Supplementary memorandum from the Department for Communities and Local Government (SSUP (08-09) 02

 

CLG Spring Supplementary Estimate 2008-9

 

Thank you for your letter of 2 April about the Communities and Local Government (CLG) Spring Supplementary Estimate 2008-09 requesting under five headings, further information and explanations. The requested information and explanations are laid out below, prefaced by each request for ease of reference, in the order of your letter.

 

Q	The explanatory memorandum identifies £36m extra grants to the Housing Corporation and £138m less to English Partnerships (EP), "to reflect outturn to the end of November 2008". There is also a £315.4m increase in grant to the Homes and Communities Agency (HCA) for December-March which appears to relate solely to timing differences between grants and budget expenditure. Do any of these adjustments represent any substantive change in the Housing Corporation, English Partnerships, HCA or CLG budgets, or simply timing differences between grant payments and budget expenditure?
A	These adjustments to grants fall under three headings: 1) to follow budget changes arising from decisions taken on PBR and the Housing Package; 2) for non-material virements between programmes; and 3) to meet the requirements of merger accounting by identifying opening and closing balances for all Programmes and treating cash disbursed by CLG prior to December vesting as deemed Grant in Aid. This work was completed in January 2009.
Q	It appears that £10.3m is being cut from the gross expenditure budgets of the New Deal for Communities (NDC), and £105.1m from Thames Gateway (TG) and HCA Affordable Housing programme gross budgets, because of lower than expected capital housing receipts. What practical impact has there been on the programmes of those bodies?
A	In 2008-09 we needed to accommodate a fall in CLG's share of right to buy receipts of around £110m, EP land and building receipts of £67m and temporary provision of £35m for Fire Control leases (which will be returned in 2009-10). This was largely covered from £50m from the TG budget and £157m from the HCA Affordable Housing budget. In relation to TG, we do not expect the £50m reduction to result in cancellation of any existing schemes but to be managed through slippage over the lifetime of this £9 billion programme. The reduction in HCA Affordable Housing Budget is more than offset by the £200m brought forward in the September Housing Package. The impact on NDC is only in timing. The £10.3m of Programme expenditure will take place in 2009/10 instead of 2008/09.
Q	The memorandum notes additional European Regional Development Fund (ERDF) provisions, and utilisation of previous ERDF provision, but Section G of the memorandum also tells us that there is no change to the £73m ERDF provision made in CLG's 2007-08's accounts. The position might also be somewhat complicated by the error in ERDF provisions made in the Winter Supplementary Estimate. It would be helpful to have a table for 2008-09, subsuming Winter and Spring Supplementaries taken together, showing new ERDF provisions, provision utilisation and bad debt write-offs now anticipated.
A	The table below shows ERDF provision and bad debt changes in 2008-09:
2008-09 Budgets for ERDF Provision and Bad Debts/ Write Offs
Notes	£m	Start of Year	Supplementaries	End of Year
		Near Cash	Non Cash	Near Cash	Non Cash	Near Cash	Non Cash
		£m	£m	£m	£m	£m	£m
1	Bad debts/Write offs	8.0		(8.0)	8.0		8.0
2	Corrections/Penalties			-
3	2008-09 Provision Release/Utilisation			55.0	(55.0)	55.0	(55.0)
4	2008-09 New Provision				50.2		50.2
1	The £8m original budget for bad debts and write offs was originally in near-cash. In 2008-09 a panel was set up to scrutinise possible write offs - generally the cases where grants have been made through the Government Offices to third sector bodies which have not then been properly administered.
2	A £22.3m Winter Supplementaries change was cancelled in the Spring Supplementaries.
3	£55m near-cash and -£55m non-cash were estimated in Spring Supplementaries for provision utilisation (payments) expected in the last quarter of the year.
4	£50.2m new provision relates to the 2000-2006 programmes.
Q	Your memorandum notes that £43m of the fiscal stimulus package for 2009-10 involves Gap Funding connected with Decent Homes voluntary transfers (page 19). How does that £43m of gap funding generate additional capital expenditure (such as to be considered 'fiscal stimulus' investment)? Are there conditions attached to the provision of gap funding about how that funding may be spent?
A	Gap funding grant arrangements support Decent Homes investment programmes undertaken by Registered Social Landlords (RSLs) following Large Scale Voluntary Stock transfers that would not have been able to proceed without additional funding support. The £43m fiscal stimulus package is additional to the £80m baseline funding allocated in the Spending Review Settlement and will be spent in 2009-10 by RSLs to improve the standard of the stock they have taken over in the transfer programme. The funding directly supports transfer RSLs' Decent Homes capital investment programmes promised to tenants during the transfer consultation and ballot process.
Q	Page 10 of the explanatory memorandum records a transfer from 'Cohesion and race equality' (section D of Request for Resources 1) to 'Gypsy site grant' (section C), "to focus an element of expenditure formerly within the cohesion and faiths programme upon community empowerment." The Committee requests further details of the purpose of this transfer.
A	The transfer aims to improve the delivery of expenditure programmes for elements of gypsy and traveller issues, and race equalities, which were formerly within the cohesion and faiths programme, by more closely aligning these programmes with other community-focused programmes. The aim is to exploit synergies within the delivery chains and thereby strengthen community aspects within these programmes.

 

May 2009