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


Memorandum submitted by the Foreign & Commonwealth Office

FOREIGN AND COMMONWEALTH OFFICE SPRING SUPPLEMENTARY ESTIMATE 2007-08

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 SPRING SUPPLEMENTARY MAIN ESTIMATE CHANGES

Take up of End Year Flexibility

  2.  The take-up of £7,350,000 Resource DEL EYF is for transfer to capital to pay to MoD to provide additional helicopter hours for movement of civilian staff in Afghanistan.

  We have taken up £31,300,000 of Capital DEL EYF as part of our ongoing programme to increase the security and safety of our Estate and the people using it. The drawdown of Capital EYF is not linked to individual programmes and/or projects. Rather we have assessed the expected overall level of capital expenditure across all FCO capital budget holders, and anticipate that the total demand for funds will necessitate use of our capital EYF.

Programme DUP

  We have also taken-up our remaining £5,000,000 programme DUP to help to fund the programme transfers listed below.

Claims on the DEL Reserve

  3.  Claims on the DEL reserve include:

    —  £16,500,000 programme expenditure for Consular premiums collected in the UK by the Home Office that are transferred to the FCO via the Reserve.

    —  £18,453,000 programme expenditure and £7,400,000 capital arising from the FCO/HMT 50/50 International Organisations subscription cost sharing agreement.

    —  £1,359,000 to increase grant to the British Council as a result of the operation of the Overseas Pricing Mechanism that compensates for exchange rate movements.

    —  £151,000 for the Emergency Disaster Relief Fund for consular activity arising from the Phuket air crash.

    —  A payment to the Reserve of £5,568,000 programme and £9,424,000 administration costs and £282,000 capital as a result of the operation of the Overseas Pricing Mechanism in relation to the FCO. Unlike the British Council, this is a dis-benefit to the FCO because the exchange rate has moved in relation to a different baseline exchange rate.

Transfers of Budgetary Cover

  4.  Transfers of budgetary cover include:

    —  A transfer of £22,396,000 capital expenditure from the Home Office's Border and Immigration Agency for biometric passport equipment.

    —  £7,350,000 programme EYF expenditure to capital to be transferred on to MoD as mentioned above.

    —  £5,363,000 programme expenditure to Home Office for the Border and Immigration Agency work to cover in-country costs incurred through the consideration of both Work Permit and Highly Skilled Migrant Programme visa applications and compliance costs associated with in-country activity to ensure that visa holders are adhering to their conditions.

    —  £5,000,000 programme expenditure to the Security and Intelligence Agencies.

    —  £1,750,000 programme expenditure to Home Office for the Border and Immigration Agency to fund assisted Voluntary returns.

    —  £100,000 programme expenditure to the Security and Intelligence Agencies.

  5.  The sums transferred to the Security and Intelligence Agencies, along with transfers to them from RfR2, will be spent on sensitive conflict prevention, counter-narcotics and good governance programmes.

  6.  No FCO activities are expected to be reduced as a result of the above transfers. Transfers between government departments such as these are a routine occurrence and are therefore incorporated in the normal budgeting process.

Neutral and Other Changes

  7.  We have increased other current expenditure of £20,000,000, fully offset by income, for Consular and Visa Work. Expenditure and receipts have been adjusted upward to reflect current levels of income and this does not imply a need to increase fees.

  8.  We have also increased capital expenditure of £5,300,000 fully offset by non-operating income from asset sales.

  9.  We have transferred £15,000,000 from non-cash resource to near-cash resource expenditure in respect of release of restructuring provisions. Within non-cash resource expenditure, we have also reduced depreciation and increased the cost of capital to better reflect forecast outturn.

  10.  Transfers within RfR1 of £7,000,000 other current and £2,000,000 capital to grants for the BBC World Service in respect of Farsi TV.

  11.  A transfer from RfR2 of £8,500,000 in respect of the Afghan Delivery Plan for combating illegal drugs.

RFR2 MAIN ESTIMATES CHANGES

Take up of End Year Flexibility

  12.  We have taken-up £6,850,000 programme expenditure for Global Conflict Prevention.

Claims on the DEL Reserve

  13.  Claims on the DEL reserve include:

    —  £95,845,000 programme expenditure from the Africa Peacekeeping pool.

