§ Lord McIntosh of Haringey
My right honourable friend the Paymaster General (Dawn Primarolo) has made the following Written Ministerial Statement.
Subject to parliamentary approval of any necessary Supplementary Estimate, HM Treasury DEL will be increased by £6,383,000 from £251,764,000 to 72WS £258,147,000 and the administration costs limits will be increased by £7,883,000 from £152,509,000 to £160,392,000. Within the DEL change, the impact on resources and capital are as set out in the following table:
Change New DEL Voted non-voted Total Resource 7,883,000 212,597,000 37,975,000 250,572,000 Capital -1,500,000 7,575,000 0 7,575,000 Depreciation* -8,638,000 -16,292,000 0 -16,292,000 Total -2,255,000 203,880,000 37,975,000 241,855,000
* Depreciation, which forms part of resource DEL, is excluded from the total DEL since capital DEL includes capital spending and to include depreciation of those assets would lead to double counting.
The change in the resource element of the DEL arises from:
An increase in total Treasury administrative costs of £7,883,000 resulting from:
The Treasury's offices at 1 Horse Guards Road being held at a valuation based on commercial property market rents. There are indications of a fall in market rents in the Victoria/ Whitehall area during 2004–05, which would give rise to an accounting charge. To cover the estimated charge, £9,000,000 will be drawn from a fund of end-year flexibility (EYF) ring-fenced for the purpose;
The Treasury's Spending Review 2002 settlement set in-year administration funding at a level lower than forecast spending, anticipating that the shortfall would be met from a draw down of EYF. The projected shortfall in 2004–05 is up to £3,000,000, which will be drawn from EYF accordingly;
The funding consequences of the transfer of tax policy functions from the Inland Revenue and HM Customs and Excise to the Treasury. These were partly dealt with in the winter Supplementary Estimate, but a further £4,235,000 of funding in relation to the first part of 2004–05 remains to be transferred to the Treasury in order properly to account for the transfer, in accordance with the Resource Accounting Manual;
A transfer of £184,000 from HM Treasury to the Inland Revenue and HM Customs and Excise for the cost of capital on GOGGS East land following its transfer to said departments;
The completion of the refurbishment of 1 Parliament Street (the east end of the building formerly known as Government Offices Great George Street), required the Treasury to transfer assets relating to 1 Parliament Street from its books to the books of the Inland Revenue and HM Customs and Excise. There is an accounting profit of £8,168,000 to the Treasury on the disposal;73WS
An increase in the Office of Government Commerce (OGC) appropriations in aid (A in A) of £725,000 and a matching £725,000 increase in expenditure for the engagement of consultants on behalf of other bodies;
Administration costs changes in detail: £ Accounting profit on disposal of 1 Parliament Street assets -8,168,000 Funding for cost of capital charges on 1 Parliament Street assets -184,000 Funding for costs of tax policy functions in the first part of 2004–05 4,235,000 Estimated accounting charges on revaluation of 1 Horse Guards Road 9,000,000 Funding for other Treasury administration costs 3,000,000 OGC engagement of consultants 0 Net total effect on admin DEL 7,883,000
An increase in A in A programme of £300,000 and a matching £300,000 increase in spend for the Office of Paymaster General to bring the estimate in line with forecasts;
An increase in A in A programme of £240,000 and a matching £240,000 increase in spend for Pool Re renegotiation costs;
A DEL neutral switch of £1,390,000 programme from non-voted to voted for Request for Resources 3 from the OGC's Efficiency Challenge Fund allocation; and
A decrease in A in A programme of £875,000 and a matching £875,000 decrease in spend due to the transfer of the Whitehall systems1 from OGC to OGCbuying.solutions.
The change in the capital element of the DEL arises from:
A partial draw-down of capital EYF of £22,433,000 and the subsequent transfer of that funding to Inland Revenue and HM Customs and Excise for the transfer of the 1 Parliament Street assets referred to above. These changes net to zero; a partial draw down of EYF of £1,500,000 by HM Treasury for the purchase of information systems software and hardware;
An increase in non-operating A in A of £11,550,000 and a loan of £8,550,000 both related to the transfer of the Whitehall systems from OGC to OGCbuying.solutions.
1 The Whitehall systems are backup heating and electricity power systems, previously operated and accounted for by OGC. Responsibility for them is being transferred to OGCbuying.solutions. OGC is surrendering its funding for cost of capital charges. OGCbuying.solutions is paying £11.55 million for the assets, £3 million in cash and £8.55 million via a loan from OGC.