Session 2010-12
Estimates Memoranda
UK Trade & Investment (UKTI)
Supplementary Estimate 2011-12
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 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.
The change in the resource element of Departmental Expenditure Limit (DEL) sought in this Supplementary Estimate relate primarily to:
UKTI’s Supplementary Estimate for 2011-12 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 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 £m |
Resource DEL |
-0.1 |
- |
-0.1 |
Total Resource DEL |
-0.1 |
- |
-0.1 |
Capital DEL |
-0.1 |
- |
-0.1 |
Total Capital DEL |
-0.1 |
- |
-0.1 |
TOTAL DEL |
-0.2 |
- |
-0.2 |
The Supplementary Estimate provides for a 0.2% reduction in net Voted resource:
The Net Cash Requirement
The Net Cash Requirement (NCR) has increased by £2,014,000 from £86,640,000 to £88,654,000. As the table below shows, this is mainly due to UKTI raising its level of receivables because of increasing service sales, while also decreasing it payables levels by clearing liabilities of UK suppliers.
Net Cash Requirement |
Increase/ Reduction |
£m |
|
Resource DEL: Budget Exchange reduction Budget Cover Transfer increase |
-0.5 0.4 |
Capital DEL: Budget Exchange reduction |
-0.1 |
Accruals to Cash Adjustments: Increase in Receivables Decrease in Payables |
0.7 1.5 |
Total Net Cash Requirement Increase |
2.0 |
Budgetary data
The effect of the above Vote changes on UKTI resource is as follows:
Total Departmental Expenditure Limit (TDEL) reduces by £187,000
Of which:
Resource DEL - due to net reduction of £55,000
Of which,
· Budget Exchange reduction of £468,000
· Budget cover transfer increase of £413,000
Capital DEL - due to Budget Exchange reduction of £132,000.
There is an increase in gross Programme expenditure offset by increased Programme income arising from sales of UKTI chargeable services being higher than forecast in the Main Estimate. There is no net change in Resource DEL as a result of these changes. This is shown in the following table:
|
Increase/ Reduction |
£m |
|
Increase in Programme income due to sales of UKTI’s chargeable services being higher than expected in the Main Estimate. |
-2.0 |
Increase to UKTI’s Gross Programme expenditure to off-set the increased Programme income. |
2.0 |
Total Resource DEL CHANGE |
0.0 |
Detailed explanation of changes in provision sought in the Supplementary Estimate, and implications for budgets
Description |
Amount £m |
Movements in provision related to Resource DEL |
|
· Reduction through Budget Exchange of £468k from UKTI Resource DEL in 2011-12 to be utilised in 2012-13: to be converted into Capital DEL in 2012-13 to cover Capital budget pressures arising from unavoidable delays to a single business-critical project: the replacement of UKTI’s electronic Customer Relationship Management tool. As a result the project requires £600k more than is in UKTI’s capital DEL for next year. · Increase through Budget Cover Transfer of £413k from BIS Resource DEL to UKTI Resource DEL: BIS to cover contractual commitments for the North West Development Agency in the years stated, following the closure of the Regional Development Agency network administered by BIS. · Increase in Programme income due to sales of UKTI’s chargeable services being higher than expected in the Main Estimate. · Increase to UKTI’s Gross Programme expenditure to off-set the increased Programme income. |
-0.5 0.4 -2.0 2.0 |
Movements in provision related to Capital DEL |
|
· Reduction through Budget Exchange of £132k in UKTI Capital DEL in 2011-12 to be utilised in 2012-13: to cover Capital budget pressures arising from unavoidable delays to a single business-critical project: the replacement of UKTI’s electronic Customer Relationship Management tool. As a result the project requires £600k more than is in UKTI’s capital DEL for next year. |
-0.1 |
TOTAL DEL CHANGE |
-0.2 |
Departmental Expenditure Limit
This Supplementary Estimate will result in an overall reduction in Resource DEL of £55,000 and a Capital DEL reduction of £132,000. Details of DEL in Estimates are:
Resource DEL |
Voted |
Non-Voted |
Total £m |
Main Estimate |
83.9 |
- |
