Estimates Memoranda

DR 24

Letter from the Foreign and Commonwealth Office: Spring Supplementary Supply Estimate Memorandum

Please find attached the Estimate Memorandum that gives detailed background to the FCO Spring Supplementary Estimate that will be presented to Parliament by the Treasury on 14 February.

The Spring Supplementary is the second of the two in-year Supplementary Estimates. As you will know, Main Estimates reflect agreed plans and changes to baseline expenditure across years rather than in-year adjustments.  However our Winter and Spring Supplementary Estimates allow us to make required ad-hoc budget transfers with governmental partners, e.g. the HMT share of the annual costs of International Subscriptions, along with non-baseline expenditure such as take-up of funds for Peacekeeping activities, the Consular premium which is element of the costs of passports which funds our overseas Consular network, and the transfers from DfID for conflict prevention. This allows us to bring our budget into line with our actual expenditure.

Along with the Spring Supplementary Estimate the Foreign Secretary will also present on 14 February a Written Ministerial Statement setting out the consequent changes to his departmental budget.

Foreign & Commonwealth Office Spring Supplementary Estimate 2010–11 Memorandum

Introduction

1. The Foreign and Commonwealth Office Estimate has two Requests for Resources ( RfRs ):

· RfR1: 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 liabilities in relation to staff leave ; and

· Section G: The refund of certain taxes and duties paid by certain Foreign and Commonwealth governments.

· RfR2: Conflict prevention, that covers:

· Section A: Expenditure by the Foreign and Commonwealth Office on conflict prevention, early warning, crisis management, conflict resolution/peacemaking;

· Section B: Peacekeeping and peace building activity and on associated strengthening of international and regional systems and capacity; and

· Section C: Provision of specialist, targeted assistance in countries emerging from violent conflict.

RfR1 Spring Supplementary Estimates Changes

Take up of EYF

2. We have taken up £6,000,000 DEL EYF administration costs in respect of Non-Cash Depreciation. Of this, £5,623,000 was from our Non-Cash EYF balance with the remainder from Near-Cash EYF (see table 5 below).

Claims on the DEL Reserve

3. Claims on the DEL Reserve include:

· £30,000,000 programme expenditure for Consular Premiums collected in the UK by the Home Office that are transferred to the FCO via the Reserve.

· £43,000,000 grants expenditure arising from the FCO/HMT 40/60 International Organisations Subscriptions cost sharing agreement.

Take up of Departmental Unallocated Provision

4. We have taken up of £15,000,000 administration DUP to offset adverse exchange rate movements.

Transfers of Budgetary Cover

5. Transfers of budgetary cover include:

· Transfer of £200,000 current grants to the Ministry of Justice in respect of the costs associated with victims of overseas terrorism.

· Transfer of £59,000 administration from the Department for International Development in respect of a refund for the Stabilisation Unit.

· Transfer of £200,000 programme from the Department for International Development in respect of UK-India collaboration on energy efficiency and trading.

· Transfer of £841,000 capital to the Identity and Passport Office as the FCO’s contribution towards the online passport application system

Changes in Annually Managed Expenditure (AME)

6. An increase in voted Non-Cash AME Provisions of £20,000,000 in respect of the costs associated with staff exits. This is fully offset within the AME budgets by an increase in the Non-Voted, non-cash release of provisions.

Other Changes

7. An increase of £3,000,000 current grants for the reimbursement of certain duties taxes and licence fees incurred by International Organisations and Diplomatic Missions in the UK reflecting higher VAT and other payments.

RfR2 Winter Supplementary Estimates Changes

Claims on the DEL Reserve

8. A claim on the DEL Reserve of £556,000 for take-up of the balance of the Peacekeeping Fund.

Transfers of Budgetary Cover To/From Other Government Departments

9. Transfers of budgetary cover include:

· Transfer of £54,000 grants to the Security Intelligence Agencies for expansion and capability.

· Three transfers totalling £2,508,000 from the Department for International Development in respect of conflict prevention activity. Conflict prevention activities are managed through five strategies: the SAF Afghanistan and CPP South Asia programmes have been merged; so too the SAF Iraq and CPP Middle East and North Africa programmes. A new Wider Europe programme funds activity in Russia/Commonwealth of Independent States and the Balkans (previously individual programmes). The Africa programme continues. A separate programme has been earmarked for thematic work, including support to international institutions. The Strategies continue to be managed tri-departmentally.

Other Changes

10. A transfer of £13,155,000 between Estimate lines B3 to A3 for repositioning of tri-departmental conflict funding (separate HMT settlement with FCO, MoD and DfID) to reflect a change to the Peacekeeping estimate-which has reduced since the Winter Supplementary Round following UN budget negotiations.

11. 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.

