Wales Office 2017-18 Supplementary Estimates Memorandum Introduction The Wales Office Supplementary Estimate for 2017-18 seeks the necessary resources and cash to support the functions of the Wales Office. These are continuing functions and no new functions have been added since the 2017-18 Main Estimate. The main purpose of this Memorandum is to provide the Welsh Affairs Committee with an overview of the Wales Office 2017-18 Supplementary Estimate, which is part of the supply procedure. It also gives information on the budgetary changes of the Welsh Government and changes to the cash grant payable to the Welsh Consolidated Fund by the Wales Office. The Supplementary Estimate seeks approval to a net resource requirement of 14,794,008,000 and a net cash requirement of 14,793,952,000 and for 2017-18 the Wales Office Departmental Expenditure (DEL) limit, net of depreciation and impairments, will increase from 4,450,000 to 4,970,000. The Memorandum is split into sections covering: (1) Summary of the Wales Office plans for 2017-18; (2) An overview of the Office s Administration Costs; (3) An overview of DEL and AME totals; (4) Details of the cash grant paid to the Welsh Consolidated Fund; (5) Details of Barnett consequentials for 2017-18; (6) Control Totals for the Welsh Government including breakdown by main programme of AME spending; (7) Reconciliation of the SR 2015 settlement for Welsh Government and Control Totals for 2017-18; and (8) Details of the Welsh Block 2015-16 to 2019-20. This memorandum has been agreed with HM Treasury.
Section 1: Summary of Wales Office Plans for 2017-18 Spending plans for 2017-18 were set in the 2015 Spending Review. From the baseline set in the 2015 Spending Review, the Wales Office agreed an overall real term increase of 2 per cent in its administration budget over the baseline. This is in line with the targets set for the other Territorial Offices. The Wales Office supports the Secretary of State for Wales in promoting the best interests of Wales within a strong United Kingdom. We are the face of the UK Government in Wales and the voice of Wales in Whitehall. Our primary and on-going goal is to support the Union of the United Kingdom. Linked to this key objective is a more immediate goal which is to ensure that the UK, including Wales, is in the strongest possible position on exiting the European Union. Our three key objectives to support these priorities are: I. A strong Welsh economy, with the Wales Office playing a key role in securing infrastructure investment and high levels of exports and foreign direct investment; II. Wales s interests fully reflected and represented in the ongoing work on exiting the European Union, and as the UK government develops its UK regional policy and industrial strategy in particular noting the importance of cross-border working; and III. A clearer, stronger and fairer devolution settlement that is coherent, stable and lasting, where powers are exercised at the most appropriate level of government across the United Kingdom. To help deliver these objectives and challenges the Office will manage work efficiently and effectively, in accordance with good governance principles and providing value for money to the taxpayer. The Department continues to look to share services and expertise with the other Territorial Offices and other Government Departments wherever possible to both drive down costs and improve resilience. To date a shared parliamentary unit has been established with the other Territorial Offices and a shared freedom of information requests (FOI) service with the Northern Ireland Office. The Office continues to use Ministry of Justice shared services in respect of accommodation, information technology, procurement, finance and Human Resources e.g. recruitment of staff. In respect of accommodation, the Department has tenants (the Greater London Lord Lieutenancy and Independent Commission for Aid Impact) in the London Office which generates rental income in 2017-18 of 63k for the Office and improves the utilisation of our accommodation. We have also held discussions with the Government Property Unit (GPU) over its Hubs programme and in particular the implications for Government buildings in South Wales. The Hubs Programme seeks to use rationalised estates and
land release to reduce overall running costs and wherever possible locate departments together in hubs around the country. The Wales Office is increasing its headcount in 2017-18 to reflect the nature of the work the Office is undertaking around EU Exit and Strengthening the Union. The Office will be responsible for providing guidance on the Welsh dimension of aspects of EU exit such as frameworks, market access, trade deals, funding, border controls, issues that arise during negotiations etc as well as leading on strengthening the Union in Wales through activity such as Ministerial visits/roundtables and enhanced stakeholder engagement.