83.9 |
Spring Supplementary Estimate |
83.9 |
- |
83.9 |
Capital DEL |
|||
Main Estimate |
3.3 |
- |
3.3 |
Spring Supplementary Estimate |
3.2 |
- |
3.2 |
Revised Total DEL |
87.1 |
- |
87.1 |
Financial Performance
The table below compares final outturn from 2008-09 onwards with planned DEL for the previous and current years, and plans for future years covering the 2010 Spending Review. These figures are available from the relevant UKTI Accounts:
Year |
£m |
£m |
£m |
£m |
% |
Resource |
Voted |
Non-Voted |
Total |
Outturn |
Variance |
2008-09¹ |
91.5 |
- |
91.5 |
90.9 |
-0.7% |
2009-10 |
96.4 |
- |
96.4 |
94.4 |
-2.1% |
2010-11 |
92.9 |
- |
92.9 |
85.7 |
-7.7% |
2011-12² |
83.9 |
- |
83.9 |
83.4 |
-0.6% |
86.5 |
- |
86.5 |
- |
- |
|
2013-14³ |
82.0 |
- |
82.0 |
- |
- |
2014-15³ |
78.4 |
- |
78.4 |
- |
- |
Year |
£m |
£m |
£m |
£m |
% |
Capital |
Voted |
Non-Voted |
Total |
Outturn |
Variance |
2008-09¹ |
0.05 |
- |
0.05 |
0.03 |
-41.7% |
2009-10 |
4.0 |
- |
4.0 |
3.9 |
-1.8% |
2010-11 |
2.1 |
- |
2.1 |
1.1 |
-49.2% |
2011-12² |
3.2 |
- |
3.2 |
2.7 |
-13.6% |
2012-13³ |
2.6 |
- |
2.6 |
- |
- |
2013-14³ |
3.0 |
- |
3.0 |
- |
- |
2014-15³ |
1.2 |
- |
1.2 |
- |
- |
¹These figures do not reflect retrospective IFRS adjustments
²Provisional Outturn at time of printing
³Plans covering the 2010 Spending review period
The Resource DEL outturn for 2010-11 of £85,731,000 was an underspend of £7,179,000 compared to the final provision of £92,910,000 (equivalent to 7.7 per cent of Resource DEL).
The Capital DEL Outturn for 2010-11 of £1,066,000 was an underspend of £1,032,000 compared against a final provision of £2,098,000 (equivalent to 49.1 per cent of Capital DEL).
The underspends were largely due to efficiencies delivered in response to the emergency budget and introduction of the Cabinet Office marketing restrictions.
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 Nick Baird, 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 organization, or the Chief Executive of a non-departmental public body (NDPB).
Administration Budget - A Treasury control on resources consumed directly by departments and agencies/NDPBs that forms part of the Departmental Expenditure Limit (DEL). Includes things such as staff costs, accommodation, etc, where they are not directly associated with frontline service delivery.
Ambit - The ambits are set out in Part I of the departmental Estimate. Separate ambits are required for both expenditure and income in each budgetary category included in the Estimate (DEL, AME and non-budget). The ambit describes the activities for which provision sought in the Estimate will be used.
Annually Managed Expenditure (AME) - AME is spending included in Total Managed Expenditure (TME), which does not fall within Departmental Expenditure Limits (DELs). Expenditure in AME is generally less predictable and controllable than expenditure in DEL.
Budget Exchange - a mechanism whereby departments are allowed to transfer a proportion of identified unspent Departmental Expenditure Limit (DEL) provision into the following year.
Capital grant - (See „Grant‟ below). In account, a capital grant scores as resource spending but in budgetary terms it scores as capital because an asset is created within the economy.
Capital income or expenditure - Related to the purchase or sale of assets. The value must usually be above a certain capitalisation threshold and the asset must be expected to be used for a period of at least one year. It includes the purchase of buildings, equipment and land. The threshold is set by each body: items valued below it are not counted as capital assets, even if they do have a productive life of more than one year.
Comptroller and Auditor General (C&AG) - The head of the National Audit Office, appointed by the Crown, and an Officer of the House of Commons. As Comptroller, the C&AG‟s duties are to authorise the issue by the Treasury of public funds from the Consolidated Fund and National Loans Fund to government departments and others; as Auditor General, the C&AG certifies the accounts of all government departments and some other public bodies, and carries out value-for-money examinations.
