Foreign and Commonwealth Office Annual Report 2007-08 - Foreign Affairs Committee Contents

Foreign & Commonwealth Office Winter Supplementary Estimate 2007-08 Memorandum for the Foreign Affairs Committee

INTRODUCTION

  1.  The Foreign and Commonwealth Office Estimate has two Requests for Resources (RfRs):

—  RfR 1: Promoting internationally the interests of the UK and contributing to a strong world community, that covers:

—  Section A: Expenditure by the Foreign and Commonwealth Office (FCO), including UK Trade and Investment, on its administration, Wilton Park Executive Agency, hospitality and facilities; international organisations; grants in aid to bodies supporting FCO objectives; scholarships, information services and sponsored visits; special payments and assistance programmes to support foreign policy objectives including human rights, good governance, international security and the fight against the illicit drug trade; and international organisations; and on associated non-cash items;

—  Sections B and C: Resource grant in aid to the BBC World Service for broadcasting and to the British Council, respectively;

—  Sections D and E: Capital grant in aid to the BBC World Service for broadcasting and to the British Council, respectively;

—  Section F: AME Provision for impairments; and

—  Section G: The refund of certain taxes and duties paid by certain Foreign and Commonwealth governments.

—  RfR 2: Conflict prevention, that covers:

—  Section A: Expenditure by the Foreign and Commonwealth Office on conflict prevention, early warning, crisis management, conflict resolution/peacemaking in Sub-Saharan Africa;

—  Section B: Expenditure by the Foreign and Commonwealth Office on conflict prevention, early warning, crisis management, conflict resolution/peacemaking globally;

—  Section C: Peacekeeping and peace building activity and on associated strengthening of international and regional systems and capacity in Sub-Saharan Africa; and

—  Section D: Peacekeeping and peace building activity and on associated strengthening of international and regional systems and capacity globally.

RFR1 WINTER SUPPLEMENTARY ESTIMATE CHANGES

Take up of End Year Flexibility

  2.  The take-up of £22 million Resource DEL EYF is for departmental restructuring, in particular, exit costs associated with the FCO's efficiency programme. Take-up of EYF for this purpose may rise further during the year and, if so, will be reflected in the Spring Supplementary Estimate. We have taken up £35 million of Capital DEL EYF as part of our ongoing programme to increase the security and safety of our Estate and the people using it.

Claim on the DEL Reserve

  3.  Take-up £3.4 million from the Resource DEL Reserve, in particular from the Emergency Disaster Relief Fund, is for costs arising from the Lebanon evacuation.

Admin DUP

  4.  The budget neutral take-up of our £17 million Admin DUP reflects the need to commit our entire Administration Budget for 2007-08, in particular to finance pressures such as the need to finance a shortfall in admin income following an overestimate in Spending Review 2004, start-up costs associated with the FCO's efficiency programme and the move to Trading Fund status of FCO services.

Transfers of Budgetary Cover

  5.  The FCO is transferring £7 million to the Border and Immigration Agency of the Home Office for work on the identification and deportation of illegal immigrants. We are also transferring amounts of £5 million and £0.3 million to the Security and Intelligence Agencies to expand their capabilities.

Neutral and Other Changes

  6.  We are increasing other current (not admin) expenditure and receipts by £60 million to cover increased consular and visa business. We are also reclassifying a total of £16.677 million from capital expenditure to capital grants. This budget neutral change is, in the main, to cover expenditure on NATO and UN buildings, levied as part of our subscriptions to these organisations, and the cost of the Government Secure Zone.

RFR2 MAIN ESTIMATES CHANGES

  7.  The FCO is taking on £3 million from DfID to cover Global Conflict Prevention Work in Afghanistan but also transferring £3 million to the Security and Intelligence Agencies to expand their capacity and capabilities, giving a token £1 thousand change to this RfR in line with convention that we only report positive changes to expenditure in Supply Estimates.