Section 2: Overview of the Wales Office s Administration Costs The key purpose of the Wales Office remains to support the Secretary of State for Wales in promoting the best interests of Wales within the United Kingdom. This Estimate provides for the administration costs of the Wales Office, including the upkeep of a Grade II* listed building; the salaries of Wales Office Ministers and staff; and payments to the Welsh Consolidated Fund. The Wales Office also has AME for future dilapidation costs for exiting the lease for the Cardiff Office. The lease ends in 2022.
Section 3: Overview of Wales Office DEL [and AME] totals for 2017-18 Departmental Expenditure Limit (DEL) The following adjustments have been made to the Control Totals for Wales Office since the 2017-18 Main Estimate.: 444,000 Reserve claim in relation to higher than expected legal costs for work undertaken on the Wales Bill; 106,000 Reserve claim in relation to EU Exit work; -30,000 Budget switch from Administration to Programme to reflect increase in ringfenced depreciation to reflect an increase in our asset base offset by a reduction in cash; 90,000 - Reserve claim on Capital in relation to IT and capital works expenditure. The Departmental Expenditure Limit current control totals for the Wales Office are set out in the table below: 000 nominal Main Changes Supp Estimate Estimate Resource DEL (RDEL) 4.560 0.550 5.110 o/w RDEL excluding depreciation 4.450 0.520 4.970 o/w depreciation ring fence in RDEL 0.110 0.030 0.140 Administration Budget* 4.390 0.520 4.910 o/w non-ringfenced RDEL administration budget 4.390 0.520 4.910 Capital DEL 0.030 0.090 0.120 * This is part of the RDEL control total and not an addition to it. Annually Managed Expenditure (AME) In addition, the Estimate (Section II) contains a change of 6,000 for AME. This change relates to an increase in provision to cover an increase in future dilapidation costs from the lease for the Cardiff Office.
Section 4 Details of the Cash grant payable to the Welsh Consolidated Fund The Estimate also allows for the payment of a cash grant to the Welsh Consolidated Fund. All expenditure by the Welsh Government is charged to the Welsh Consolidated Fund. This expenditure is shown in Section II of the Wales Office Estimate. Since the Main Estimate, provision has increased/decreased by 470,943,000. The table below reconciles the spending aggregates of the Welsh Government with the cash grant payable to the Welsh Consolidated Fund. RECONCILIATION OF GRANT PAYABLE TO WELSH CONSOLIDATED FUND 2017-18 Supplementary Main Estimate Changes Estimate '000 '000 '000 Expenditure Classified as DEL 15,605,433 775,149 16,380,582 Expenditure Classified as AME 754,198 33,551 787,749 Expenditure Financed by Capital Borrowing 20,000-20,000 0 Non Domestic Rates AME 1,059,000 0 1,059,000 Total Managed Expenditure 17,438,631 788,700 18,227,331 Less: Non Voted expenditure: LA Credit Approvals 88,800 0 88,800 Other Non-Voted 6,078 0 6,078 Wales Act 2014 Transactions: Capital Borrowing 20,000-20,000 0 Non-Cash: Resource Ringfenced Non Cash 636,264 313,274 949,538 AME Non-cash 204,937 21,873 226,810 TOTAL NON VOTED TME 956,079 315,147 1271226 TOTAL VOTED TME 16,482,552 473,553 16,956,105 Voted receipts Contributions from the National Insurance Fund 1,163,325 45,540 1,208,865 NDR Receipts 1,001,278 17,070 1,018,348 Timing Adjustments Increase / Decrease in Debtors & Creditors 0 60,000 60,000 Use of Provisions 0 0 0 TOTAL GRANT TO WELSH CONSOLIDATED FUND 14,317,949 470,943 14,788,892
The following significant adjustments have been made to the cash grant to the Welsh Consolidated Fund since the 2017-18 Main Estimate: - 462,000,000 Increase in DEL (RDEL excluding depreciation + Capital DEL + Financial Transactions); 11,000,000 increase in cash spending in AME; 60,000,000 Movement in Creditors/Debtors; - 63,000,000 Increase in income.
