Estimates Memoranda

DR 23

UK Trade & Investment: Estimates Memorandum and Written Statement

HM Treasury guidance specified that departments are required to provide a ‘Written Statement’ and an ‘Estimates Memorandum’ to their Select Committee explaining the changes sought in Supplementary Estimates and how these link to the department's published targets.

I enclose UK Trade & Investment's Estimates Memorandum and Written Statement for the forthcoming Spring Supplementary at Annex A and B respectively. These reflect the changes required to our funding for 2010–11.

The following adjustments are included in our Supplementary Estimate:

• Reduced Capital DEL expenditure through Budget Cover Transfer:-

Transfer of £1,000k from UKTI Capital DEL to BIS Capital DEL: to facilitate the early move of the UKTI London based staff to 1 Victoria Street by 1 April 2011. The funding will be used by BIS to meet fit-out costs and expect to make significant savings in future years.

• Increased Resource DEL expenditure:-

£1k nominal, net increase in expenditure (Increase of income £1,048k; Increase in expenditure £1,049k). This allows income to be formally offset against expenditure.

• Increase in Working Capital:-

£1,000k increase in net cash requirement to cover the settlement of contractual liabilities.

Overall, these changes have led to a total Resource DEL change of £1k and a total Capital DEL change of -£1,000k, giving an overall total DEL reduction of £999k.

Whilst the timetable for the presentation and publication of the forthcoming Spring Supplementary is not fixed, it is likely that presentation to the House of Commons will be on Monday, 14 February 2010.

Should the Committee require any additional information, I would be happy to expand the Statement appropriately.

I am also sending a copy of this letter and enclosure to the Clerk of the Business Innovation & Skills Committee.

7 February 2011

ANNEX A

UK Trade & Investment (UKTI)

Spring Supplementary Estimate 2010-11

Select Committee Memorandum

Introduction

The purpose of this memorandum is to provide the Select Committee with an explanation of how the resources and cash sought in the Spring Supplementary 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 may also refer to future financial plans. Details of changes in resources relative to original plans set out in the last Comprehensive Spending Review are provided.

The change in the resource element of Departmental Expenditure Limit (DEL) sought in this Supplementary Estimate relate primarily to:

Description	Resource near-cash £’000s	Capital £’000s
Reduced Capital DEL expenditure through Budget Cover Transfer
Transfer of £1,000k from UKTI Capital DEL to BIS Capital DEL: to facilitate the early move of the UKTI London based staff to 1 Victoria Street by 1 April 2011. The funding will be used by BIS to meet fit-out costs and expect to make significant savings in future years.		-1,000
Increased Resource DEL expenditure
£1k nominal, net increase in expenditure (Increase of income £1,048k; Increase in expenditure £1,049k). This allows income to be formally offset against expenditure.	1
Total Resource DEL Change	1
Total Capital DEL change		-1000
TOTAL DEL CHANGE	-999

The UKTI’s Spring Supplementary Estimate for 2010–11 seeks the necessary resources and cash for its programme and capital Vote. UKTI’s administration costs are met from within the resources of the Department for Business, Innovation & Skills (BIS) and the Foreign & Commonwealth Office (FCO) and consequently any changes related to Administration costs are shown in the BIS and FCO Spring Supplementary Estimates.

An explanation of key terms used in the memorandum is provided in the glossary of key terms located at the end of this memorandum.

Summary of the main spending control figures contained in the Estimate Voted provision

Voted Provision

Resource and Capital DEL	Change Voted	Change Non-Voted	Total Increase £’000s
Resource DEL	1	-	1
Total Resource DEL	1	-	1
Capital DEL	-1,000	-	-1,000
Total Capital DEL	-1,000	-	-1,000
TOTAL DEL	-999	-	-999

The Supplementary Estimate provides for a 1.0% decrease in net Voted resource:

The Net Cash Requirement

The Net Cash Requirement (NCR) has increased by £1,000 from £95,306,000 to £95,307,000. As the table below shows, this is mainly due to Capital DEL changes and the increase in working capital necessary in 2010–11 to settle contractual liabilities.

Net Cash Requirement	Increase/ Reduction
	£’000s
Resource DEL: Token increase	1
Capital DEL: Reduced Capital DEL expenditure through Budget Cover Transfer	-1,000
Decrease in liabilities	1,000
Total Net Cash Requirement Increase	1

Budgetary data

The effect of the above Vote changes on UKTI resource is as follows:

Total Departmental Expenditure Limit (TDEL) decreases by £999,000

Of which:

Resource DEL - due to token increase of £1,000

Capital DEL - due to Budget Cover Transfer to BIS of -£1,000,000.

There is an increase in gross expenditure offset by increased appropriations-in-aid arising from income generated from UKTI chargeable services being higher than forecast in the Main Estimate. This entails a net change in Resource DEL of £1,000, as a token increase. This token transfer is required to allow Parliament to affect the changes sought by UKTI. This is shown in the following table:

Resource DEL	Increase/ Reduction
	£’000’s
Increase in Appropriations-in-Aid due to take-up of UKTI’s chargeable services being higher than expected in the Main Estimate.	-1,048
Increase to UKTI’s Gross Resource DEL to off-set the increased Appropriation-in-Aid	1,049
Total Resource DEL Increase	1

Detailed explanation of changes in provision sought in the Supplementary Estimate, and implications for budgets

Description	Amount £’000’s
Movements in provision related to Resource DEL
An increase of a token £1,000 to allow the increase in Appropriations-in-Aid (increased income of £1,048,000, increased expenditure of £1,049,000)	1
Movements in provision related to Capital DEL
Transfer of £1,000k from UKTI Capital DEL to BIS Capital DEL: to facilitate the early move of the UKTI London based staff to 1 Victoria Street by 1 April 2011. The funding will be used by BIS to meet fit-out costs and expect to make significant savings in future years.	-1,000
TOTAL DEL CHANGE	-999

Departmental Expenditure Limit

This Supplementary Estimate will result in an overall increase in Resource DEL of £1,000.

