Department for
Transport: Main Estimate 2010-11—Estimate Memorandum
The Department's Main Estimate 2010-11 was published
on 21 June 2010.
INTRODUCTION
The Department for Transport Main Estimate for 2010-11
seeks the necessary resources and cash to support the functions
of the Department for Transport, including its Executive Agencies,1
and to support the construction of venues and infrastructure related
to the 2012 Olympics. These are continuing functions from previous
years.
The purpose of this Memorandum is to provide the
Select Committee with an explanation of the resources and cash
sought in the Main Estimate. This includes information on comparisons
with the resources provided in earlier years in Estimates and
departmental budgets, and to future financial plans. Details of
changes in resources relative to original plans set out in the
2007 Comprehensive Spending Review are also provided.
An explanation of key terms used in the memorandum
is provided at the Annex.
2007 COMPREHENSIVE
SPENDING REVIEW
The Comprehensive Spending Review, announced by the
then Chancellor in October 2007 (Cm7227), set new annual Departmental
Expenditure Limit figures for the years 2008-09 to 2010-11. The
provision for 2010-11 was as follows:
DEPARTMENT FOR TRANSPORT CSR SETTLEMENT FOR
2010-11
| £million |
2010-11 |
| Resource DEL 2 | 6,673
|
| Of which near-cash 2 |
6,058 |
| Of which administration | 269
|
| Capital DEL | 8,112 |
| Total DEL 3 | 14,465
|
Notes:
1 Highways Agency, Driver and Vehicle Licensing
Agency, Maritime and Coastguard Agency, Driving Standards Agency,
Vehicle and Operator Services Agency, Vehicle Certification Agency,
Government Car and Despatch Agency.
2 The CSR07 settlement made provision for DfT to
manage the public expenditure pressures caused by the Metronet
companies entering PPP administration. At the time of the CSR
the related terms for the transfer of £1.7 billion to TfL
for payment of the "Put Option" to Metronet's lenders
and the £630 million offered by DfT to TFL over four years
(reflecting Metronet's unused borrowing headroom at the time of
its collapse) remained unresolved.
Agreement was subsequently reached between HM Treasury and DfT
that the funds would be transferred to TfL under a grant-based
arrangement as opposed to a loan-based arrangement. This required
the level of future TfL Transport Grants to be reduced to ensure
that TfL did not receive any additional benefit from the financing
cost savings through grant funding, as opposed to commercial debt
servicing. This resulted in a £81/96/103 million near cash
reduction to the GLA transport grant (resource) in 2008-09 to
2010-11. This reduction has not been included in the
above table but is reflected in the Main Estimate.
3 Full resource budgeting basis, net of depreciation.
Changes to the CSR settlement are as follows (£million)
Three significant changes have affected totals arising
from the CSR07 settlement:
- (a) Budgetary savings announced on 24 May
2010 reduced DfT's budget by £683 million with a further
£6.2 million on DfT's element of the Olympics;
- (b) 2009-10 was the first year in which resource
accounts and budgets were prepared using International Financial
Reporting Standards (IFRS). For 2010-11 there is a £+387m
Resource DEL increase and a £+214m capital DEL increase associated
with the implementation of these standards; and
- (c) the Alignment (or "Clear Line of
Sight") Project which seeks to simplify government's financial
reporting to Parliament by better aligning the recording of government
spending in departmental budgets, Estimates and resource accounts.
Full details of the alignment reforms were set out in Cm 7567
published in March 2009. There are several important implications
for Budgets and Estimates:
- DEL is divided between Resource DEL and Capital
DEL (ie there is no longer a distinction within Resource DEL between
Near Cash and Non Cash);
- Depreciation and DEL impairments remain within
Resource DEL;
- Cost of capital charges and credits have been
removed entirely from budgets;
- The take-up and utilisation of provisions moves
from non-cash DEL into resource AME;
There are also minor changes and clarifications associated
with the Alignment Project as follows:
- Notional Audit fees remain in Resource DEL;
- AME impairments remain in Resource AME;
- Revaluations between historic cost score in Resource
AME;
- Accrued employee benefits move from Resource
AME to Resource DEL;
- In most cases the write-off of bad debts has
moved from non-cash DEL into resource AME;
- No change in treatment of pensions although it
should be noted that pension costs which were previously non-cash
DEL remain in the Resource DEL budget;
- Financial guarantees are subject to a new control
regime and score as AME; and
- The treatment of stocks written-off has been
amended and from 2010-11 onwards write-off remains in Resource
DEL.