DETAILED LIST OF CHANGES

Table 1

DETAILED EXPLANATION OF CHANGES

£m
End Year Flexibility
22.000	RfR1 Section A2 Programme EYF for departmental restructuring.
35.000	RfR1 Section A7 Capital EYF in respect of the departmental estate.
22.000	Resource Total Change to DEL
35.000	Capital Total Change to DEL
Transfers from non-voted Departmental Unallocated Provision
17.000	RfR1 Section A1 take up Administration DUP.
1.000	RfR1 Section A7 take up of capital DUP.
Transfers between section within the Estimate
15.200	RfR1 Section A3 increase in capital grants for International Subscriptions offset by decrease in A7.
0.250	RfR1 Section A3 increase in capital grants for Gibraltar Pensions offset by decrease in A7.
1.227	RfR1 Section A3 increase in capital grants for Government Secure Zone offset by decrease in A7.
Transfers from Other Government Departments
3.001	RfR2 Section B3 Budgetary Transfer from DfID for Global Conflict Prevention work in Afghanistan.
0.014	RfR1 Section A1 Budgetary Transfer from Cabinet Office for the Privy Council Office.
3.015	Resource Total Change to DEL
Transfers to Other Government departments
-7.000	RfR1 Section A2 budgetary transfer to HO for work on illegal immigration
-5.000	RfR1 Section A2 budgetary transfer to SIA to cover expansion and capability.
-3.000	RfR2 Section B3 budgetary transfer to SIA to cover expansion and capability.
-0.300	RfR1 Section A2 budgetary transfer to SIA to cover expansion and capability.
-15.300	Resource Total Change to DEL
Transfers from Central Funds
3.407	RfR1 Section A2 Resource Reserve claim for EDR monies relating to work in the Lebanon.
3.407	Resource Total Change to DEL
Increases in gross spending offset by Appropriations in Aid
60.000	RfR1 Sections A2 and A5 for Consular and Visa work.
2.830	RfR1 Sections A2 and A5 for Anti-narcotics work.
13.122	Net total change to Resource DEL
35.000	Net total change to Capital DEL

DEPARTMENTAL EXPENDITURE LIMIT (DEL) AND ADMINISTRATION BUDGETS

  8.  The tables below show a comparison of the 2007-08 DEL (Table 2 and 2a) and Administration (Table 3) budgets with the 2002-03, 2003-04, 2004-05, 2005-06 and 2006-07 outturn, and plans for 2007-08.

  9.  Table 2a shows outturn on the definition of DEL used in the year concerned in order to be consistent with published Departmental Expenditure Limits. They do not therefore correspond to the outturns in Table 2 that are on a consistent basis year on year, including reclassification by Treasury of expenditure across all years of the Public Expenditure cycle.

Table 2

DEL COMPARISON

	2002-03	2003-04	2004-05	2005-06	2006-07	2007-08
	Actual	Actual	Actual	Actual	Actual	Budget
Resource DEL 1,2	1,475,575	1,508.860	1,707.753	1,874.336	1,825.291	1,822.326
Capital DEL	101.971	86.621	116.626	131.792	160.275	182.753
Less Depreciation 1,3	67.072	64.010	67.106	108.675	81.505	116.624
Total	1,510.474	1,531.471	1,757.273	1,897.453	1,904.061	1,888.455
1  Figures for all years reflect the reclassification of impairment expenditure from DEL into AME.
2  Resource DEL figures for 2007-08 are understated because they do not include all of the conflict prevention expenditure, which will be transferred at the time of the 2007-08 Spring Supplementary Estimates. In addition 2005-06 included expenditure on a number of one off items (Tsunami expenditure, Efficiency Challenge Fund & G8 & EU presidencies).
3  Depreciation, which forms part of Resource DEL, is excluded from the total DEL, since Capital DEL includes the purchase cost of capital assets. To add on the depreciation of those assets would double count their cost.

