Supplementary Estimates 2011-12
Andrew Mitchell (Secretary of State, International Development; Sutton Coldfield, Conservative)
Subject to parliamentary approval of the necessary supplementary estimate, the Department for International Development’s departmental expenditure limit (DEL) will be reduced by £13.0 million from £7,880.3 million to £7,867.3 million.
Within the DEL change, the impact on resources and capital are as set out in the following table:
|Change||New DEL||£’ 000|
The change in the Resource element of DEL arises from:
Transfers out to other Government Departments, including those relating to the jointly managed conflict pool. This sits on Department for International Development’s baseline but is shared between Department for International Development, Foreign and Commonwealth Office and Ministry of Defence. Budget transfers relate to expenditure managed by these other Government Departments.
£4.5 million transferred to the Foreign and Commonwealth Office in respect of the tri-departmental conflict pool. This was funded from the original conflict pool allocation of £256.0 million, and £4.0 million was funded from DFID RDEL (given unforeseen pressures in Libya);
£4.0 million transferred to the Foreign and Commonwealth Office in respect of the tri-departmental conflict pool. This was in addition to the £4.5 million outlined above and was a result of unforeseen pressures in Libya;
£2.1 million transferred to the Foreign and Commonwealth Office in respect of approved funding to the returns and re-integration fund;
£2.6 million transferred to the Department for Environment, Food and Rural Affairs (DEFRA) in respect of approved funding for DARWIN project;
£0.9 million transferred to DEFRA in respect of the technical contribution fund for the International Atomic Energy Agency;
£10.0 million transferred to DEFRA in respect of DFID in respect of the overall ODA and International Climate Finance management strategy. An ODA/GNI target of 0.56% was set out in DFID’s CSR10 settlement letter, as was a climate change spending target of £275.0 million;
£3.0 million transferred from the Department for Education to DFID in respect of a forecast underspend on ODA eligible budget.;
£247.0 million transferred internally from DFID’s RDEL budget to DFID’s CDEL budget in order to facilitate the deposit of the IDA 16 £300.0 million promissory note. This represented the first deposit towards the 16th replenishment of the International Development Association, the arm of the World Bank whose funding provides people with education, health care, clean water and access to economic opportunities in around 80 of the world’s poorest countries. The UK has pledged £2.664 billion to cover the period from July 2011 to June 2014.
|Net RDEL transfer to OGDs||-£30.1 m|
|Transfer to non-voted RDEL to support EC attribution||-£31.9 m|
|Transfer to DFID CDEL from DFID RDEL||-£247.0 m|
|Subtotal voted||- £ 309.0 m|
Adjustment to the total of EC attribution
Based on updated information of 2009 outturn made by EU directly on behalf of the UK the figure for the outturn of the 2009 EC attribution was £31.9 million higher than outlined in the 2011 main estimate. As such, an adjustment is required to reflect the new estimated amount for the non-voted EC attribution total.
£31.9 million transferred from DFID in respect of a forecast underspend on ODA eligible budget.
|Increase in EC attributed aid||£31.9 m|
|Subtotal non- voted||£ 31.9 m|
|Total reductions in RDEL||£ 277.1 m|
The change in the capital element of DEL arises from:
Internal transfers from DFID RDEL to DFID CDEL, and transfers of CDEL from OGDs as part of previously stated RDEL to CDEL swaps.
£10.0 million CDEL received from DEFRA in respect of the overall ODA and International Climate Finance management strategy;
£7.1 million CDEL received from DECC in respect of the overall ODA and International Climate Finance management strategy;
£247.0 million internal transfer from DFID RDEL to DFID CDEL. The majority of this internal swap is used to partly fund the £300.0 million promissory note to IDA 16, summarised earlier. DFID’s contribution to IDA, like many other donors, is made by way of promissory note to enable the organisation to enter into commitments with the support of the promissory note but ensure effective cash management and avoid large unutilised cash balances.
|Transfer to DFID CDEL from DFID RDEL||£247.0 m|
|Transfer from OGDs to DFID CDEL||£17.1 m|
|Subtotal voted||£ 264.1 m|
No CDEL non voted adjustments
|Subtotal non voted||£0|
|Total increases in CDEL||£ 264.1 m|
DFID’s Annually Managed Expenditure (AME) budget is used to fund amendments to provision requirements and also fair value adjustments to financial instruments, notably DFID’s existing loan portfolio. DFID’s significant provisions include contributions towards the International Finance Facility for Immunisations (IFFIm) and Advance Market Commitments (AMC).
Adjustments have been made to reflect updated expectations of provision requirements and utilisation of provisions based on revised information. The most notable of these are in IFFIm and AMC provisions. DFID’s provision requirements for IFFIm represent the net present value of committed payments to cover the UK share of currently issued bonds. This year bond issues are expected to be lower than originally forecast, due to lower anticipated demand for bonds as a result of the global economic circumstances. AMC’s provision represents committed payments to fund supplier agreements signed to produce vaccines to meet demand. The value of agreements signed in the year is now lower than forecast at main estimate stage and a reduction in AME is expected for this reason.
These reductions are offset by an expected increase in AME to cover fair value adjustments in loans, which are now treated as AME by way of the Clear Line of Sight reform. The majority of DFID’s loan debtor represents DFID’s share of a euro-denominated portfolio of loans given to developing countries which is administered by the European Investment Bank (EIB). It is expected the valuation of this outstanding balance will reduce due to a combination of exchange rate movements, recognising the weakening of the euro against sterling, but also to reflect doubts over the recoverability of certain balances where the countries are in default or are expected to be given debt relief status.
Expected net income from the sale of assets disposed of in the financial year is £1.6 million, and is capital AME. This is included below.
|AME voted summary|
|Increase in utilisation of provisions||-£10.9 m|
|Increase in provision||£3.4 m|
|Income in AME Capital||-£1.6 m|
|Subtotal voted||£ 9.1 m|
No AME non-voted adjustments have been made
|AME non-voted summary|
|Sub total non-voted||£0|
|Total decrease AME||£ 9.1m|