(£million)
| Change | Resource
DEL
| Of which administration
| Capital
DEL | AME
|
| CSR07 | 6,673 |
269 | 8,112
| 4,493 |
| | |
| | |
| Reduction in GLA grant 1 | -103
| 0 | 0 | 0
|
| | |
| | |
| Increases in funding to meet the disbursement costs associated with the restructuring of London & Continental Railways Ltd
| 0 | 0 | 0
| +452 |
| | |
| | |
| Savings announced in Budget 2009 as part of the Government's recoverable value for money savings in 2010-11
| -200 | 0 | 0
| 0 |
| | |
| | |
| Fiscal stimulus: the 2008 Pre-Budget Report announced that £700 million of transport spending would be brought forward from 2010-11 into 2009-10
| 0 | 0 | -700
| 0 |
| | |
| | |
| Reduction in PBR09 : £-50 million for Strategic Investment Fund ( PBR Report p59); and £-30 million for Warm Front (PBR Report p117)
| 0 | 0 | -80
| 0 |
| | |
| | |
| Budget 2010 uplift towards funding repairs for local roads damaged by recent cold weather; and investment to enable further progress on the Managed Motorways programme and other major road projects
| +84 | 0 | +170
| 0 |
| | |
| | |
| Announcement of budgetary savings on 24 May 2010 2
| -290 | -10 | -393
| 0 |
| | |
| | |
| DfT element of Olympics share of budgetary savings
| 0 | 0 | -6
| 0 |
| | |
| | |
| Transfer from Capital to meet Resource pressure for support to passenger rail services
| +163 | 0 | -163
| 0 |
| | |
| | |
| Reclassification of shared services costs from programme to administration to reflect NAO advice
| 0 | +8 | 0
| 0 |
| | |
| | |
| Other Government Department (OGD) transfers identified in 2009-10 Main Estimate Memorandum
| +1 | 0 | 0
| 0 |
| | |
| | |
| OGD reduction for Royal Travel transfer to MOD
| -1 | -1 | 0
| 0 |
| | |
| | |
| OGD transfer to MoJ for pleural plaques |
-1 | 0 | 0
| 0 |
| | |
| | |
| OGD transfer from CLG for capital grants |
0 | 0 | +25
| 0 |
| | |
| | |
| Alignment Project changes - Resource | +238
| 0 | 0 | 0
|
| | |
| | |
| Alignment Project changes - Non cash | -615
| 0 | 0 | 0
|
| | |
| | |
| Alignment project changes - AME | 0
| 0 | 0 | -3,221
|
| | |
| | |
| IFRS—depreciation | +601
| 0 | 0 | 0
|
| | |
| | |
| IFRS—road renewals | -214
| 0 | +214 | 0
|
| | |
| | |
| IFRS—other | 0 | 0
| 0 | +1 |
| | |
| | |
| Accounting change—PFI interest | +52
| 0 | 0 | -52
|
| | |
| | |
| TOTAL | 6,388 |
266 | 7,179
| 1,673 |
Notes:
1 The initial reduction in GLA grant reflects
Note 2 of CSR settlement table above (a further £-108 million
was subsequently reduced in announcement of budgetary savings
on 24 May 2010);
2 Savings of £683 million announced on
24 May include £309 million for local authorities (£33
million resource and £276 million capital).