Table 2a

PREVIOUS YEARS' EXPENDITURE AGAINST DEPARTMENTAL EXPENDITURE LIMITS

					£m
Year	Voted	Non-voted	Total DEL	Outturn1	Variance
Resource
2004-05	1,607.192	209.690	1,816.882	1,736.188	80.694
2005-06	1,999.224	6.713	2,005.937	1,916.190	89.747
2006-07	1,924.913	44.213	1,969.126	1,852.024	117.102
Capital
2004-05	101.533	1.000	102.533	71.236	31.297
2005-06	135.697	1.000	136.697	92.959	43.738
2006-07	157.779	1.000	158.779	160.747	-1,968(2)
1  Outturn in is based on the definition of DEL in the relevant year and so is not consistent with the outturn in Table 2 that includes subsequent classification changes effective across all years.
2  A small overspend was recorded against capital DEL in 2006-07 largely due to the reclassification of some international subscriptions as capital grants.

Table 3

ADMINISTRATION BUDGET COMPARISON

						£m
	2002-03	2003-04	2004-05	2005-06	2006-07	2007-08
	Actual	Actual	Actual	Actual	Actual	Plan
Administration budget	703.482	706.187	745.541	814.689	780.025	870.060
1  Figures for all years reflect the reclassification of impairment expenditure from DEL into AME.

DEPARTMENTAL UNALLOCATED PROVISION (DUP) 2007-08

  10.  At the time of the Winter Supplementary Estimate, the FCO has £5m of unallocated resource provision only:

Table 4

2007-08 DEPARTMENTAL UNALLOCATED PROVISION

	Resource	Capital
RfR1 DUP to met unforeseen requirements arising in-year	£0.0m	£0.0m
RfR2 Global Conflict Prevention Pool	£5.0m	—
Total	£5.0m	£0.0m

END YEAR FLEXIBILITY (EYF)

  11.  The Public Expenditure Outturn White Paper published in July 2007 showed a total figure of £218.208 million for carry forward of underspending into 2007-08 under the DEL EYF scheme.

  12.  Of this total, £112.9 million was a provisional forecast underspend on Resource DEL in 2006-07 and, in particular, administration costs (£93.9 million). The underspends resulted from lower than expected IT and security costs and a prudent approach to spending, particularly towards the end of the financial year. However final administration cost outturn was £15.8 million higher than the provisional forecast after apportionment of visa and consular overheads to other current was taken into account. The provisional capital DEL underspend of £13.4 million also did not materialise in the final account owing to the reclassification of grants to NATO and the UN from resource DEL to capital. Our capital EYF stock is therefore entirely composed of underspends accumulated before 2006-07.

  13.  Our plans for EYF take up in 2007-08 are discussed at paragraph 2 above.

Table 5

ACCUMULATION OF EYF

						£m
	Administration	Programme	Total Resource	Of which near cash	Capital	Total
Total FCO EYF Entitlement in Public Expenditure Provisional Outturn July 2007 (table 6—Cm 7156)	107.958	27.367	135.325	101.482	82.883	218.208
Adjustment for final 2006-07 outturn	-15.846	20.258	4.412	3.976	-15.339	-10.927
EYF drawn down in Winter Supplementary (1)	22.000	0.000	22.000	22.000	35.000	57.000
BALANCE OF ACCUMULATED END YEAR FLEXIBILITY	70.112	47.625	117.737	83.458	32.544	150.281
(1)  Admin EYF drawn down in Winter Supplementary will be spent as programme.

PUBLIC SERVICE AGREEMENTS

  14.  The main purpose of this supplementary Estimate is take-up of £22 million Resource DEL EYF for departmental restructuring and £35 million of Capital DEL EYF as part of our ongoing programme to increase the security and safety of our Estate and the people using it. This uptake of EYF is designed therefore to improve delivery against all of the FCO's stategic priorities and PSA's. The other major item impacting on the FCO's PSA's, in particular PSA 9 on effective and efficient consular and entry clearance services, is the budget neutral increase in other current expenditure and receipts by £60 million to cover increased consular and visa business.

Keith Luck

Finance Director General

13 November 2007

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Prepared 8 February 2009