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Department for Business, Enterprise and Regulatory Reform (BERR) and the Department for Innovation, Universities and Skills (DIUS)

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Department for Business, Enterprise and Regulatory Reform (BERR) and the Department for Innovation, Universities and Skills (DIUS) James Davies Clerk of the Committee Business Innovation and Skills Committee House of Commons 7 Millbank London SW1P 3JA 7 July 2010 Dear James Main Estimates Memorandum 2010-11 I am enclosing the Department for Business Innovation and Skills (BIS’s) Memorandum for the forthcoming Main Estimate. This Memorandum has been prepared in accordance with the “Guide to Preparing Estimate Memoranda” and has been approved by the Departmental Accounting Officer. Presentation and publication of the Main Estimate was made on 21 June 2010. I recognise that, as this is a new Committee, some of this information may require fuller explanation to bring members fully up to speed with the Department’s activities and funding. I will be happy to provide any additional information which may be required. Yours sincerely Howard Orme Director General, Finance and Commercial Finance and Commercial, 1 Victoria Street, London SW1H 0ET www.bis.gov.uk Direct Line +44 (0)20 7215 5936 | Fax +44 (0)20 7215 3248 | Mincom +44 (0)020 7215 6740 Enquiries +44 (0)20 7215 5000 | Email [email protected] 1 Department for Business Innovation and Skills Main Estimate 2010-11 Select Committee Memorandum 1. This is the first Main Estimate for the Department for Business Innovation and Skills (BIS). The principal activities of the Department relate to the funding, policy and support of Innovation, Business and Enterprise; Further and Higher education and Skills; and Science and Research. 2. The Main Estimate for 2010-11 seeks the necessary resources and cash to support the functions of the Department and its Non Departmental Public Bodies (NDPBs). The purpose of this Memorandum is to provide the new Select Committee with an explanation of how the resources and cash sought in the Estimate will be applied to achieve Departmental objectives, and how the amounts compare to budgets for 2009-10. A contents list may be found at Annex A and a glossary of terms used within the Estimate at Annex B. 3. For a fuller picture of the Department’s planned expenditure in 2010-11, with comparison figures for prior years, the Committee is referred to HM Treasury’s Main Supply Estimates and Supplementary Budgetary Information. Prior years’ figures have been adjusted to remove the Budgets transferred to other Departments through Machinery of Government (MoG) changes. Requests for Resources 4. BIS’s Estimate is divided into three Requests for Resources (RfRs), although the Committee will wish to note that these will cease to exist from 2011-12 as part of the changes resulting from the implementation of HM Treasury’s Clear Line of Sight project. These are: RfR 1: To help ensure business success in an increasingly competitive world RfR 2: Increasing Scientific excellence in the UK and maximising its contribution to society RfR 3: To help build a competitive economy by creating opportunities for everyone to develop their learning and skills creating excellence in science, research and innovation 2 Departmental Expenditure Limits Budget for 2009-10 5. The Budget for the period from 2008-09 to 2010-11 was set through the Comprehensive Spending Review 2007 process, and then amended for the various MoG changes and the various increases or decreases to budgets which have occurred. The following table shows the Departmental Expenditure Limits (DEL) Budget figures in the Main Estimates for 2009-10 to allow comparison with 2010-11 figures (these are the combined totals of the former Department for Business, Enterprise and Regulatory Reform (BERR) and the Department for Innovation, Universities and Skills (DIUS): Figures published in the two 2009-10 £’000 £’000 £’000 Main Estimates Near Cash Non Cash Capital Amended CSR 07 Settlement (DEL) for 1,443,826 141,040 338,054 BERR CSR 07 Settlement (DEL) for DIUS 15,694,107 1,530,383 2,647,108 Revised 2009-10 Total 17,137,933 1,671,423 2,985,162 Including Admin of: BERR 254,630 18,319 DIUS 69,299 1,600 Total 323,929 19,919 Departmental Expenditure Limits Budget for 2010-11 6. The Budget for 2010-11 is as follows: Figures published in the 2010-11 Main £’000 £’000 Estimates Resource Capital Total 19,039,782 2,002,333 Including Admin of: 321,187 Budgeting changes for 2010-11 7. The Alignment (or ‘Clear Line of Sight’) Project seeks to simplify government’s financial reporting to Parliament by better aligning the recording of government spending in departmental budgets, Estimates and resource accounts. Full details of the alignment reforms were set out in Cm 7567 published in March 2009. Changes to the budgetary 3 framework resulting from the Alignment Project have been implemented in 2010-11. The main change is that the separate Near Cash and Non Cash controls within resource budgets have been removed. Of those transactions previously recorded in Non Cash budgets: o Provisions – the take up and revaluation