position after 1 December 2008, ie CLG provision for December to March was transferred to the HCA and grant in aid correspondingly increased. No changes were made to amounts for the period before December.

8. To ensure consistency with the accounting treatment, changes are necessary in the Spring Supplementary Estimate to transfer the remaining eight months' budget for transferred functions to the HCA and make a corresponding increase to non budget provision in RfR1, section X, to incorporate 'deemed grant in aid'.

 

9. These transfers and adjustments are set out in the table below. They are broadly neutral in terms of DEL, the Net Resource Requirement and the Net Cash Requirement.

 

 

 

 

Table 19 - Estimate and Budget changes due to Merger Accounting for Homes and Communities

Agency

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annex B

 

CONTRIBUTION TO FISCAL STIMULUS

 

At the Pre-Budget Report Ministers announced plans to bring forward £775m housing and regeneration capital spending to support the construction industry over the next two years.

 

The £775m funding will be used to support the following programmes:

 

· Bringing forward Decent Homes work £250m will be available to fund improvements in 25,000 homes. These properties will benefit from home improvements including measures to make homes more energy efficient. £130m will be available for planned improvements in 2008-09 and £120m brought forward to 2009-10.

 

· Major Repairs to council housing Council tenants will benefit as £175m is brought forward from 2010-11 to 2009-10 to carry out repairs on council homes.

 

· New homes for social rent £150m will be available in 2009-10 for the provision of around 2,000 new homes for social rent in addition to the £400m (for around 5,500 new homes in 2008-10) brought forward as part of measures announced in the September Housing Package.

· Regeneration projects £100m funding has been brought forward to complete key transport projects in the Growth Areas and support regeneration projects which might otherwise not go ahead in the current market.

 

· and Regional Development Agencies We are working with RDAs and regional partners to consider how they may bring forward up to £100 million from future years to support priority projects in the regions.

 

 

Table 20 £M

 

Pre Budget Report Amendments (£m)	2008-09	2009-10	2010-11
Decent Homes - ALMOs	130	120	-250
Major Repairs Allowance	0	175	-175
Homes for Social Rent	0	150	-150
Regeneration projects	20	80	-100
Regional Development Agencies	0	100	-100
TOTAL	150	625	-775

 

 

 

ANNEX C

 

EXPLANATION OF KEY TERMS AND GLOSSARY OF ABBREVIATIONS

 

DEL - Departmental Expenditure Limit

 

This is spending within the department's direct control, which can be planned over a Spending Review period and includes programme and administration expenditure. The Department for Communities and Local Government has two DELs - Main DEL, which covers main programme spending, and Local Government DEL, which covers local government programmes.

 

RfR - Request for Resources

 

These are the resource element of the Departmental Estimates. The department has two RfRs:

 

RfR 1: Improving the quality of life by creating thriving, inclusive and sustainable communities in all regions.

 

RfR 2: Providing for effective devolved decision making within a national framework.

 

The RFR covers the central Department and the Government Offices, and unlike the DEL does not consolidate NDPB spend, showing instead payments of grant in aid to the NDPBs.

 

DUP - Departmental Unallocated Provision

 

The department's (non voted) contingency reserve, which can be accessed to meet pressures or to deal with in year management of resources by means of Main and Supplementary Estimates

 

EYF - End Year Flexibility

 

This enables the department to plan the use of resources over a Spending Review period as it allows the carry forward of unspent DEL resources into future years. The department allows the carry forward of EYF for specific ring-fenced programmes. The remainder is used as a central resource to meet pressures arising in year.

 

Voted and Non-Voted Expenditure

 

Voted expenditure is that expenditure which has been approved in Main or Supplementary Estimates. Non-voted expenditure has not been through this Parliamentary process. Examples of non-voted are the resource and capital expenditure by NDPBs. NDPBs' grant-in-aid is voted.

 

Spending Review

 

A fundamental look at resources by the Treasury which (usually) takes place every two years and normally covers a three year period. The current budgets are a result of CSR07, which covered the years 2008-09, 2009-10 and 2010-11.

 

 

Other Abbreviations

 

CNT - Commission for New Towns

 

CSR07 - Comprehensive spending review 2007

 

DCSF - Department for Children, Schools and Families

 

DWP - Department for Work and Pensions

 

EP - English Partnerships

 

ERDF - European Regional Development Fund

 

HC - Housing Corporation

 

HCA - Homes and Communities Agency

 

HMRF - Housing Market Renewal Fund

 

HRAS - Housing Revenue Account Subsidy

 

NDPB - Non Departmental Public Body

 

NNDR- National Non-Domestic Rates

 

OGD - Other Government Department

 

PFI - Private Finance Initiative

 

PSA - Public Service Agreement

 

RSG - Revenue Support Grant

 

RSS - Regional Spatial Strategy

 

SR04 - Spending review 2004

 

TSA - Tenant Services Authority

 

UDC - Urban Development Corporation

 

URA - Urban Regeneration Agency

 

VAT - Value Added Tax