PROVISION SOUGHT
IN MAIN
ESTIMATE 2010-11
The following key Estimate and Budget control totals
are sought:
Voted provision
The Main Estimate provides for a:
- Net Resource Requirement (NRR) of £12,881,334,000
- Net Cash Requirement (NCR) of £13,514,107,000
Budgetary data
The key budgetary figures are:
| Resource Departmental Expenditure Limit
| £6,388,078,000 |
| | Of which:
| |
| Administration budget
| £266,102,000 |
|
| Programme | £6,121,976,000
| |
| Capital Departmental Expenditure Limit
| £7,178,550,000 |
| Annually Managed Expenditure |
£1,673,430,000 |
EXPLANATIONS
OF SIGNIFICANT
CHANGES IN
PROVISION COMPARED
WITH THE
PREVIOUS YEAR
(2009-10)
The Department's 2010-11 Estimate implements the
third year of the 2007 CSR settlement described above. To illustrate
the impact of in year budget changes on the 2009-10 Main Estimates
position an explanation is provided below of budget changes with
particular reference to one-off changes such as take up of end
year flexibility.
Net Resource Requirement
| 2010-11 | Main Estimate
| £12,881,334,000 | |
| 2009-10 | Main Estimate
| £15,630,092,000 |
|
| 2009-10 | Spring Supplementary
| £16,738,980,000 |
|
Provision is currently £3,858 million (23%)
lower than the 2009-10 Spring Supplementary Estimate figure. This
largely reflects: (a) the reduction in AME arising from the introduction
of the Alignment Project of which £3,182 million relates
to cost of capital on the Highways Agency; and (b) £-616
million budgetary savings announced on 24 May 2010. (This excludes
the capital element of the £689 million reduction but includes
capital grants.)
During 2009-10 the Net Resource Requirement was increased
by £+1,109m of which significant elements were:
- £+711 million (net) associated with implementation
of International Financial Reporting Standards (IFRS);
- £+587 million for Non Budget funding of
Non Departmental Public Bodies and Public Corporations (£+612
million); partially offset by reduction in grant-in-aid to the
Driver and Vehicle Licensing Agency trading fund (£-25 million);
- £+174 million (net) from Non Voted including
£+246m use of departmental unallocated provision;
- £+20 million use of End Year Flexibility
for London & Continental Railways Ltd; partially offset by
- £-377 million (net) AME including £-433
million non cash reduction for Highways Agency; partially offset
by £+56 milluion increases elsewhere; and
- £-6 million transfer from capital to capital
grant.
At the start of 2010-11 the Department has £68
million of non voted Departmental Unallocated Provision of which
an amount may be used for voted provision during the year.
Net Cash Requirement
| 2010-11 | Main Estimate
| £13,514,107,000 | |
| 2009-10 | Main Estimate
| £13,258,651,000 |
|
| 2009-10 | Spring Supplementary
| £14,181,261,000 |
|
Provision is currently £-667 million (-5%) lower
than the 2009-10 Spring Supplementary Estimate figure and includes
a repayment of £1 Billion associated with London & Continental
Railways Ltd restructuring: this is a cash transaction and does
not impact on the Department's Resource DEL. The reduction reflects
the level of budgetary savings announced on 24 May 2010.
During 2009-10 the Net Cash Requirement was increased
by £+923m to meet estimated requirements.
Resource DEL
| 2010-11 | Main Estimate
| £6,388,078,000 | |
| 2009-10 | Main Estimate
| £6,398,054,000 |
|
| 2009-10 | Spring Supplementary
| £7,158,900,000 |
|
The £771 million reduction (-11%) from the 2009-10
Spring Supplementary Estimate figure largely reflects the £-377
million net effect of Clear Line of Sight adjustments; £-200
million savings announced in Budget 2009; £-290 million budgetary
savings announced on 24 May 2010; and £+163 million transferred
from Capital DEL to meet Resource pressures.
During 2009-10, Resource DEL was increased by £+761m
of which: £+711m was associated with the implementation of
IFRS (including £+1,080m Non Cash); and £50m was take
up of End Year Flexibility for London & Continental Railways
Ltd.
Administration Budget
| 2010-11 | Main Estimate
| £266,102,000 | |
| 2009-10 | Main Estimate
| £275,172,000 |
|
| 2009-10 | Spring Supplementary
| £279,692,000 |
|
The £-13m net reduction (-5%) from the 2009-10
Spring Supplementary Estimate figure reflects the £-9 million
year on year real terms efficiency savings agreed in the CSR07
settlement; £-10 million from budgetary savings announced
on 24 May 2010; partly offset by a £7 million reclassification
in 2010-11 for shared services from programme to administration.