Consolidated Fund - The Government‟s current account, operated by the Treasury, through which pass most government payments and receipts.
Consolidated Fund Extra Receipt (CFER) - Income, or related cash, that passes through a department‟s accounts but may not be retained by the department and is surrendered to the Consolidated Fund.
Contingent Liability - Potential liability that is uncertain but recognises that future expenditure may arise if certain conditions are met or certain events happen.
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 multi-year limits. Some elements may be largely demand led.
There is a small DEL Reserve from which the Treasury may support unavoidable costs that cannot be absorbed within the existing limit.
Departmental Unallocated Provision (DUP) - An element of a department‟s total DEL that is not allocated to particular spending, but held back by the department to meet any future unforeseen pressures.
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.
Estimate - 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 by a government department.
Estimates Memorandum - An explanation of how provision sought in the Estimate is intended to be used and the relationship with other spending controls. Primarily provided for the departmental select committee but made freely available online
Excess Vote - The means by which excess expenditure, or otherwise unauthorised expenditure, of cash, capital or resources, is regularised through an additional vote by Parliament.
Grant - Payment made by a department, or other public body, to outside bodies to reimburse expenditure on agreed items or functions, and often paid only on statutory conditions being met. May be made for resource or for capital purposes.
Grant in Aid - Financing payment made by a department to an NDPB or other arms length body.
International Financial Reporting Standards (IFRS) - International accounting standards, adopted by government and reflected in UK GAAP.
Main Estimate - The means through which departments seek parliamentary approval for their spending plans for the year ahead. Presented to Parliament within five weeks of the Budget Statement.
Near-Cash - Expenditure that has a directly 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 (NCR) - 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 expenditure in its Estimate. In the case of a negative net cash requirement, the department must generate a surplus of at least that amount.
Non-Cash - Expenditure where there is no directly related cash transaction but which reflects resources used. Examples include depreciation and provisions.
Public Accounts Committee (PAC) - A committee of the House of Commons, which examines the accounting for, and the regularity and propriety of, government expenditure. It also examines the economy, efficiency and effectiveness of expenditure. Also commonly known as the Committee of Public Accounts.
Section - An ‘Estimate line’ within the Part II: Subhead detail table in an Estimate.
Select Committee - Both Houses of Parliament have select committees that scrutinise the work and expenditure of government. Responsibilities include oversight of particular government departments.
Spending Review - A cross-government review of departmental aims and objectives and analysis of spending programmes. Results in the allocation of multi-year budgetary limits.
Subhead - A single cell within a section (or Estimate line) within the Part II: Subhead detail table in an Estimate.
Supplementary Estimate - The means by which departments seek to amend parliamentary authority provided through Main Estimates by altering the limits on resources, capital and/or cash or varying the way in which provision is allocated. Normally presented in January each year.
Supply - The process whereby Parliament gives statutory authority for both the consumption of resources (for resource and capital purposes) and for cash to be drawn from the Consolidated Fund.
Supply and Appropriation Acts - Acts of Parliament which give formal approval to departmental Supply Estimates. There are usually two such Acts each year: the Supply and Appropriation (Main Estimates) Act is presented in July and authorises the Main Estimates, and the Supply and Appropriation (Anticipation & Adjustments) Act is presented in February/March and authorises Supplementary Estimates, Vote on Account for the forthcoming year and any Statement of Excesses relating to the prior year.
Token Estimate (or section) - 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. Since Estimates may include negative limits (where income is greater than expenditure), a token £1,000 would only be required where income and expenditure completely offset.
Virement - The use of savings on one or more sections (Estimate lines) or subheads to meet excesses on another section or subhead within the same voted limit in an Estimate.
Vote - The process by which Parliament approves funds in response to Supply Estimates.
Voted provision - That which has been authorised by Parliament in response to Supply Estimates.
Vote on Account - Presented to Parliament by the Treasury in January to provide necessary provision for voted resources, capital and cash for each departmental Estimate in the early months of the following financial year. For each department it generally seeks up to 45 per cent of the amounts voted in the current year’s Main Estimate.