ENGINEERING AND PHYSICAL SCIENCES RESEARCH COUNCIL PROVIDE THE EXPLANATION BELOW:

Question 1

  As requested please find a breakdown of the EYF stocks attached at Appendix 1

Question 2

  (i)  Original projections included in the EPSRC Delivery Plan suggested in year expenditure leading to a £21.5 million draw down of brought forward EYF stocks. However with the passage of time since publication of Delivery Plan it became increasingly clear that the expectation on the rate of start on new grants was falling behind the planning assumptions. Recognising the situation that was developing during the first two months of the financial year 2005-06 an increased level of activity was undertaken to prevent further slippage. Indeed as a result of this during the last 10 months of the financial year the position has been held and the present level of confidence of delivering a neutral current year EYF is high.

  (ii)  In addition to the above, a loan of £21M from the EPSRC to RCUK was agreed during 2005-06. This was supported by the OST, however a misunderstanding resulted in differing accounting treatments of the loan by the OST and the EPSRC. It had been intended by the EPSRC that the loan should effectively reduce DEL from £574 million to £553 million, however OST reflected an expectation of £21 million drawdown from brought forward EYF stocks. The position was subsequently agreed with the OST that the suggested drawdown of £21 million would not be realised.

Question 3

  As requested please find the latest DEL Outturn Statements at Appendix 2.

  Sub-point (a)  You will note that income has increased by £25 million. This is made up of three elements: (1) £21 million referred to above in at 2(ii) above; (2) Reinstatement of an allocation of £3.5 million in respect of Diamond Beamlines; and, (3) an additional allocation of £0.8 for RCPS.

  These are exactly balanced by increases in expenditure so that the resulting forecast was not changed.

  Sub-point (b)  There are no anomalies.

March 2006