During 2009-10 the administration budget was increased
by £+4.5 million to reflect a near cash reclassification
from programme of Shared Services expenditure (£+4 million)
and a near cash transfer from Cabinet Office for Parliamentary
Counsel Office's work (£+0.5 million).
Capital DEL
| 2010-11 | Main Estimate
| £7,178,550,000 | |
| 2009-10 | Main Estimate
| £8,313,602,000 |
|
| 2009-10 | Spring Supplementary
| £8,263,347,000 |
|
Provision is currently £-1,085 million (-13%)
less than the 2009-10 Spring Supplementary Estimate figure and
largely reflects the impact of: £-700 million fiscal stimulus
funding brought forward into 2009-10; £-163 million transferred
to Resource DEL to fund support for passenger rail services; £-80
million reduction at PBR09; £-399 million budgetary savings
announced on 24 May 2010; partially offset by £-350 million
transferred to the Communities & Local Government (CLG) for
Building Britain's Future initiative in 2009-10; and £+25
million transferred from CLG in 2010-11.
During 2009-10 the Capital DEL was decreased by £-50
million to reflect £-350 million transferred to CLG; partially
offset by £+280 million to reflect the implementation of
IFRS; and £+20 million take up of End Year Flexibility for
London & Continental Railways Ltd.
AME (all resource)
| 2010-11 | Main Estimate
| £1,673,430,000 | |
| 2009-10 | Main Estimate
| £4,264,652,000 |
|
| 2009-10 | Spring Supplementary
| £4,092,150,000 |
|
Provision is currently £2,419 million (59%)
less than the 2009-10 Spring Supplementary Estimate figure which
largely reflects the reduction in AME arising from the introduction
of the Alignment Project
During 2009-10 AME was decreased by £-173 million
as follows:
- £-433 million non cash to reflect Highways
Agency forecast for write-downs and cost of capital charges; partially
offset by
- £+204 million (non voted) for interest payments
by London & Continental Railways Ltd and Cross Channel Rail
Link Finance Companies. This reflects the non voted consumption
of £204 million grant in aid to these bodies shown in line
AC of the 2009-10 Winter Supplementary Estimate. Although changes
to non voted AME budgets were not included in the 2009-10 Estimate
Memoranda, these will be shown in future;
- £+52 million non cash costs associated with
London & Continental Railways Ltd and Cross Channel Rail Link
Finance Companies; and
- £+4 million for railways and other expenditure.
DEPARTMENTAL
EXPENDITURE LIMIT
The table below compares outturn from 2007-08 with
planned DEL for the current year:
| £'000s |
Outturn | Outturn
| Outturn 1 | Estimate
|
| 2007-08 | 2008-09
| 2009-10 | 2010-11
|
| Resource DEL | 6,793,930
| 6,495,376 | 6,563,963 | 6,388,078
|
| o/w Near Cash | 6,555,016
| 5,852,363 | 5,689,595
| n/a |
| Non Cash | 238,914
| 643,013 | 874,368
| n/a |
| Capital DEL | 7,052,712
| 7,187,594 | 8,263,324 | 7,178,550
|
| Less depreciation 2 | -392,368
| -859,977 | -877,949
| -836,589 |
| TOTAL DEL | 13,454,274
| 12,822,993 | 13,949,338 |
12,730,039 |
1 End of March 2010 provisional outturn
2 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. Planned depreciation for 2010-11 reflects
latest assessment of requirement and differs by £-88m from
assumptions made in the Comprehensive Spending Review.
Near Cash
The £163 million decrease in near cash expenditure
between 2008-09 and 2009-10 largely reflects the introduction
of IFRS.
Non Cash
The £231 million increase in non cash DEL expenditure
between 2008-09 and 2009-10 largely reflects the introduction
of IFRS.
Capital
The £1,076 million increase in capital expenditure
between 2008-09 and 2009-10 largely reflects a planned increase
of £498 million in the 2007 Comprehensive Spending Review;
and a further (net) £350m fiscal stimulus funding brought
forward from 2010-11.
For 2010-11, plans reflects the 2007 Comprehensive
Spending Review settlement with adjustments identified in the
table on page 4.