    —  £61,603,000 programme expenditure from the rest of the World Peacekeeping pool.

Transfers of Budgetary Cover

  14.  Transfers of budgetary cover include:

    —  £3,413,000 programme expenditure from DfID for conflict prevention in Africa.

    —  £1,500,000 programme expenditure from DfID for conflict prevention in Sri Lanka.

    —  £31,000,000 programme expenditure to MoD for Peacekeeping operations in the Balkans.

    —  £9,660,000 programme expenditure to DfID for planned Global Conflict Prevention Activity.

    —  £2,200,000 programme expenditure to the Security and Intelligence for expansion and capability.

    —  £1,500,000 programme expenditure to MoD for planned Global Conflict Prevention Activity.

    —  £50,000 programme expenditure to the Security and Intelligence Agencies for expansion and capability.

  15.  The sums transferred to the Security and Intelligence Agencies, along with transfers to them from RfR1, will be spent on sensitive conflict prevention, counter-narcotics and good governance programmes.

  16.  No FCO activities are expected to be reduced as a result of the above transfers. Transfers between government departments such as these are a routine occurrence and are therefore incorporated in the normal budgeting process.

Neutral and Other Changes

  17.  We have increased expenditure of £2,500,000, fully offset by income from MoD, for Better Basra.

  18.  We have increased expenditure of £2,500,000, fully offset by income from DfID, for Better Basra.

DETAILED LIST OF CHANGES

Table 1

DETAILED EXPLANANTION OF CHANGES £M
End Year Flexibility
7.350RfR1 Section A2 Take-up of programme End Year Flexibility for capital transfer to MoD
6.850RfR2 Section A3 Take-up of Global Conflict Prevention Pool End Year Flexibility
31.300RfR1 Section A7 Take up of capital EYF in respect of the FCO Estate
14.200Resource Total Change to DEL
31.300Capital Total Change to DEL
Transfers from non-voted Departmental Unallocated Provision
5.000RfR1 Section A3 take up Programme DUP
Transfers from programme to capital
-7.350RfR1 Section A2 Take-up of programme End Year Flexibility for capital transfer to MoD
-7.350Resource Total Change to DEL
Transfers between section within the Estimate
8.500RfR1 Section A3 increase in grant from RfR2 Section D3 for Afghan Delivery Plan
7.000RfR1 Section B2 increase in grant-in-aid to BBC World Service from Section A2 for Farsi TV
2.000RfR1 Section D3 increase in capital grant to BBC World Service from Section A7 for Farsi TV
Transfers from Other Government Departments
3.413RfR2 Section A3 programme transfer from DfID for conflict prevention
1.500RfR2 Section B3 programme transfer from DfID for Sri Lanka operations
22.396RfR1 Section A7 capital transfer from Home Office for biometric passport equipment
4.913Resource Total Change to DEL
22.396Capital Total Change to DEL
Transfers to Other Government departments
-31.000RfR2 Section D3 programme expenditure to MoD for operations in the Balkans
-9.660RfR2 Section D3 programme expenditure to DfID for planned Global Conflict Prevention Activity
-9.424RfR1 Section A1 administration transfer to HMT reserve for the Overseas Pricing Mechanism
-5.568RfR1 Section A2 programme transfer to HMT reserve for the Overseas Pricing Mechanism
-5.363RfR1 Section A2 programme transfer to Home Office for the Border and Immigration Agency
-5.000RfR1 Section A2 programme transfer to the Security and Intelligence Agencies for expansion and capability
-2.200RfR2 Section B3 programme transfer to the Security and Intelligence Agencies for expansion and capability
-1.750RfR1 Section A2 programme transfer to Home Office for the Border and Immigration Agency to fund assisted voluntary returns
-1.500RfR2 Section B3 programme transfer to MoD for planned Global Conflict Prevention Activity
-0.100RfR1 Section A2 programme transfer to the Security and Intelligence Agencies for expansion and capability
-0.050RfR2 Section A3 programme transfer to the Security and Intelligence Agencies for expansion and capability
-7.350RfR1 Section A7 transfer of capital expenditure to MoD for operations in Afghanistan
-0.282RfR1 Section A7 capital transfer to HMT reserve for the Overseas Pricing Mechanism
-71.615Resource Total Change to DEL
-7.632Capital Total Change to DEL
Transfers from Central Funds
95.845RfR2 Section C3 Resource Reserve claim for drawdown of remaining peacekeeping funds for Africa
61.603RfR2 Section D3 Resource Reserve claim for drawdown of remaining peacekeeping funds for rest of the World
18.453RfR1 Section A3 Resource Reserve claim for FCO/HMT 50/50 International Organisations cost sharing agreement
16.500RfR1 Section A2 Resource Reserve claim for consular premiums collected in the UK
1.359Increased grant to the British Council from the Overseas Pricing Mechanism
0.151RfR1 Section A2 Resource Reserve claim for Emergency Disaster Relief Fund
7.400RfR1 Section A7 Capital Reserve claim FCO/HMT 50/50 International Organisations cost sharing agreement
193.911Resource Total Change to DEL
7.400Capital Total Change to DEL
Increases in gross spending offset by Appropriations in Aid
20.000RfR1 Sections A2 and A5 for Consular and Visa work
2.500RfR2 Sections B3 and B5 for income from MoD for Better Basra
2.500RfR2 Sections B3 and B5 for income from DfID for Better Basra
5.300RfR1 Sections A7 and A8 for sale of surplus assets
134.059Net total change to Resource DEL
60.814Net total change to Capital DEL


