Further supplementary memorandum submitted
by the Department of Trade and Industry on Winter Supplementary
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
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