Section 5 Details of Barnett Consequentials for 2017-18 From time to time, the Treasury will adjust the budgets of UK departments with the devolved administrations receiving Barnett consequentials of these adjustments. The majority of these budgetary adjustments take place at major fiscal events such as the Budget. In December 2017, the Treasury published a breakdown of changes in the devolved administrations block grant funding from the 2015 Spending Review until Autumn Budget 2017 for all years covered by the SR. This includes details of included all Barnett Consequentials allocated to the devolved administrations since the conclusion of the 2015 SR. https://www.gov.uk/government/publications/block-grant-transparencydecember-2017-publication The table below details the Barnett consequentials for the financial year 2017-18 received by the Welsh Government since the announcement of the 2015 Spending Review in Autumn 2015. Additional Barnett consequentials for 2017-18 announced since the publication of the 2017-18 Main Estimate are shown at the foot of the table. This information is provided to assist the Committee to understand the composition of the block budgets of the Welsh Government.
Barnett Consequentials from Fiscal Events for 2017-18 since 2015 Spending Review Fiscal Event UK Government Measure Resource/Capital Barnet Consequential ( m) Budget 2016 Business Rates - Permanently double SBRR from 2017- Resource 35.619 Business Rates - Increasing the Small Business Rate ReResource 39.887 Business Rate - Increasing the standard multiplier threshresource 5.861 Making all schools academies by 2022 Resource 9.673 National Funding Formula Resource 2.845 Northern Powerhouse Resource 1.144 Mentoring for 25,000 disadvantaged students Resource 0.171 Longer school day Resource 3.841 Expanding breakfast clubs Resource 0.341 Doubling the primary school sports premium Resource 5.292 Flood package: maintenace funding Resource 2.276 Partnership Support Fund Capital 0.285 Six year programme top-up Capital 0.683 Royal College of Arts Capital 0.626 Drapers Hall - Coventry Capital 0.057 Hall for Cornwall Capital 0.114 S1 Artspace Capital 0.028 Shakespeare North Capital 0.228 Cathedrals Resource 0.285 Hull City of Culture Resource 0.142 Devolution Deals - resource Resource 2.333 Sub-Total Budget 2016 111.729 Autumn Statement 2016 Business Rates - Rural Rate Relief Resource 0.340 Business Rates - Fibre relief Resource 0.170 Northern Power House: Investment Fund Capital - Financial Transactions 0.226 Midlands Engine: Investment Fund Capital - Financial Transactions 0.967 Mayfield Review of Management Resource 0.283 Wentworth Woodhouse Resource 0.067 Creative Media Centre Plymouth Capital 0.057 Studio 144 Southampton Capital 0.091 Royal Socierty of Arts School Pilots Resource 0.025 Rugby League World Cup 2021 Capital 0.057 Rugby League World Cup 2021 Resource 0.113 World Road Cycling Capital 0.028 World Road Cycling Resource 0.065 Right to Buy - extended pilot Resource 8.490 Midlands Rail Hub Resource 0.113 Invest in University Tech Transfers Capital 1.415 Grammar Schools Capital 2.830 Strategic roads pinchpoints Capital 5.377 Local roads and local transport Capital 11.886 Smart ticketing Capital 1.415 Development funding for Oxford-Cambridge + M25 Capital 0.283 Accelerated build-out (Conference) Capital 13.584 Affordable housing grants Capital 25.753 Help-to-Build, including Roads for Homes Capital 2.830 QR funding Capital 1.191 Sub-Total Autumn Statement 2016 77.656 Spring Budget 2017 Business Rates - Mitigating Impact of SBRR Resource 1.019 Business Rates - Discretionary Relief Fund Resource 9.905 Business Rates - Pubs Resource 1.302 LAs delivering Business Rates Reforms Resource 0.238 Free Schools Resource 0.906 Social Care Resource 57.188 Health Capital A & E Capital 5.660 Social Transformation Programme Funding Capital 6.195 Work Coaches Resource 0.311 Midlands Skills Challenge (English Language Training) Resource 0.057 Returnships Resource 0.119 Suffragette Centenary Resource 0.294 Sub-Total Spring Budget 2017 83.194 Autumn Budget 2017 Air Quality - Compliance Funding Resource 0.676 Air Quality - Compliance Funding Capital 0.282 Local Roads Capital 2.590 Midlands Connect: Motorway Hub Resource 0.056 Health - Resource Resource 18.793 Health Capital Capital 28.488 Help to Buy Equity Loan Capital - Financial Transactions 89.967 Office for Data Analytics Resource 0.006 Disabled Facilities Grant Capital 2.365 Efficiency Review Savings Resource -14.863 Sub total Autumn Budget 2017 128.360 Totals Resource DEL Resource 195.382 Capital DEL Capital 114.397 Capital - Financial Transactions Capital - Financial Transactions 91.160 All DEL 400.939 Note Totals may not sum due to roundings
Section 6: 2017-18 Control Totals for the Welsh Government including breakdown by main programme of AME spending Resource and capital DEL for Welsh Government The following adjustments have been made to the Control Totals for the Welsh Government since the 2017-18 Main Estimate: DEL Changes million RDEL excluding depreciation Barnett Consequentials - EU exit Funding 2.950 Barnett Consequentials - Autumn Budget 2017 4.847 Barnett Consequentials Abortion Services for women from 0.057 Northern Ireland Reserve claim Barnett Consequentials Department for Transport reserve 3.378 claim to cover loss of rail fares income Budget Exchange 79.176 Budget Transfer from Cabinet Office: Cyber Security 0.579 Budget Transfer from DH: HIV infected blood 0.176 Budget Transfer from HO: Immigration Health Surcharge 3.748 Budget Transfer from MoJ: Offender Learning 1.045 Cash Management Charge/Rebate 0.150 Coastal Communities Fund 4.098 EU Structural Funds 3.807 LIBOR: Wales Air Ambulance 1.000 Personal Injury Discount Rate 39.000 Reprofile Efficiency Review savings into 2017-18 -14.919 Reserve Claim - Apprenticeship Levy 13.700 Reserve Claim: Tampon Tax 0.267 Resource to Capital Switch: R&D -43.000 100.06 Depreciation ring fence in RDEL Budget Exchange (RDEL Depreciation) 13.274 Switch within non-cash ring-fence (RDEL Depreciation) 38.720 51.99 Student loans ring fence in RDEL Reserve Claim: Student Loan Impairment 300.000 Switch within non-cash ring-fence (Student Loans) -38.720 261.28 General Capital DEL Barnett Consequentials - EU exit Funding 0.730 Barnett Consequentials - Autumn Budget 2017 33.724 Barnett Consequentials - Floods Reserve Claim 2.887 Budget Exchange 73.419 Budget Transfer from BEIS: Energy Efficiency 2.733 Budget Transfer from BEIS: R & D funding 0.804 Budget Transfer from DCMS: Superfast Broadband 2.073
Resource to Capital Switch: R&D 43.000 159.37 Financial Transactions Barnett Consequentials - Autumn Budget 2017 89.967 Budget Exchange 112.479 202.45 Total 775.149 The current control totals for the Welsh Government are set out in the table below: 2017-18 Changes 2017-18 m nominal Main Estimate Supp Estimate Resource DEL 14,002 413 14,415 of which: RDEL excluding depreciation 13,365 100 13,465 depreciation ring fence in RDEL 491 52 543 student loans ring fence in RDEL 146 261 407 Capital DEL 1,604 362 1,966 of which: General Capital DEL 1,438 159 1,597 Financial Transactions 166 203 369
Annually Managed Expenditure (AME) The following changes have been agreed since the publication of the 2017-18 Main Estimates: - Programme 2017-18 Main Changes 2017-18 Supp Estimate Estimate Non- Domestic Rates 1,059 0 1,059 Student Loans 408 10 418 Public Sector Pensions 4 49 53 Depreciation & 97 267 170 Impairments NHS Impairments & -123 49 172 Provisions TOTAL 1,813 33 1,846 Note Totals may not sum due to rounding s
