DR 376: Foreign and Commonwealth Office Spring Supplementary Estimate 2009-10

Introduction

1. The Foreign and Commonwealth Office Estimate has two Requests for Resources (RfRs):

· RfR 1: Promoting internationally the interests of the UK and contributing to a strong world community, that covers:

· Section A: Expenditure by the Foreign and Commonwealth Office (FCO), including UK Trade and Investment, on its administration, FCO Services, Wilton Park Executive Agency, hospitality and facilities; international organisations; grants in aid to bodies supporting FCO objectives; scholarships, information services and sponsored visits; special payments and assistance programmes to support foreign policy objectives including human rights, good governance, international security and the fight against the illicit drug trade; and international organisations; and on associated non-cash items;

· Sections B and C: Resource grant in aid to the BBC World Service for broadcasting and to the British Council, respectively;

· Sections D and E: Capital grant in aid to the BBC World Service for broadcasting and to the British Council, respectively.

· Section F: AME Provision for impairments and liabilities in relation to staff leave ; and

· Section G: The refund of certain taxes and duties paid by certain Foreign and Commonwealth governments.

· RfR 2: Conflict prevention, that covers:

· Section A: Expenditure by the Foreign and Commonwealth Office on conflict prevention, early warning, crisis management, conflict resolution/peacemaking;

· Section B: Peacekeeping and peace building activity and on associated strengthening of international and regional systems and capacity; and

· Section C: Provision of specialist, targeted assistance in countries emerging from violent conflict. Provision in this section has now been subsumed into Section A of RfR2.

RfR1 Spring Supplementary Estimates Changes

take up of Eyf

2. We have taken up £5,700,000 DEL EYF in respect of administration costs for restructuring. We have taken up £3,000,000 Capital EYF in respect of a transfer to administration costs to help with exchange rate pressures.

claims on the Del reserve

3. Claims on the DEL reserve include:

· £44,464,000 programme expenditure arising from the FCO/HMT 40/60 International Organisations subscription cost sharing agreement.

· £25,060,000 programme expenditure for Consular premiums collected in the UK by the Home Office that are transferred to the FCO via the Reserve.

· £6,000,000 administration costs in respect of modernisation of the FCO.

transfers of budgetary cover

4. Transfers of budgetary cover include:

· Transfer of £5,500,000 other current from DfID in respect of the Returns and Reintegration Fund to increase the number of foreign national prisoners and failed asylum seekers who return to their countries of origin and to ensure that those who return voluntarily are effectively re-integrated.

· Transfer of £77,000 other current from DfID in respect of the Iraqi locally engaged staff assistance scheme.

· Transfer of £11,000 administration from the Cabinet Office in respect of charging for legal services by the Office of the Parliamentary Counsel.

· Transfer of £10,000 other current from DfID in respect of the Low Carbon High Growth Strategic Programme Fund.

· Transfer of £6,695,000 other current to MOD in respect of counter-narcotics work in Afghanistan for the payment of CN Ground Force, AIU Transition Costs and Project Taipan.

· Transfer of £1,965,000 other current to MOD in respect of counter-narcotics work in Afghanistan for HQ Land Forces in relation to Operation Curium funding.

· Transfer of £1,002,000 administration to MOD in respect of the FCO's contribution to the Information Assurance Technical Programme.

· Transfer of £500,000 other current to the Security and Intelligence Agencies for expansion and capability.

5. No FCO activities are expected to be reduced as a result of the above transfers. Transfers between government departments such as these are a routine occurrence and are therefore incorporated in the normal budgeting process.

transfers from capital spending to resource spending

6. We have transferred £16,000,000 capital to administration in respect of exchange rate pressures. This amount includes £3,000,000 transferred from Capital EYF.

changes in annually managed expenditure (Ame)

7. We have increased other current non cash AME by £30,000,000 in respect of impairments to cover the impact of adverse exchange movements. We have transferred £2,735,000 other current AME to administration DEL in respect of FCO staff costs for accrued annual leave following reclassification of this expenditure by HM Treasury.

other changes

8. We have transferred £2,000,000 Resource DEL from RfR1 to RfR2 for FCO's contribution to the Helmand troop uplift for Stabilisation and Conflict Prevention as announced by the Prime Minister in November 2009.