END YEAR
FLEXIBILITY
The 2009-10 EYF stock for the Department for Transport
was reported in the Public Expenditure White Paper 2008-09 (PEOWP)
(Cm 7606 ) *. The analysis below shows changes since then as follows:
| £'000 |
Administration
costs
| Other Resource |
Total Resource DEL |
Of which
| Capital |
| | |
| Near Cash | Non Cash
| |
| Entitlement1 | 67,896
| 572,841 | 640,737 | 262,704
| 378,033 | 148,378 |
| | |
| | | |
|
| Take up in Winter Supplementary Estimates |
0 | 50,000 | 50,000
| 50,000 | 0 |
0 |
| | |
| | | |
|
| Take up in Spring Supplementary Estimates |
0 | 0 | 0 | 0
| 0 | 20,000 |
| | |
| | | |
|
| Balance of unused EYF at 31 March 2009 |
67,896 | 522,841 | 590,737
| 212,704 | 378,033
| 128,378 |
| | |
| | | |
|
| Provisional underspend 2 | -94
| +302,053 | +302,147 | +87,670
| +214,477 | -53,576 |
| | |
| | | |
|
| Provisional EYF opening stock at 1 April 2010
| 67,802 | 824,894 | 892,884
| 300,374 | 592,510
| 74,802 |
1 EYF entitlement published in PEOWP (Cm 7606 ).
2 Provisional
underspend is based on the difference between provisional 2009-10
outturn (at the end of March 2010) and budgets agreed at the 2009-10
Spring Supplementary Estimates.
The Department's 2009-10 total DEL opening entitlement
of £789 milliion (set out above) arose from: changes in 2007-08
outturn (£5 million); 2008-09 EYF not taken up (£203
million); and 2008-09 underspend (£581 million).
The main elements of the 2008-09 DEL underspend were
summarised in Table 1 of Appendix A (p 215) of the Departmental
Annual Report and Resource Accounts (HC 454).
An analysis of 2008-09 Resource Outturn by Estimate
section is shown in Note 2 of the Resource Accounts (pp346-8 of
HC 454) with material components of variances explained on pp298-300.
The Department took up EYF during 2009-10 as follows:
Winter Supplementary Estimates:
£50 million near cash (non voted) for London & Continental
Railways Ltd.
Spring Supplementary Estimates:
£20 million capital (voted) for London & Continental
Railways Ltd.
Provisional 2009-10 under/over spend
The near cash underspend is £-46 million, of which £-44
million relates to programme and £-2 to administration. The
non cash underspend is £-549 million, of which £-544
million relates to programme and £-5 million to administration.
The capital underspend is £-0.023 million.
Future Use
It is likely that some end year flexibility will
be required to meet pressures including those which may arise
as a result of the economic downturn.
Resource: the provisional
stock of £552 million (£485 million programme, £67
million administration) will be used to meet pressures that may
arise in 2010-11.
Capital: the provisional
stock of £128m will be used to meet pressures that may arise
in 2010-11.
2010-11 OPENING DEPARTMENTAL
UNALLOCATED PROVISIONS
| £'000 |
| Resource | 68,029 |
| Capital | 0 |
ADMINISTRATION
BUDGET
The table below compares outturn from 2007-08 with
planned DEL for the current and future years:
| £'000s | Outturn
| Outturn | Outturn1
| Estimate |
| 2007-08 | 2008-09
| 2009-10 | 2010-11
|
| Administration budget | 282,328
| 278,441 | 277,807 | 266,102
|
Notes
1 End of March 2010 provisional outturn.
The budgets for 2010-11 reflect a £10 million reduction as
part of the budgetary savings announced on 24 May 2010.