Section 7: Reconciliation of the SR 2015 settlement for Welsh Government and Control Totals for 2017-18 In December 2017, the Treasury published a breakdown of changes in the devolved administrations block grant funding from the 2015 Spending Review until Autumn Budget 2017 for all years covered by the SR. This includes details of included to the budgets of the devolved administrations since the conclusion of the 2015 SR. https://www.gov.uk/government/publications/block-grant-transparencydecember-2017-publication The table below details the changes to the Welsh Government budget for the financial year 2017-18 received by the Welsh Government since the announcement of the 2015 Spending Review in Autumn 2015. We have provided this information to assist the Committee in their understanding of the composition of the block budgets of the Welsh Government for the financial year 2017-18 which form part of the Wales Office Supplementary Estimate. Changes to Welsh Government Control Totals for 2017-18 since 2015 Spending Review Ring-fenced Ring-fenced General Capital Finacial Transactions RDEL depreciation student loans DEL Capital m m m m m 2015 Spending Review settlement 13,147.343 490.695 145.569 1,357.395 164.537 Barnett Consequentials: Budget 2016 109.709 2.020 Barnett Consequentials: Autumn Statement 2016 9.666 66.796 1.193 Barnett Consequentials: Spring Budget 2017 71.338 11.855 Barnett Consequentials - EU exit Funding 2.950 0.730 Barnett Consequentials - Autumn Budget 2017 4.847 33.724 89.967 Barnett Consequentials - Floods Reserve Claim 2.887 Barnett Consequentials - Free terminations for NI Women Reserve claim 0.057 Barnett Consequentials - Rail fares Reserve Claim 3.378 Budget 2016: Cardiff City Deal 10.000 Budget Exchange 79.176 13.274 73.419 112.479 Budget Transfer from BEIS: Energy Efficiency 2.733 Budget Transfer from BEIS: R & D funding 0.804 Budget Transfer from Cabinet Office : Cyber Security 0.579 Budget Transfer from DCMS: Lloyd George Museum 0.027 Budget Transfer from DCMS: Superfast Broadband 2.073 Budget Transfer from DH: HIV infected blood 0.176 Budget Transfer from HO: Health migrant levy 7.180 Budget Transfer from HO: Immigration Health Surcharge 3.748 Budget Transfer from HO: Police funding 10.110 Budget Transfer from MoJ: Offender Learning 1.045 Cash Management Charge/Rebate 0.150 Coastal Communities Fund 4.098 EU Structural Funds 3.807 LIBOR: Wales Air Ambulance 1.000 Personal Injury Discount Rate 39.000 Reprofile Efficiency Review savings into 2017-18 -14.919 Reserve Claim - Apprenticeship Levy 13.700 Reserve Claim: Student Loan Impairment 300.000 Reserve Claim: Tampon Tax 0.267 Resource to Capital Switch: R&D -43.000 43.000 Switch within non-cash ring-fence 38.720-38.720 Current Control Totals (Supplementary Estimate 2016-17) 13,465.432 542.689 406.849 1,597.436 368.176
Section 8 Details of The Welsh Block 2016-17 to 2019-20 2016-17 2017-18 2018-19 2019-20 outturn plans plans plans '000 '000 '000 '000 Wales Office Resource (3) Wales Office Administration Costs 4,350 4,910 4,480 4,570 Wales Office - other (3) 163 200 170 170 Wales Office Resource (3) 4,513 5,110 4,650 4,740 Wales Office Capital Wales Office 0 120 30 30 Wales Office Resource + Capital DEL (3) 4,513 5,230 4,680 4,770 less depreciation & impairments -109-140 -110-110 Wales Office DEL (4) 4,404 5,090 4,570 4,660 Welsh Government Welsh Government Resource 13,324,553 14,414,970 14,188,181 14,270,032 Welsh Government Capital 1,448,699 1,965,612 1,897,847 2,110,584 Welsh Government DEL (3) 14,773,252 16,380,582 16,086,028 16,380,616 less depreciation & impairments -253,319-949,538-664,279-689,981 Welsh Government DEL (4) 14,519,933 15,431,044 15,421,749 15,690,635
Notes (1) Totals may not sum due to roundings. (2) Includes Budgetary Changes as a result of Clear Line of Sight. (3) Including depreciation & impairments (4) Resource + capital - depreciation & impairments. (5) By convention Departmental Expenditure Limit budgets are expressed as resource and capital less depreciation & impairments. Therefore the resource and capital numbers in this table will not sum to the Departmental Expenditure Limit: the difference being depreciation & impairments.