of provisions is now largely in Annually Managed Expenditure (AME), with payment remaining in DEL (with the exception of Student Loans, where the treatment remains in reverse); o Near Cash – this is no longer a control total; the elements of expenditure which were designated as “Non Cash” now form part of either DEL or AME budgets and will not appear separately in reports for 2010-11; o Cost of Capital credits/charges – these no longer form part of Accounts, Budgets and Estimates from 2010-11 and will only be used to determine fees and charges. There is also a further unrelated change: o Profit/loss on asset sales – this becomes Resource income rather than Capital income; however, income from the disposal of assets remains as Capital income. All figures were subject to re-forecasting before the classification changes were made. These classification changes, which are reflected in all departmental Estimates, have the effect of reducing DEL budgets across Departments in all years. However, the adjustments have no impact on the purchasing power of Departments or the planned level of expenditure. Additionally there are a number of Budget changes as a result of the adoption of International Financial Reporting Standards (IFRS). The implementation of IFRS is treated as a reclassification and the Department’s Budget baseline is being adjusted accordingly. Budget 2010 and the May 2010 Savings Announcement 8. A number of the changes announced in the 2010 Budget and the May 2010 Savings Announcement related to BIS and resulted in the following changes to the Department’s Budget: Budget 2010 Changes Resource Capital 4 £’000 £’000 Higher Education Places modernisation fund 251,000 Higher Education Shared Services pilot 20,000 Higher Education Places Student Support 24,000 Further Education Shared Services Pilot 15,000 UK Centre for Medical Research and Innovation (UKCRMI) - 250,000 BIS contribution to the Budget Growth Package from the Strategic (121,000) Investment Fund (SIF) underspends in 2010-11 BIS contribution to UKCRMI from other funding (17,000) Investment in the Institute of Web Science 5,000 Allocation for Newton Scholarships 2,500 Allocation for costs of a new Small/Medium Business Adjudicator 5,000 Service Reduction in expenditure on Consultancy, Marketing and (5,000) Communications Small Business Research Initiative (to be taken via EYF) 10,000 Totals 327,500 112,000 May 2010 Savings Announcements Resource Capital £’000 £’000 Core BIS and Partner Organisation efficiency savings (48,700) (51,300) Higher Education efficiency savings package (170,000) (30,000) UK Centre for Medical Research and Innovation (UKCRMI) - (233,000) Regional Development Agency savings (from core BIS funding) (5,000) (67,000) UK Vocational Reform (11,000) Small/Medium Business Adjudicator Service (3,000) Investment in the Institute of Web Science (5,000) Small Business Research Initiative (to be taken via EYF) (10,000) Train to Gain refocus (200,000) Apprenticeships 150,000 Further Education 50,000 Totals (291,700) (342,300) Comparison between the 2009-10 and 2010-11 Main Estimates’ figures 9. The main differences between the 2009-10 and 2010-11 planned DEL expenditure on activities are explained in the following table: Notes Description of the main differences Near Cash Non Cash Capital 5 between the 2009-10 and 2010 11 Main £’000 £’000 £’000 Estimates 2009-10 DEL Provision in the Main Estimate 17,137,933 1,671,423 2,985,162 Admin (see next paragraph for explanation) 22,858 (19,919) (a) Fiscal Stimulus Programmes (750,000) (b) Launch Investment Income (64,000) Clear Line of Sight changes (see paragraph 8 1,874,100 (1,651,504) above) IFRS reclassification changes (see paragraph 8 15,419 above) (c) Additional Capital funding awarded in the Pre- 100,000 Budget Report Other funding differences between years (51,499) (63,529) (c) Additional Capital funding from Department 50,000 for Transport (DfT) Changes to funding from Budget 2010 and 35,800 (230,300) the May 2010 Savings Package (see paragraph 9 above) (d) Transfer to DfT (100) (e) Repayment of loan by UK Trade & Investment 500 (f) Transfer to the Office for National Statistics (1,000) (g) Transfer from the Ministry of Justice (MoJ) 24,621 (h) Transfer from the Department for Education 1,400 (DfE) (i) Transfer from DfE 10,000 (i) Transfer to DfE (89,850) (j) Adjustment for Student Loans 27,500 (k) Transfer from the Department of Health (DoH) 25,000 (l) Transfer to MoJ for Pleural Plaques (7,400) (m) Virement from Capital to Resource in respect 50,000 (50,000) of Higher Education (n) Transfer to the Department for Communities (2,500) and Local Government (CLG) (o) Transfer to CLG for the Migration Impact Fund (8,000) 2010-11 DEL Provision in the Main Estimate 19,039,782 0 2,002,333 Notes: (a) Elements of Capital expenditure were brought forward from 2010-11 to 2009-10 to provide fiscal stimulus as follows: £200m for Higher Education Funding Council for England; £50m for the Large Facilities Capital Fund; £25m for the Research Investment 6 Fund transitional funding for Higher Education Institutions and £100m for the Regional Development Agencies (RDAs).
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