Memorandum submitted by the Foreign and
Commonwealth Office
MAIN ESTIMATE 2008-09
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, FCO Services, 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.
— Section E: Provision of specialist,
targeted assistance in countries emerging from violent conflict.
RFR1 MAIN
ESTIMATES CHANGES
Transfer of front-line expenditure from Administration
Budgets into Programme (other current) expenditure.
2. The Main Estimate reflects the Comprehensive
Spending Review decision to reclassify £486,245,000 on frontline
activity from administration budgets into programme (other current)
expenditure (from section A1 to section A2). However, this reclassification
applies across all years of the Public Expenditure cycle (2002-03
to 2010-11).
MACHINERY OF
GOVERNMENT TRANSFER
OF THE
DEFENCE EXPORTS
RESPONSIBILITY FROM
MOD
3. As the Prime Minister announced in July
2007, responsibility for Defence Exports transferred from the
MoD to UK Trade and Investment on 1 April 2008. UKTI has its own
Estimate but also receives funding through the FCO and the Department
for Business, Enterprise and Regulatory Reform. MoD therefore
transferred £2,093,000 administration costs (Section A1)
and £60,000 capital (Section A7) in 2008-09. However, this
Machinery of Government change applies across all years of the
Public Expenditure cycle (2002-03 to 2010-11).
FCO SERVICES
4. FCO Services became a Trading Fund from
1 April 2008 but it is funded by charges to its customers and
so it is not currently expected to be in receipt of any grant-in-aid.
RFR2 MAIN
ESTIMATES CHANGES
5. Activity and expenditure under the Peacekeeping,
Conflict Prevention Pool and Sustainability Aid Fund are undertaken
jointly by the FCO, MOD and the Department for International Development
(DFID). The FCO manages the Peacekeeping programme but management
of the Global Conflict Prevention programme has transferred to
DfID, from 1 April 2008, except for those elements that have been
incorporated into the new Stabilisation Aid Fund (SAF). The SAF,
which was announced by the Chancellor in the Pre-Budget Report
2007, has been placed within the MoD baseline. Expenditure is
added to by other pool partners through transfers between Departments
in Main and Supplementary Estimates. The effect of the transfers
between pool partners to the 2008-09 FCO Main Estimates is a net
increase of £235,606,000. This is made up of an increase
of £200,000,000 for peacekeeping (Sections C and D), a transfer
to MoD for global Peacekeeping of £16,875,000 (Section D)
and transfers from DfID of £24,481,000 Global programme expenditure
(Sections A and B) and MoD of £28,000,000 for the SAF (Section
E).
6. Since there is uncertainty over these
costs due to changes in demand for peace support operations, the
Treasury has agreed that an initial amount of £200,000,000
should be applied for in the Main Estimate. The Treasury expects
that further provision will be sought in the Supplementary Estimates,
by which time more accurate information will be available. Last
year (2007-08) approval was given for a total amount of £372,462,000
to be sought. The Chief Secretary to the Treasury has not yet
agreed the total amount for which parliamentary approval should
be sought for peacekeeping expenditure in 2008-09.
RECONCILIATION OF
2007-08 MAIN ESTIMATES
TO SR2004 OUTCOME
7. The Comprehensive Spending Review 2007
settlement showed the FCO Resource Budget for 2008-09 as £1,592,000,000
and the capital budget as £206,000,000. Since October 2007
there have been a small number of changes to the FCO's Departmental
Expenditure Limits (DELs) which bring the current Resource DEL
figure for 2008-09 to £1,829,699,000 and the Capital DEL
to £206,060,000. The tables below show the main changes and
reconcile the DELs with the Main Estimates figures.
Table 1
|
| Resource | 2008-09
|
|
| Resource DEL Baseline from CSR 2007 (£m)
| 1,592.000 |
| Changes to Resource DEL (Chronological Order)
| |
| Changes effected in Main Estimates 2008-09
| |
| Reserve claim for Peacekeeping | 200.000
|
| Peacekeeping transfer to MoD | -16.875
|
| Transfer from MoD for Sustainability Aid Fund (SAF)
| 28.000 |
| Transfer from DFID for Conflict Prevention |
24.481 |
| Machinery of Government transfer from MoD for Defence Export Sales
| 2.093 |
| Resource DEL at 1 April 2008 | 1,829.699
|
| Difference Between Resource DEL and Main Estimate
| |
| Remove non-Voted Expenditure in the OCS (Common Foreign Security Policy)
| -3.000 |
| Include BBCWS Capital Grant from Capital DEL (Resource in Estimates)
| 31.000 |
| Include British Council Capital Grant from Capital DEL (Resource in Estimates)
| 8.000 |
| Include International Subscriptions Capital Grant from Capital DEL (Resource in Estimates)
| 8.000 |
| Include Voted expenditure outside budgets (Reimbursement of certain duties, taxes and licence fees)
| 18.000 |
| Remove unallocated resource provision | -17.000
|
| Include Voted AME (impairments) | 50.000
|
| 2008-09 Main Estimate Resource Total
| 1,924.699 |
|
Table 2
|
| Capital | 2008-09
|
|
| Capital DEL Baseline from CSR 2007 (£m)
| 206.000 |
| Changes to Capital DEL | |
| Machinery of Government transfer from MoD for Defence Export Sales
| 0.060 |
| Capital DEL at 1 April 2008 | 206.060
|
| Difference Between Capital DEL and Main Estimate
| |
| Remove BBCWS Capital Grant from Capital DEL (Resource in Estimates)
| -31.000 |
| Remove British Council Capital Grant from Capital DEL (Resource in Estimates)
| -8.000 |
| Remove International Subscriptions Capital Grant from Capital DEL (Resource in Estimates)
| -8.000 |
| 2008-09 Main Estimate Capital Net Total
| 159.060 |
|
DEPARTMENTAL EXPENDITURE
LIMIT (DEL) & ADMINISTRATION
BUDGETS
8. The tables below show a comparison of the 2008-09
DEL (Table 3 and 3a) and Administration (Table 4) budgets with
the 2002-03, 2003-04, 2004-05, 2005-06 and 2006-07 outturn, the
forecast for 2007-08 and plans for 2008-09, 2009-10 and 2010-11.
