WINTER SUPPLEMENTARY ESTIMATES 2007-08, 30 NOVEMBER 2007

  Thank you for your letter of 22 November in which you raised a number of points regarding the supporting memorandum to HMRC's Winter Supplementary Estimate.

  I hope that the responses below satisfactorily address the queries raised.

—  £30 million Reserve claim

  The information provided in the memorandum in respect of the Reserve claim in the Estimate and the negative Reserve claim entry in the EYE table appear to have been misunderstood. As background HMRC was allowed to draw down £30 million in each year for 2006-07 and 2007-08 in respect of the expansion of contact centres. The entry of -£30 million in the EYF table within this year's Winter Supplementary Estimate memorandum represents the return of the 2006-07 Reserve claim to the Treasury from our EYF reserves. The Reserve claim for 2007-08 is separate and as such is properly identified as a £30 million draw down of funds.

—  £15 million Departmental Unallocated Provision (DUP)

  The following is an answer to both questions on the draw down of £15 million DUP. The Treasury required that the £15 million funding for additional compliance staff for risk based compliance activity around the Construction Industry Sector could only be accessed by HMRC as voted provision once Treasury had approved its release. It was agreed with the Treasury that prior to their approval the funding should be scored as non-voted DUP, even though this is normally held for "unseen pressures". The release of this funding was approved after the Main Estimate was published; consequently the draw down took place at the Winter Supplementary stage.

—  EYF Table

  The following is a revision of the EYE table produced in the memorandum. The bottom line figures remain extant, but you will see that there is a change to the adjustments total. I apologise for the omission. The figures are those agreed with the Treasury in July.

DEL END-YEAR FLEXIBILITY

  The 2007-08 EYE stock for HMRC was reported in the Public Expenditure Outtum White Paper 2006-07 (PEOWP) (Cm 7156). The breakdown below shows changes since the spring supplementary for 2006-07. EYE prior to this was provided in the Main Estimate Memorandum for 2007-08.

£000	Admin Resource	Other Resource	Total Resource	Of which:		Capital
				Near-cash	*Non-cash
06-07 EYF not taken up	61,404	46,517	107,921	139,460	-31,539	—
06-07 underspend	26,676	17,714	44,390	43,390	1,219	32,718
Reductions for Reserve claims	-30,000	—	-30,000	-30,000	—	—
Other adjustments	3,745	-1,125	2,620	3,159	-539	539
PEOWP (July 2007)	61,825	63,106	124,931	155,790	-30,859	33,257
Take-up in Winter Supplementary Estimate	—	-1,400	-1,400	-1,400	—	—
Balance of EYF After Winter Supplementary	61,825	61,706	123,531	154,390	-30,859	33,257

This Supplementary Estimate draws down EYF near-cash of £1,400,000 other resource, for use on administration.

*  The negative values appearing in the non-cash column of figures represent an overspend in non-cash. Where this occurs the near cash total will exceed the figures in the total resource column.

  The stock of EYE is to be used to:

—  Enable the release of staff under our exit strategies.

—  Maximise non-staff efficiency gains by centralising procurement, using flexibilities in Estates contract and making sound commercial decisions on the management of the IT contracts.

—  To modernise and transform HMRC.

November 2007