Please find attached a copy of the FCO Winter Supplementary Estimate 2006-07.

Richard Cooke

Parliamentary Relations and Devolution Team

20 November 2006

Foreign & Commonwealth Office Winter Supplementary Estimate 2006-07 Memorandum for the Foreign Affairs Committee

SUMMARY OF CHANGES

  1.  The 2006-07 Winter Supplementary Estimate for the Foreign & Commonwealth Office (FCO) provides for the drawdown of end year flexibility (EYE) and Departmental Unallocated Provision (DUP); changes arising from a number of transfers to and from other government departments and internal transfers; transfers from Central funds and internal departmental corrections. These are reflected in changes to the Departmental Expenditure Limit and to the Administration and Capital budgets.

  2.  A list of all changes is shown in Table 1. Those changes requiring further explanation are detailed below.

RFR1

  3.  The FCO has drawn down £14.755 million from administration near cash EYF to meet additional forecast pressures on budgets. The main pressure is the implementing of the FCO IT strategy, which is expected to cost in the region of £13 million.

  4.  The FCO has drawn down £4.5 million in programme DUP (shown in section A3) to be used to fund additional expenditure on the Better Basra project.

  5.  The FCO has switched £1.6 million from capital to capital grant to enable the FCO to make its capital contribution to the Government Secure Zone from resource. Previously such funds would have been moved via a budget transfer from capital. However, latest HM Treasury guidance is that the government department providing such a service should invoice the department paying for the service. It is therefore necessary to move the funds available for such expenditure to resource.

  6.  Budget transfer of £117,000 for police pensions costs for 2006-07 and 2007-08. This is in relation to police officers on secondment to the FCO and is split into three different RfR1 transfers to reflect the precise activities the officers are deployed on. There are two similar transfers for RfR2 (see below).

RFR2

  7.  On peacekeeping, the FCO is drawing down £50 million from the Main estimate provision in this Winter Supplementary split equally between Africa and Global peacekeeping.

  8.  Budget transfer of £1,411 million for police pensions costs for 2006-07 and 2007-08. This is in relation to police officers on secondment to the FCO working on peacekeeping activity. It is split into two different RfR2 transfers to reflect the number of officers working on Africa and Global peacekeeping activities respectively.

CAPITAL

  The sale of part of the Bangkok compound has realised net receipts of £49 million. This will be reinvested in capital as part of Asset Recycling Agreement. This represents a £39 million increase on the previous figure for Asset Recycling of £10 million.

DETAILED LIST OF CHANGES

  10.  Table 1 lists the individual changes included in the Winter Supplementary Estimate. The changes are shown in descending value within each category.

DEPARTMENTAL EXPENDITURE LIMIT (DEL) & ADMINISTRATION BUDGETS

  11.  The tables below show the effect of changes to the FCO's DEL (table 2); and a comparison of the 2005-06 DEL (table 3) and Administration (table 4) budgets with the 2004-05 outturn, 2005-06 outturn and plans for 2007-08 and 2008-09.

DEPARTMENTAL UNALLOCATED PROVISION (DUP) 2006-07

  12.  There has been a reclassification of £14.5 million of Departmental Unallocated Provision (DUP) from Programme to Administration, as agreed by the Chief Secretary to the Treasury, to correct a previous legacy error. The remaining £4.5 million of 2006-07 RfR1 programme DUP has been drawn down in the Winter Supplementary Estimate. This has left £59.5 million of unallocated resource provision and £1 million unallocated capital provision which is broken down as follows:

  13.  The FCO is currently reviewing whether to draw down these unallocated provisions in the Spring Supplementary.

END YEAR FLEXIBILITY (EYF)

  14.  The Public Expenditure Outturn White Paper published in July 2006 showed a total figure of £136.9 million to carry forward of 2005-06 DEL underspending into 2006-07 under the DEL EYF scheme. Table 6 below shows how this figure was made up from a mixture of adjustment for 2004-05 final outturn, forecast 2005-06 underspend and unused 2005-06 EYF entitlement.

IMPACT ON PSA TARGETS

  15.  Changes to the FCO's budget provision relate to planned activity and so will not impact our public service agreements.

D R Todd

Finance Director

November 2006

2   Resource DEL figures for 2007-08 are understated because they do not include conflict prevention expenditure, which will be transferred at the time of the 2007-08 Main and Supplementary Estimates. Back

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. Back