9. Table 3a 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 3 that are on a consistent basis year
on year, including reclassification by Treasury of expenditure
across all years of the Public Expenditure cycle.
Table 3 DEL Comparison
|
| | 2002-03
| 2003-04 | 2004-05
| 2005-06 | 2006-07
| 2007-08 | 2008-09
| 2009-10 | 2010-11
|
| Actual |
Actual | Actual
| Actual | Actual
| Forecast | Budget
| Plans | Plans
|
|
| Resource DEL1,2 | 1,477.982
| 1,511.272 | 1,710.233
| 1,876.593 | 1,827.287
| 1,939.100 | 1,829.699
| 1,610.059 | 1,618.028
|
| Capital DEL | 102.021
| 86.671 | 116.676
| 131.842 | 160.314
| 246.000 | 206.060
| 216.060 | 205.060
|
| Less Depreciation1,3 | 67.122
| 64.060 | 67.156
| 108.725 | 81.555
| 75.000 | 105.050
| 103.050 | 100.050
|
| Total | 1,512.881
| 1,533.883 | 1,759.753
| 1,899.710 | 1,906.046
| 2,110.100 | 1,930.709
| 1,723.069 | 1,723.038
|
|
1 Figures for all years reflect the reclassification of impairment expenditure from DEL into AME.
2 Resource DEL figures for 2008-09 are understated because they do not include all of the conflict prevention expenditure, which will be transferred at the time of the 2008-09 Supplementary Estimates. In addition 2005-06 included expenditure on a number of one off items (Tsunami expenditure, Efficiency Challenge Fund and G8 and 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 3a
| 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 |
| Forecast outturn 2007-08
| 1,950.523 | 5.862
| 1,956.385 | 1,903.200
| 53.185 |
| 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 |
| Forecast outturn 2007-08
| 243.567 | -
| 243.567 | 230.200
| 13.367 |
|
| 1 Outturn in is based on the definition of DEL in the relevant year and so is not consistent with the outturn in Table 3 that includes subsequent classification changes effective across all years.
|
Table 4 Administration Budget Comparison £m
|
| 2002-03 |
2003-04 | 2004-05
| 2005-06 | 2006-07
| 2007-08 | 2008-09
| 2009-10 | 2010-11
|
| Actual |
Actual | Actual
| Actual | Actual
| Forecast | Budget
| Plans | Plans
|
|
| Administration budget | 353.296
| 375.961 | 405.495
| 399.931 | 393.201
| 437.526 | 430.569
| 420.558 | 411.527
|
|
| 1 Figures for all years reflect the reclassification of impairment expenditure from DEL into AME.
|
DEPARTMENTAL UNALLOCATED
PROVISION (DUP) 2008-09
10. At the time of the Main Estimate, the FCO has £17,000,000
of unallocated resource.
Table 5
|
| 2008-09 Departmental Unallocated Provision
| Resource | Capital
|
|
| RfR1 DUP to met unforeseen requirements arising in-year
| £17.0m | £0.0m
|
| Total | £17.0m
| £0.0m |
|
11. The DUP will be used to meet unforeseen pressures
such as unfavourable currency exchange rate changes since CSR
2007.
END YEAR
FLEXIBILITY (EYF)
12. 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.
13. 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.
14. We intend to spend resource EYF carried forward into
2008-09 on restructuring and any capital EYF on our ongoing programme
to increase the security and safety of our Estate and the people
using it.
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
|
| EYF drawn down in Spring Supplementary |
- | 14.20
| 14.2 | 14.2
| 31.3 | 45.50
|
| BALANCE OF ACCUMULATED END YEAR FLEXIBILITY GOING INTO 2008-09
| | | |
| | |
| (1) Admin EYF drawn down in Winter Supplementary was intended to be spent as programme.
| 70.112 | 33.43
| 103.54 | 69.26
| 1.24 | 104.78
|
|
PUBLIC SERVICE
AGREEMENTS
15. Full details of the FCO's Public Service Agreements
for 2008-09 will be published in the 2008 Departmental Report
(Cm 7398).
10 April 2008
|