Capital DEL decreases by £1,000,000. Details of DEL in Estimates are:

Resource DEL	Voted	Non-Voted	Total £’000’s
Main Estimate	91,798	-	91,798
Spring Supplementary Estimate	91,799	-	91,799
Capital DEL
Main Estimate	3,098	-	3,098
Spring Supplementary Estimate	2,098	-	2,098
Revised Total DEL†	93,897	-	93,897

† Depreciation, which forms part of RDEL, is excluded from total DEL since CDEL include capital spending and to include depreciation of those assets would lead to double counting.

The only significant movement in DEL Budget is due to the CDEL transfer to BIS of £1,000,000.

Financial Performance

The table below compares final outturn from 2006–07 onwards with planned DEL for the previous and current years. These figures are available from the relevant UKTI Accounts:

Year	£’000s	£’000s	£’000s	£’000s	%
Resource	Voted	Non-Voted	Total	Outturn	Variance
2006–07*	95,329	-	95,329	94,088	-1.30%
2007–08*	89,329	-	89,329	87,807	-1.70%
2008–09*	91,527	-	91,527	90,927	-0.66%
2009–10	96,384	-	96,384	94,384	-2.08%
Capital
2006–07*	248	-	248	176	-29.03%
2007–08*	248	-	248	57	-77.02%
2008–09*	48	-	48	28	-41.66%
2009–10	3,988	-	3,988	3,917	-1.78%

*These figures do not reflect retrospective IFRS adjustments

The Resource DEL outturn for 2009–10 of £94,384,000 was an underspend of £2,000,000 compared to the final provision of £96,384,000 (equivalent to 2.1 per cent of Resource DEL).

The Capital DEL Outturn for 2009–10 of £3,917,000 was an underspend of £71,000 compared against a final provision of £3,988,000 (equivalent to 1.8 per cent of Capital DEL).

The underspends were largely due to the late adoption of IFRS rule changes, redefining the classification of some resource expenditure to capital assets   .

DEL End-Year Flexibility

	Resource £’000’s	Capital £’000’s
EYF at start of 2010–11	13,963	1,738
EYF drawn down in Winter Supplementary Estimates	-	-
EYF drawn down in Spring Supplementary Estimates	-	-
Current EYF balance	13,963	1,738

This Supplementary Estimate will not draw down any EYF. The stock of EYF arose due to the managed planned reductions in resource resulting in a limited underspend over a number of years.

Administration Budget

UKTI’s Vote does not include Administration provision, which is included in the Estimates for our parent departments, BIS and FCO.

Provisions

UKTI does not have any provisions.

Contingent Liabilities

UKTI does not have any contingent liabilities.

Approval of Memorandum

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 Susan Haird, the departmental Accounting Officer.

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 Resource DEL.

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.

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 (DEL)-a Treasury budgetary control. DEL spending forms part of Total Managed Expenditure (TME) and includes that expenditure which is generally within the departments control and can be managed with fixed three-year limits.

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 Exclusion Adjustment – a technical adjustment under vote accounting rules to ensure voted DEL (either Resource or Capital) is not reduced from its previously voted position.

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.

International Financial Reporting Standards (IFRS) – a set of International financial reporting standards adopted to enhance comparability and consistency across the UK public sector, the UK private sector and internationally.

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.

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.

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.

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.

ANNEX B

UK Trade & Investment (UKTI)

Spring Supplementary 2010–11

Written Statement

The statement below follows the format guidance as set out in Supply Estimates: a guidance manual, available on the HMT website.

	Change		New DEL £’000
	Voted	Non-Voted	Voted	Non-Voted	Total
Resource DEL†	1	-	91,799	-	91,799
Capital DEL	-1,000	-	2,098	-	2,098
Total DEL	-999	-	93,897	-	93,897

Subject to parliamentary approval of any necessary Supplementary Estimate, UKTI’s total DEL (Resource and Capital) will be decreased by £999,000 from £94,896,000 to £93,897,000. This reflects the net transfer of £1,000,000 in Capital DEL Voted resource from UKTI’s Vote to BIS’s Vote, and a token increase of £1,000 in Resource DEL. Within the total DEL change, the impact on resources and capital is set out in the following table:

†Depreciation, which forms part of resource DEL, is excluded from total DEL since Capital DEL includes capital spending and to include depreciation of those assets would lead to double counting.

UKTI’s Vote does not include Administration provision, which is included in the Estimates of our parent departments, BIS and FCO.

The change in the resource element of Departmental Expenditure Limit (DEL) sought in this Supplementary Estimate relate primarily to:

· £1k nominal, net increase in expenditure (Increase of income £1,048k; Increase in expenditure £1,049k). This allows income to be formally offset against expenditure

The change in the capital element of DEL sought in this Supplementary Estimate relate primarily to:

· Transfer of £1,000k from UKTI Capital DEL to BIS Capital DEL: to facilitate the early move of the UKTI London based staff to 1 Victoria Street by 1 April 2011. The funding will be used by BIS to meet fit-out costs and expect to make significant savings in future years.

UK Trade & Investment

February 2011