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DR 335:
Letter to the Clerk of the Committee from Mr Curtis Juman, Director of
estimates memorandum
HM Treasury guidance in Supply Estimates: a guidance manual specifies that departments are required to provide an 'Estimates Memorandum' to their Select Committee explaining the allocations sought in the Main Estimates and how they link to the department's published targets.
I enclose UK Trade & Investment's Estimate Memorandum for the forthcoming Main Supply Estimate. This allows the draw down of £96.4m resource and £97m net cash in line with the Comprehensive Spending Review Settlement. This includes the Machinery of Government transfer of trade promotion for defence exports from the Ministry of Defence and the additional £5m announced in the Budget on 22nd April 2009. Should the Committee require any additional information, I would be happy to expand the Memorandum appropriately.
Main Estimates are presented and published approximately five weeks after the Budget and it is likely that presentation to the House of Commons will be on Tuesday 2 June 2009.
I am also sending a copy of this letter and enclosure to the Clerk of the Business & Enterprise Committee.
8 May 2009
introduction
1 The purpose of this memorandum is to provide the Select Committee with an explanation of how the resources and cash sought in UK Trade & Investment's (UKTI) Main Estimate will be applied to achieve departmental objectives. This includes information on comparisons with the resources provided in earlier years in Estimates and departmental budgets, and also refers to future financial plans. Details of changes in resources relative to original plans set out in the last Comprehensive Spending Review are provided.
Main Estimate
2 The UKTI's Main Estimate for 2009-10 seeks the necessary resources and cash for its programme and capital Vote.
3 UKTI's administration costs are met from within the resources of Business, Enterprise & Regulatory Reform (BERR) and Foreign & Commonwealth Office (FCO). Consequently any changes related to the administration costs fall within the BERR and FCO Estimates.
4 An explanation of key terms used in this memorandum is provided in Annex A.
Summary of the * Provisional figures **Depreciation,
which forms part of Net
5 Annually Managed Expenditure: There is no change in the provision provided.
6 Net
7 Near-cash
figures in
8 Capital
Explanation of significant changes in provision compared with:
Spending Review Allocations
* Provisional figures.
9 At the start of 2008-09 UKTI's allocation reflected a net flat-cash budget settlement in the Comprehensive Spending Review (CSR) 2007 of £89 million for each of the three years.
10 This funding is for the delivery of UKTI's agreed targets; its marketing commitments related to the Olympics over the CSR period; and a contribution to the Regional Development Agencies (RDA) single pot of £17/16/16m in relation to inward investment activities.
11 In 2008-09 the responsibility for defence exports promotion moved from the Ministry of Defence to UKTI to provide greater integration with the Government's general support activities. The related net budget decreases over the CSR period, reflecting agreed efficiencies.
12 The provision increases from 2008-09 as a result of additional resource (£5m 2009-10, £5m 2010-11) provided in the 2009 Budget to help UK businesses better showcase their strengths to overseas customers and markets which leads to an increase in UKTI's overall net resource requirement as detailed above.
Previous year comparison (with 2008-09)
13 As set out above, the provision increases from 2008-09 due to the announced additional resource less agreed efficiencies.
Net Cash Requirement
* Provisional figures.
14 The main change in the net cash requirement relates to the draw down of cash reflecting the additional £5m resource provided in the 2009 Budget announcement.
Departmental Strategic Objectives
15 UKTI is a joint department of the Foreign & Commonwealth Office (FCO) and the Department for Business, Enterprise & Regulatory Reform (BERR). Consequently UKTI's funding and human resources reflect this framework. It shares its Departmental Strategic Objective (DSO) targets with its parent departments, delivering through staff employed by either the FCO or BERR.
16 These shared objectives for FCO and BERR respectively are to Support the British Economy and promote the creation and growth of business and a strong enterprise economy across all regions. They are underpinned by UKTI's Strategic Objective, and related targets:
By 2011, deliver measurable improvement in the business performance of UK Trade & Investment's international trade customers, with an emphasis on innovative and R&D active firms; increase the contribution of foreign direct investment to knowledge intensive economic activity in the UK, including R&D; and deliver a measurable improvement in the reputation of the UK in leading overseas markets as the international business partner of choice.
Departmental Expenditure Limit
17 There has been an upward movement in the
DEL End-Year Flexibility
18 At the start of 2009-10 UKTI will have an accumulated End Year Flexibility (EYF) entitlement of £11.158m resource and £1.647m capital, subject to any further adjustments that emerge during the finalisation of the 2008-09 Resource Accounts.
19 The stock of EYF arose as a result of planned reductions in resource over a number of years. There are no plans to draw down any EYF during the financial year.
Provisions
20 UKTI does not have any provisions.
Contingent Liabilities
21 UKTI does not have any contingent liabilities.
Approval of Memorandum
22 This memorandum has been prepared with reference to guidance in the Supply Estimates: a guidance manual provided by HM Treasury. The information in this memorandum has been approved by Sir Andrew Cahn, KCMG, the Accounting Officer for UKTI. Annex A
Glossary of Key Terms
Accounting Officer - a person appointed by the Treasury or designated by a department to be accountable for the operations of an organisation and the preparation of its accounts. The appointee is, by convention, usually the head of a department or other organisation or the Chief Executive of a non-departmental public body (NDPB).