PROVISIONS
AND CONTINGENT
LIABILITIES
Provisions
DFT (CENTRAL) AND MARITIME & COASTGUARD AGENCY
| £'000s | Early retirements 1
| NFC travel concessions 2 |
Channel Tunnel Rail Link 3 |
Other DfT (C) 4 | Maritime & Coastguard Agency
| Total |
| Position as at 1 April 2010 |
| | | |
| |
| Balance at 1 April 2010 | 12,054
| 16,000 | 264,772 | 311,652
| 1,250 | 605,728 |
| | | |
| | |
|
| Provided in year in Main Estimate |
| | 69,379 | 142,800
| 1,250 | 213,429 |
| | | |
| | |
|
| Provision expected to be used in year | -2,650
| | | |
| -2,650 |
| | | |
| | |
|
| Expected unwinding of discount |
| | | |
| |
| | | |
| | |
|
| Estimated closing balance | 9,404
| 16,000 | 334,151 | 454,452
| 2,500 | 816,507 |
Notes
1 Early retirements—These amounts relate to former
staff who left the Department's employment before their formal
retirement age, and in respect of whom the Department and its
Agencies are responsible for making payments until their retirement
age.
2 NFC travel concessions—this is for amounts
in respect of re-imbursements to National Freight Company PLC
and its subsidiaries for providing travel concessions to staff
previously employed by the road transport division of British
Rail.
3 Channel Tunnel Rail Link—These amounts cover
Domestic Capacity Charge payments to London and Continental Railways
Ltd (LCR), specifically those de-risked to facilitate the raising
of finance by LCR.
4 Provisions for shipping inquiries, the PPP arbiter's
pension liabilities, provisions relating to the Channel Tunnel,
South East Trains, Strategic Rail Authority pension liabilities,
LCR grant provision, and dilapidations.
HIGHWAYS AGENCY PROVISIONS FOR LIABILITIES AND CHARGES
1
| £'000s | Land and Property Acquisition
| Engineering and Construction Services
| Bridge Strengthening | Tunnels
| Other Liabilities (RCU, 3rd Party Claims & Other)
| Grand Total |
| Position as at 1 April 2010 |
| | | |
| |
| Estimated Balance at 1 April 2010 2
| 171,564 | 45,497 | 87,500
| 87,684 | 17,393 | 409,638
|
| | | |
| | |
|
| Provided in main estimate | 34,165
| 44,156 | - | -
| 6,850 | 85,171 |
| | | |
| | |
|
| Provision expected to be used in year | -47,183
| -57,665 | -31,058 | -14,042
| -7,542 | -157,490 |
| | | |
| | |
|
| Estimated closing balance | 158,546
| 31,988 | 56,442 | 73,642
| 16,701 | 337,319 |
1 This table reflects the latest available information
which will be reflected in the next Supplementary Estimate
2 The balance at 1 April 2010 is derived from the
Highways Agency Draft 2009-10 Accounts.
Contingent Liabilities
The Department accounts for contingent liabilities
in its Resource Accounts in accordance with the Accounting Standards
Board's publication, International Accounting Standard 37 "Provisions,
Contingent Liabilities and Contingent Assets", as endorsed
by Treasury's Financial Reporting Manual (FReM). This includes
contingent liabilities created through letters of comfort, guarantees
and indemnities, which are required to be reported to Parliament
in accordance with Managing Public Money, as well as contingent
liabilities arising as a result of litigation or other claims
or disputes affecting the Department. Consequently, the Department
recognises as actual liabilities any liabilities which it considers
more likely than not that it will have to settle, it discloses
any contingent liabilities for which it considers the likelihood
of settlement to be more than remotely likely and it also discloses
all contingent liabilities reported to Parliament in accordance
with Managing Public Money, except where disclosure might
prejudice a legal claim, or jeopardise security arrangements.
The majority of the Department's contingent liabilities
fall into five categories:
Financial guarantees in respect of Network Rail—The
Department has offered guarantees to the purchasers of Network
Rail's debt instruments that, if Network Rail is unable to repay
its borrowings, the Department will do so. These guarantees enable
Network Rail to borrow at a preferable rate.
Letters of Comfort to Train Operating Companies—The
Department has offered guarantees to Train Operating Companies
and Rolling Stock Companies. These typically provide assurance
that companies will recover the value of their investment in franchise-specific
assets and consequently encourage investment. They also reflect
other concerns, such as force majeure arrangements.
Measures to support Crossrail—Following
the signing of the Crossrail Sponsors Agreement, the Department
has offered a series of support measures to the project.
