Select Committee on Public Accounts Minutes of Evidence


APPENDIX 1

Supplementary memorandum submitted by HM Treasury

HM Treasury Guidance: Selling Government Services into Wider Markets

BACKGROUND

  1.  This note sets out the circumstances under which the Treasury would expect to be consulted regarding the levels of receipts from wider markets activities. As Mr Glicksman said in answer to Q119, the Treasury guidance is contained in a document entitled Selling Government Services into Wider Markets, [8]issued in 1998 ("the Wider Markets guidance").

  2.  The guidance generally applies to commercial activity of a non-statutory, discretionary nature. [9]

  3.  The guidance, a departure from the previous policy, was designed to encourage departments to make the best use of existing public assets. As such, a number of safeguards and triggers for action were introduced to manage risk. These included requirements for the Treasury to be consulted in certain circumstances.

  4.  The original 1998 edition stated (at footnote 2 on page 10):

    "Where annual receipts from Wider Markets appropriated-in-aid exceed 5 per cent of departmental (ie Class) cash-limited provision, departments should consult Treasury spending teams."

  5.  The guidance was revised in December 2001, to reflect the transition to Resource Accounting and Budgeting (RAB). The revision states:

    "Treasury spending teams should be consulted where a department's aggregated annual receipts from wider markets projects exceed 5 per cent of discretionary spending within the Departmental Expenditure Limit."

  6.  This applies to net receipts (ie income from wider markets activities after the costs of providing the activity have been deducted) and to gross discretionary spending.

WIDER MARKETS ACTIVITY

  7.  The intention of the 5 per cent threshold in the Wider Markets guidance was to give the Treasury early warning of particularly high levels of wider markets receipts to ensure that departments' core activities do not become dependent on receipts from wider markets activity, which may be uncertain and irregular.

  8.  The requirement is only that departments consult the Treasury. The Treasury would normally expect to permit departments to continue to generate wider markets receipts above this level, subject (where necessary) to conditions, which might include continued monitoring by the department (in the case of Agencies and NDPBs) and the Treasury. The key consideration for the Treasury is that the provision of the departments' core services remains sustainable.

  9.  The guidance also states that all projects where the full annual cost is more than £1 million require Treasury approval. This threshold was derived from the Treasury's Fees and Charges Guide. In practice, as departments should be utilising existing assets, the Treasury would not expect them to incur major expenditure in establishing wider markets products or services. Contentious and repercussive projects must also be approved by the Treasury.

SCOPE

  10.  The 5 per cent threshold applies at departmental level. Within that, it is for departments to monitor and control the activities of their agencies and NDPBs (such as the Research Councils).

PRECEDENT

  11.  To date, the Department of Trade and Industry has not consulted the Treasury regarding wider markets receipts under the terms of the Wider Markets guidance because, at departmental level, receipts have not reached the level of 5 per cent of discretionary spending.

REVISION OF WIDER MARKETS GUIDANCE

  12.  The Treasury is currently revising the Wider Markets guidance. This will reflect developments in competition legislation, the Freedom of Information Act 2000 and Treasury guidance: Charging for Information: When and How. [10]The revision to the guidance will also take the opportunity to specify more precisely the circumstances under which departments should consult the Treasury, in particular to specify when net and gross figures should be used (see paragraph 6).

Mr Brian Glicksman

Treasury Officer of Accounts

HM Treasury

April 2002



8   www.hm-treasury.gov.uk/mediastore/otherfiles/sgswm.pdf Back

9   Further details about the applicability of the guidance are set out in paragraph 7 of the Wider Markets guidance. Back

10   www.hm-treasury.gov.uk/mediastore/otherfiles/charging_for_info.pdf Back


 
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