Administration
Budget - a Treasury control on the resources consumed directly by departments
and agencies in providing those services which are not directly associated with
frontline service delivery. Includes such things as: civil service pay;
resource expenditure on accommodation, utilities and services. The Administration
Budget is part of
Annually Managed Expenditure (AME) - a Treasury budgetary control. AME spending forms part of Total Managed Expenditure (TME) and includes that expenditure which is generally less predictable and controllable than expenditure in DEL.
Ambit - the ambit is set out in Part I of the departmental Estimate. It describes the activities for which resources sought in the RfR will be used.
Appropriations in Aid - income received by a department which it is authorised to retain (rather than surrender to the Consolidated Fund) to finance related expenditure. Such income is Voted by Parliament in Estimates and accounted for in departmental resource accounts.
Capital expenditure - spending on the purchase of assets, above a certain capitalisation threshold, which are expected to be used for a period of at least one year. It includes the purchase of buildings, equipment and land. The capitalisation threshold is set by each department: items of a value below it are not counted as capital assets, even if they do have a productive life of more than one year.
Comprehensive Spending Review (CSR) - a cross-government review of departmental aims and objectives and analysis of all spending programmes. Results in the allocation of three year Departmental Expenditure Limits (DELs).
Consolidated Fund - the Government's current account, operated by the Treasury, through which pass most government payments and receipts.
Consolidated Fund Extra Receipts (CFERs) -Income, or related cash, that may not be appropriated in aid of an Estimate and is surrendered to the Consolidated Fund.
Contingencies Fund - A cash-based Fund enabling the Treasury to make repayable cash advances to departments for new or existing urgent services that cannot await the voting of funds under the normal Supply procedure, in anticipation of provision for those services by Parliament.
Contingent Liabilities - potential liabilities that are uncertain but recognise that future expenditure may arise if certain conditions are met or certain events happen.
Cost of capital charge - reflecting the cost to the government of financing investment, (i.e., the rate at which it borrows). This is charged to departments to improve transparency under resource accounting and encourage efficient use of assets. It is included in the calculation when setting fees and charges and is calculated as a percentage of the net asset value.
Current expenditure (or resource consumption) - spending reflecting the consumption of goods and services in that year (e.g., pay, grants, depreciation of assets).
Departmental
Expenditure Limit (
Depreciation - a measure of the wearing out, consumption or other reduction in the useful life of a fixed asset whether arising from use, passage of time or obsolescence through technological or market changes.
Devolved
Administrations - the administrations established in
End-Year Flexibility (EYF) - a mechanism whereby departments are allowed to carry forward unspent Departmental Expenditure Limit (DEL) provision into later years.
Estimates - a statement of how much money the government needs in the coming financial year, and for what purpose(s), by which Parliamentary authority is sought for the planned level of expenditure and receipts in a department.
Estimates Memorandum - an explanation to the relevant departmental select committee setting out the links to other spending controls and the contents of a departmental Estimate.
Grant - payments made by departments to outside bodies to reimburse expenditure on agreed items or functions, and often paid only on statutory conditions.
Grant in aid - regular payments made by departments to outside bodies (e.g., non-departmental public bodies) to finance their operating expenditure.
Main Estimates - the means through which departments seek parliamentary approval for their spending plans for the year ahead. Presented within five weeks of the Budget Statement.
Near-cash - resource expenditure that has a related cash implication, even though the timing of the cash payment may be slightly different. For example, expenditure on gas or electricity supply is incurred as the fuel is used ,though the cash payment might be made in arrears on a quarterly basis.
Net cash requirement - the limit Voted by Parliament reflecting the maximum amount of cash that can be released from the Consolidated Fund to a department in support of its resource Estimate to carry out the functions specified in the Estimate's ambits.
Non-cash - costs where there is no cash transaction but which are included in a body's accounts (or taken into account in charging for a service) to establish the true cost of all the resources used.
Regional Development Agencies - They are located in the 9 English regions, and work towards bringing together views of the people who live and work in each region, and combining these with a unique set of business and economic insights to make the most of the opportunities globalisation brings.
Request for Resources (RfR) - the functional level into which departmental Estimates may be split. RfRs contain a number of functions being carried out by the department in pursuit of one or more of that department's objectives.
Resource Accounting - the accruals basis on which annual departmental accounts are prepared.
Resource Budgeting - the means by which the Government plans and controls public expenditure.
Select committees - are appointed by the House to consider subjects, which fall within their orders of reference. Most do not have executive powers but make reports to the House containing their opinions based on evidence they have taken. They are different to standing committees, which proceed by formal debate.
Spending Review - sets out the key improvements in public services that the public can expect over a given period. It includes a thorough review of departmental aims and objectives to find the best way of delivering the Government's objectives, and results in the allocation of three-year Departmental Expenditure Limits (DELs).
Subhead - a single cell within a section within the Part II: Subhead detail table in an Estimate.
Supplementary Estimates - seek parliamentary authority for additional resources and/or cash, or vary the way in which resources are allocated. Normally presented in the summer (June), winter (November) and spring (February). Supply the process whereby Parliament gives statutory authority for both the consumption of resources and for cash to be drawn from the Consolidated Fund.
Token Estimates (or sections) - where a department's expenditure within the Estimate (or the section) is wholly offset by income, so that a token amount of £1,000 is Voted.
Voted provision - that which has been authorised by Parliament in response to Supply Estimates. |