Support in other transport sectors—The
Department has offered financial support to other entities in
the transport sector, where required by legislation (for example,
to protect purchasers of package holidays) or to support contractual
arrangements.
Occasional claims and litigation—The
Department occasionally faces legal challenges over some of its
actions. It defends its position robustly and ensures that disclosure
given in the Resource Accounts does not prejudice the Crown's
position.
Significant changes:
- (a) The Department took on the responsibility
for repaying the financial obligations of the Channel Tunnel Rail
Link High Speed 1 during 2009-10, and these therefore no longer
appear as contingent liabilities.
- (b) A number of contingent liabilities previously
reported as unquantifiable have now been assigned estimated values.
APPROVAL OF
MEMORANDUM
This memorandum has been prepared with reference
to guidance in the Estimates Manual provided by HM Treasury and
that found on the House of Commons Scrutiny Unit website. The
information in this Memorandum has been approved by the Departmental
Accounting Officer.
Annex
GLOSSARY OF KEY TERMS
Administrative Expenditure—expenditure
incurred by departments and agencies in providing those services
which are not directly associated with frontline service delivery.
Includes pay, training, travel, accommodation, stationery, utilities,
etc.
Alignment project—To
create a single, coherent financial regime, that is effective,
efficient and transparent, enhances accountability to Parliament
and the public. It also underpins the Government's fiscal framework,
incentivises good value for money and supports delivery of excellent
public services by allowing managers to manage.
Annually Managed Expenditure
(AME)—a Treasury budgetary control for expenditure which
is generally less predictable and controllable than expenditure
in DEL.
Comprehensive Spending Review
(CSR)—a cross-government review of the departmental aims
and objectives and analysis of all spending programmes, with the
resultant allocation of three year Departmental Expenditure Limits
(DEL).
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.
Contingent liabilities—potential
liabilities that are uncertain but recognise that future expenditure
may arise if certain conditions are met or certain events happen.
Departmental Expenditure Limit
(DEL)—a Treasury budgetary control for expenditure which
is generally within the department's control and can be managed
within fixed three-year limits (Comprehensive Spending Review
period).
Departmental Unallocated Provision
(DUP)—an amount held back by a department to meet unforeseen
pressures in expenditure and is not allocated at the start of
the year to any particular programme. It forms part of the DEL.
End Year Flexibility (EYF)—a
set of rules by which departments are allowed to carry forward
unspent DEL budget from one year to the next. Agreed EYF entitlement
for the year is set out in an annual Public Expenditure Outturn
White Paper (PEOWP).
International Financial Reporting Standards
(IFRS)
In accordance with the announcement in the 2007 Budget that government
departments and other entities in the public sector should prepare
their accounts using International Financial Reporting Standards
(IFRS), to bring benefits in consistency and comparability in
the global economy and to follow private sector best practice,
the Department for Transport has, like other government departments,
adopted IFRS. The financial year 2009-10 was the first year in
which resource accounts and budgets followed IFRS with changes
reflected in the Spring Supplementary Estimate for that year.
Financial Reporting Standards
(FRS)—a publication issued by the Accounting Standards Board
that communicates best practice in accounting for the type of
transaction or item specified in the title. Accounting standards
FRS 25 and FRS 26 on financial instruments provide guidance on
the accounting treatment of contractual financial assets and liabilities.
Non Voted Expenditure—public
expenditure outside that voted by Parliament in Supply Estimates.
It is largely used for NDPB and DVLA budgets, apart from grant-in-aid
paid to these bodies which is voted expenditure. Non voted expenditure
also includes utilisation of provisions and Supported Capital
Expenditure (Resource).
Provision—a provision
is set up to cover recognised liabilities which either have to
be paid out by departments over a period of more than one year
(such as pensions or contractual obligations), or are held back
by the departments pending decision for eventual payment if directed
by a ruling body.
Reserve—a small
amount of both resource and capital DEL budgetary provision that
has not been allocated by HM Treasury to a department. The function
of the Reserve is to assist departments with the costs of genuinely
unexpected and unforeseeable events, which are also large relative
to the department's available resources.
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).
Voted Expenditure—that
which has been authorised by Parliament in response to Supply
Estimates.
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