Memorandum submitted by HM Treasury
At the hearing of the Committee on 17 July,
Treasury officials undertook to provide notes on: the composition
of the £2.8 billion fall in the 2001-02 Public Sector Net
Investment estimate between the Budget and the Spending Review;
the 2001-02 underspend by the Department of Education and Skills;
and audit and accountability arrangements for hospitals and Primary
Care Trusts. These are enclosed.
On 18 July, the Chancellor offered notes on
historic trends in Council Tax rises, and on MP's pension arrangements.
We will come back to you with these during the Recess.
We also promised clarification on the arrangements
under which the three White Papers relating to the Spending Review
were published. New Public Spending Plans 2003-06 (Cm 5570),
Public Service Agreements 2002-06 (Cm 5571) and Public
Expenditure 2001-02, provisional Outturn (Cm 5574) were laid
before both Houses shortly before the Chancellor completed his
statement on 15 July. Cm 5570 and Cm 5571 were available to Members
from the Vote Office at the conclusion of the Chancellor's speech.
The Treasury intended CM 5574 to be available at the same time
but unfortunately The Stationery office were not able deliver
printed compies to the Vote Office until the following morning,
due to the large quantity of material associated with the Spending
The Treasury very much regrets that all three
White papers were not available on the afternoon of 15 July and
appologies for any inconvenience caused to members. I should however
explain that the figures for the aggregate provisional outturn
for 2001-02 by department in Cm 5574 are exactly the same as in
Table B4 of Cm 5570. There is therefore no new information on
aggregate departmental underspends in CM 5574 which was not already
in the public domain.
23 July 2002
NOTE 1: CHANGES
The estimate of public sector net investment
(PSNI) outturn in 2001-01 published at the time of the Budget
was £12.0 billion. At that point in time there was only limited
information on investment in the first quarter of 2002, especially
for local authorities and public corporations.
ONS published the first full data for the public
finances in 2001-02 in their quarterly Public Accounts first release
on 28 June. This showed a substantially revised estimate of PSNI
in 2001-02 of £9.2 billion £2.8 billion below
the first estimate.
This £2.8 billion is made the first estimate.
£0.8 billion increase in the
ONS estimate of public sector depreciation; and
a £2 billion reduction in public
sector gross investment made up as follows:
£0.8 billion reduction in local
authority capital expenditure and £0.4 billion reduction
in public corporation capital expendituremaking a total
of £1.2 billion. These estimates are still very provisional
and may well be subject to further revision;
a £0.5 billion reduction in central
Government capital expenditure, although the Treasury's estimate
of capital DEL outturn fell by only £0.1 billion between
the Budget and the Spending Review; and
the remaining £0.3 billion is accounted for
by an ONS reclassification of surplus received from the National
Coal Board pension scheme as a capital receipt, which offsets
Capital DEL published at the PBR was £24.9
billion. This fell to £24 billion by the time of the Budget
and to £23.9 billion in the Spending Review.
NOTE 2: 2001-02 DFES
Figures in tables 1 and 1A of PEOWP published
on 15 July show:
DfES underspend during 2001-02 of
of which £836 million is resource
and £410 million capital;
these figures are derived by subtracting
the provisional outturn from final DEL in the tables.
A figure for original DELas published
in the March 2001 Budgetis aso shown in the tables. After
the Election, various machinery of Government changesincluding
transfer of employment policy to DWPmean that this "oringinal
DEL" was cut. At the same time DfES drew down some of the
previous years' underspend to increase their DEL to cater for
prevailing budgetary needs. There were also other small changes.
These were all given in PQ answers on 28 November, 14 February
and 21 March.
The "final DEL" figurepublished
in the PBR in November 2001is the new, adjusted, sum against
which the outturn can be compared to get the underspend. It is
not meaningful to compare original DEL with the provisional outturn.
(2) + (1)
(2) + (1)
|Total DfES DEL||21,583||¸1,279
Note: a first provisional outturn was given in the
Budget this Aprila figure of £19.5 billion, which
implied underspend of £800 million. The revised figure is
£19.1 billion giving new estimate for the in-year underspend
of £1.2 billion.
NOTE 3: LOCAL
The new single Commission for Healthcare Audit and Inspection
will bring together the health value for money work of the Audit
Commission, the work of the Commission for Health Improvement
and the private healthcare role of the National Care Standards
Commission. The new single Commission will have responsibility
for inspecting both the public and private health care sectors.
Its principal roles will include:
inspecting all NHS hospitals;
licensing private healthcare provision;
conducting NHS value for money audits on a national
validating published performance assessment statistics
on the NHS, including waiting list information;
publishing star ratings for all NHS organisations
with the ability to recommend special measures where there are
publishing report on the performance of NHS organisations
both individually and collectively;
independent scrutiny of patient complaints; and
publishing an annual report to Parliament on national
progress on health care performance and how resources have been
The Audit Commission will continue to be responsible for
appointing external auditors to NHS bodies, to carry out annual
financial audits. CHAI will work with partner organisations, including
external auditors, to provide a system of regulation and improvment
that is integrated, efficient and that commands the confidence
and respect of patients and users of services and the organisations