  Departmental Expenditure Limit (DEL) & Administration Budgets

  19. 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.

  20. 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 DEL1,2
1,475,575
1,508.860
1,707.753
1,874.336
1,825.291
1,956.385
Capital DEL
101.971
86.621
116.626
131.792
160.275
243.567
Less Depreciation1,3
67.072
64.010
67.106
108.675
81.505
76.459
Total
1,510.474
1,531.471
1,757.273
1,897.453
1,904.061
2,123,493

1  Figures for all years reflect the reclassification of impairment expenditure from DEL into AME.
2  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
-1,9682

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
860.636

1  Figures for all years reflect the reclassification of impairment expenditure from DEL into AME.

DEPARTMENTAL UNALLOCATED PROVISION (DUP) 2007-08

  21. All FCO provision has been allocated in the Spring Supplementary Estimate:

Table 4

2007-08 DEPARTMENTAL UNALLOCATED PROVISION


Resource
Capital

RfR1 DUP to meet unforeseen requirements arising in-year
£0.0 million
£0.0 million
RfR2 Global Conflict Prevention Pool
£0.0 million
Total
£0.0 million
£0.0 million

END YEAR FLEXIBILITY (EYF)

  22.  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.

  23.  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.

Table 5

ACCUMULATION OF EYF £ MILLION


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
EYF drawn down in Spring Supplementary
14.20
14.2
14.2
31.3
45.50
Balance of Accumulated End Year Flexibility
70.112
33.43
103.54
69.26
1.24
104.78

(1)  Admin EYF drawn down in Winter Supplementary will be spent as programme.


PUBLIC SERVICE AGREEMENTS

  24.  The bulk of the increase in expenditure in this Supplementary Estimate is take-up monies for the conflict prevention and peacekeeping pools in RfR2 and international subscriptions in RfR1 to further our PSA 3 on conflict prevention. We have also taken-up £31.3 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 strategic priorities and PSA's. Other major changes impact on PSA 9, covering effective and efficient consular and entry clearance services. These are the budget neutral increase in other current expenditure and receipts of £20 million to cover increased consular and visa business, the transfer from the Treasury Reserve of £16.5 million of consular income and the £22.4 million capital transfer from the Home Office for Bio-metric passport equipment.

Keith Luck,

Finance Director General

15 February 2008






 
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