Table 1 Detailed Explanation of Changes

End year flexibility

 

 

6.000

RfR1

Section A1 administration EYF for Non-Cash Depreciation

 

6.000

Resource Total Change to DEL

Transfers between sections within the Estimate

 

13.155

RfR1

DEL Neutral transfer to Section A3 from Section B3 for peacekeeping to conflict prevention switch

 

0.000

Resource Total Change to DEL

Transfers from Other Government Departments

 

0.059

RfR1

Section A1 administration transfer from DfID for Stabilisation Unit

 

0.200

RfR1

Section A2 programme transfer from DfID for UK-India Collaboration on Energy Efficiency and Trading

 

2.508

RfR2

Section A3 grants transfers from DFID for Conflict Prevention and Peacekeeping

 

2.767

Resource Total Change to DEL

Transfers to Other Government Departments

 

-0.054

RfR2

Section A3 grants transfer to the Security and Intelligence Agencies for expansion and capability

 

-0.200

-0.841

RfR1

RfR1

Section A3 grants transfer to MoJ as contribution towards costs of overseas terrorism

Section A7 capital transfer to Identity and Passport Office for online passport application system

-0.841

Capital Total Change to DEL

 

-0.254

Resource Total Change to DEL

Transfers from Central Funds

 

30.000

43.000

0.556

RfR1

RfR1

RfR2

Section A2 DEL Reserve programme claim in respect of consular premium

Section A3 DEL Reserve grants claim in respect of international subscriptions cost sharing agreement

Section A3 DEL Reserve claim for take up of balance of peacekeeping fund

 

73.556

Resource Total Change to DEL

Transfers from non-voted Departmental Unallocated Provision

 

15.000

RfR1

Section A1 take-up administration DUP to offset adverse exchange rate movements

Other budget neutral changes

20.000

3.000

RfR1

RfR1

Section F2 increase in Non-Cash AME provisions to cover the costs involved with staff exits

Section G3 increase in grants in respect of reimbursement for certain duties taxes and licence fees

0.000

Resource Total Change to DEL

 

82.069

NET TOTAL CHANGE TO RESOURCE DEL

 

-0.841

NET TOTAL CHANGE TO CAPITAL DEL

Departmental Expenditure Limit (DEL) & Administration Budgets

12. The tables below show a comparison of the 2010–11 DEL (Table 2 and 2a) and Administration (Table 3) budgets with the 2005–06, 2006–07, 2007–08, 2008–09 and 2009–10 outturn, and the forecast for 2010–11.

13. 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

2005–06

2006–07

2007–08

2008–09

2009–10

2010–11

Actual

Actual

Actual

Actual

Actual

Forecast

Resource DEL 1,2

1,815.302

1,770.997

1,808.411

2,027.427

2,126.806

2,235.450

Capital DEL

133.340

160.786

227.792

226.803

200.732

167.854

Less Depreciation 1,3

108.725

81.555

73.220

81.684

100.980

105.050

Total

1,839.917

1,850.228

1,962.983

2,172.546

2,226.558

2,298.254

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

2 Resource DEL figures for 2010–11 are understated because they do not include all of the conflict prevention expenditure, which will be transferred at the time of the relevant Main and 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

Outturn 1

Variance

Resource

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

2007–08

1,950.523

5.862

1,956.385

1,895.961

60.424

2008–09

2,074.701

3.000

2,077.701

2085.310

-7.609

Final outturn 2009–10

2,237.987

3,000

2,240.987

2,224.375

16.612

Capital

2005–06

135.697

1.000

136.697

92.959

43.738

2006–07

157.779

1.000

158.779

160.747

-1.968

2007–08

243.567

-

243.567

227.973

15.594

2008–09

216.060

-

216.060

229.080

-13.020

Final outturn 2009–10

203.310

-

203.310

199.638

3,672

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.

Table 3 Administration Budget Comparison £m

2005–06

2006–07

2007–08

2008–09

2009–10

2010–11

Actual

Actual

Actual

Actual

Forecast

Plans

Administration budget

388.191

382.439

356.319

383.492

431.768

490.757

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

Departmental Unallocated Provision (DUP) 2010–11

15. The remaining balance of £15,000,000 provision has been allocated in the Spring Supplementary Estimate.

Table 4 2010–11 Departmental Unallocated Provision

Resource

Capital

RfR1 DUP to offset adverse exchange rate movements

£0.0m

£0.0m

Total

£0.0m

£0.0m

End Year Flexibility (EYF)

16. The Public Expenditure Outturn White Paper published in July 2010 showed a total figure of £110.017 million for carry forward of under spend into 2010–11 under the DEL EYF scheme.

17. We took up £15,000,000 EYF in the Winter Supplementary Estimate for modernisation and have taken up a further £6,000,000 DEL administration costs EYF in respect of Non-Cash depreciation in the Spring Supplementary. As our non-cash balance was only £5,623,000 we have take-up £377,000 near-cash EYF as non-cash EYF.

Table 5 Accumulation of EYF £m

Administration

Programme

Total Resource

Of which non-cash

Capital

Total

Total FCO EYF Entitlement in Public Expenditure Provisional Outturn July 2010 (table 6 – Cm 7911)

71.846

34.779

106.625

5.623

3.392

110.017

EYF drawn down in Winter Supplementary

15.000

-

15.000

-

-

15.000

EYF drawn down in Spring Supplementary

6.000

-

6.000

5.623

-

6.000

BALANCE OF ACCUMULATED END YEAR FLEXIBILITY

50.846

34.779

85.625

0.000

3.392

89.017

10 February 2011

Prepared 26th May 2011