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