Select Committee on Trade and Industry Appendices to the Minutes of Evidence


APPENDIX 3

Further supplementary memorandum submitted by the Department of Trade and Industry on Winter Supplementary Estimates 2000-01

QUESTIONS FROM THE TRADE AND INDUSTRY COMMITTEE

Q(a).  What are the reasons for the increase of £45 million in nuclear decommissioning costs, indicating precisely where these are to arise and showing in each case the estimate made for the purposes of the aggregate figure in the main Estimates?

  The £45 million increase over the expenses related to nuclear provisions in the main Estimates reflects the expected requirements for the decommissioning and waste management programme at Dounreay. It is largely due to work required at Dounreay as a result of the NII/SEPA safety audit to upgrade facilities, to strengthen the management and safety systems, to bring forward some decommissioning activities, and to offset the loss of income anticipated from commercial contracts brought about by the continued closure of the fuel cycle area. The amount attributable to Dounreay in the Department's main Estimates was £90 million, net of the expected income from the commercial programme.

Q(b).  What is the reason for the expenditure from the Civil Service Modernisation Fund?

  All departments were invited to bid for resources from the Civil Service Modernisation Fund to support initiatives in relation to the Civil Service Reform Programme. The DTI's resources are being directed to a variety of projects linked to its own modernisation programme, including, for example, more extensive external recruitment and interchange; encouragement of the use of the European Foundation for Quality Management excellence model; the bringing on of staff with potential in pursuit of the Department's diversity agenda; and supporting improvements in our approach to performance management.

Q(c).  Please provide more information on the transfer of RDA administrative costs, indicating the nature of these costs hiterto borne by DTI.

  The transfer of £1.166 million reflects the cost of the posts required to carry out the DTI functions and responsibilities that transferred from the Government Offices into the RDAs and the London Development Agency. These included responsibility for developing regional competitiveness, innovation and export strategies.

Q(d).  Please provide more information on the transfer to the OFT budget of the rent paid for Fleetbank House, indicating on which budget rent has been borne hitherto.

  The Office of Fair Trading (OFT) has always paid its own rental costs and will continue to do so. The transfer of £1.07 million was agreed as an inducement to persuade the OFT to relocate to Fleetbank House, rather than outside the civil estate. This is because a situation can arise in which PACE has property on the civil estate where the economic market rent is less than the actual rent payable to the landlord. In such cases PACE transfers the difference between the market rent and the actual rent payable to the landlord, as a means of persuading Departments to move into these empty properties.

Q(e).  Please provide more information on the increase in the gross running costs limit for Ofgem as a result of expenditure on NETA, showing how this relates to past increases on such expenditure and why it was not foreseen in the main Estimates.

  The Winter Supplementary Estimate increased the provision for the NETA project (net of VAT) by £13.3 million, from £16.945 million to £30.245 million.

  At the beginning of the 2000-01 financial year the total project cost was estimated at £29.8 million, of which £16.945 million was expected to fall into the current financial year. The decision to defer the introduction of NETA until the Spring was taken to enable further work to be carried out on the development and testing of systems. Inevitably this has led to a substantial increase in costs.

  At the time the Main Estimates were prepared, we fully expected to achieve the published "go live" target for NETA. But the risk of delay has always been recognised. In accordance with the rules laid down in Government Accounting, Parliament was only asked to vote provision for known costs in the Main Estimates: no provision was made to cover contingencies.

16 November 2000


 
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