RfR2 Spring Supplementary Estimates Changes

claims on the Del reserve

9. We have returned £14,000,000 to benefit HMT's Reserve in respect of Stabilisation and Conflict Prevention. This follows double counting of an amount transferred in the Winter Supplementary from MoD following the merger of the Stabilisation Aid Fund into the Conflict Prevention Pool. The amount had already been included in a DfID transfer but this was not apparent at the time. Although this merger was a one off event we have increased the number of cross checks we undertake with MoD to ensure that there is no recurrence.

transfers of budgetary cover

10. Transfers of budgetary cover include:

· Transfer of £14,700,000 from DfID in respect of discretionary Peacekeeping funds that are now included in the Conflict prevention Pool.

· Transfer of £11,259,000 from DfID in respect of Stabilisation and Conflict Prevention.

other changes

11. (We have transferred of £2,000,000 from RfR1 to RfR2 for FCO's contribution to the Helmand uplift for Stabilisation and Conflict Prevention.

12. We have transferred £60,000,000 between Estimate's lines C3 to A3 to reflect the merger of the Conflict Prevention Pool and Stabilisation Aid Fund.

13. The above transfers reflect the revised structure of RfR2. Conflict prevention activities are now managed through five strategies: the SAF Afghanistan and CPP South Asia programmes have been merged; so too the SAF Iraq and CPP Middle East and North Africa programmes. A new Wider Europe programme funds activity in Russia/Commonwealth of Independent States and the Balkans (previously individual programmes). The Africa programme continues. A separate programme has been earmarked for thematic work, including support to international institutions. The Strategies continue to be managed tri-departmentally.

14. As with the RfR1 transfers no FCO activities are expected to be reduced as a result of the above transfers. Transfers between government departments such as these are a routine occurrence and are therefore incorporated in the normal budgeting process.

departmental expenditure limit (Del) and administration budgets

15. The tables below show a comparison of the 2009-10 DEL (Table 2 and 2a) and Administration (Table 3) budgets with the 2003-04, 2004-05, 2005-06, 2006-07, 2007-08 and 2008-09 outturn, the forecast for 2009-10 and plans for 2010-11.

16. Table 2a shows outturn on the definition of DEL used in the year concerned in order to be consistent with published Departmental Expenditure Limits. They do not therefore correspond to the outturns in Table 2 that are on a consistent basis year on year, including reclassification by Treasury of expenditure across all years of the Public Expenditure cycle.

¹Figures for all years reflect the reclassification of impairment expenditure from DEL into AME.

² Resource DEL figures for 2010-11 are understated because they do not include all of the conflict prevention expenditure, which will be transferred at the time of the relevant Main and Supplementary Estimates. In addition 2005-06 included expenditure on a number of one off items (Tsunami expenditure, Efficiency Challenge Fund & G8 & EU presidencies).

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.

¹Figures for all years reflect the reclassification of impairment expenditure from DEL into AME.

departmental unallocated provision (Dup)

17. All FCO provision has been allocated in the Winter Supplementary Estimate. We took up £17,000,000 DUP to offset adverse exchange rate movements.

end year flexibility (Eyf)

18. The Public Expenditure Outturn White Paper published in July 2009 showed a total figure of £134.002m for carry forward of underspend into 2009-10 under the DEL EYF scheme.

19. In the Winter Supplementary Estimate we took up £13.0m DEL EYF, of which £2.0m administration costs and £11.0m other current costs, in respect of FCO Capital charges (non-cash).

20. As explained above in the Spring Supplementary Estimate we took up £5.7m resource EYF for restructuring and £3.0m capital EYF to transfer to administration to help with exchange rate pressures.

public service agreements

21. The £44m taken up as part of the 40/60 cost sharing agreement for International Subscriptions particularly supports the DSO for preventing and resolving conflict through a strong international system but also confers benefits across a number of DSOs and PSA targets.

22. The transfer from the Treasury Reserve of £25m of consular income contributes to our DSO to support British nationals abroad.

23. Part of the increase in expenditure in this Supplementary Estimate is take-up monies to further the conflict reduction PSA on which we are the lead department.

24. The up-take of EYF of £5.7m and £3m for respectively improved efficiency and currency fluctuations are both designed to improve delivery across a number of FCO's Departmental Strategic Objectives and PSA targets as is the £6m Reserve claim for modernisation of the FCO.

25. We have also had transferred £5.5m from DFID to facilitate work in furtherance of the shared migration PSA.

Keith Luck

Director General Finance

10 February 2010