Letter from Secretary of State John Denham to stakeholders on Budget
I am writing to tell you about the outcomes of this week’s Budget.
Budget 2009 represents a good settlement for DIUS and our partners. In a tough fiscal environment, Government has made it clear that it will continue to invest in skills, science and innovation. This is recognition of the work of all our partners and the role you play in helping individuals and businesses through the downturn. And so, despite the pressure on public resources, the budget for DIUS will increase in 09-10.
The Chancellor announced additional investment of over £260m for training and subsidies to help young adults, aged 18-24, approaching 12 months unemployment to acquire the skills at all levels or get the experience they need in sectors with strong future demand. That includes £122m for DIUS to deliver over 70,000 work-focussed pre-employment training places in England.
In recognition of the role of the TSB in promoting innovation which directly supports economic growth, the Government will set aside funding of £50 million as part of the new Strategic Investment Fund to enable the TSB to increase its capacity to support innovation in areas which have high potential to drive future growth, such as low-carbon technologies, advanced manufacturing and the life sciences.
The Budget announced additional capital funding of £300m in the current CSR period which will allow the LSC to give approval to a limited number of projects starting in 2009-10. Recognising the long-term nature of capital projects, we are planning a continuing FE capital investment programme in future years, with a planning assumption of £300m a year from 2011-12 to 2013-14 to be confirmed at the next Spending Review. This provides a provisional £1.2bn in total to 2013-14.
As the Government made clear in Building Britain’s Future – New Industry, New Jobs science is fundamental to the future of the UK economy. The Budget therefore underlines Government’s ongoing commitment to continued and increased funding for science and research through the protection of the ring-fence around the science budget.
As with other areas of Government, we also need to ensure that, especially in the current economic climate, every taxpayer’s pound that we spend is used as effectively as possible. We have therefore looked across our budgets to identify the scope for making efficiency savings to contribute to the Government’s target of an additional £5billion of value for money savings to be delivered in 2010-11.
The Department already has a range of value for money programmes in place, and an excellent record of delivery against previous targets.
In the CSR period 2005-06 to 2007-08, DIUS over-achieved against its “Gershon” efficiency target of £622 million by some £265 million by March 2008. All these gains were recycled into improving delivery. As part of the Comprehensive Spending Review for the period 2008-09 to 2010-11, DIUS identified scope to generate additional VfM gains worth £1.5 billion by 2010-11, all of which will be cash-releasing and net of costs and are being re-invested in delivery. We have already made good progress towards delivering on this target.
We believe, however, that there is scope to go further and deliver further value for money savings in 2010-11 totalling £400 million. This represents 2.2% of the total DIUS Resource DEL budget in 2010-11. Further information about value for money savings across Government, including DIUS can be found in the Budget documentation. At the same time, we will ensure that budgets are managed to reflect known cost pressures, including a continuing rise in HE student support expenditure reflecting the success of the Government’s policies in supporting students from all backgrounds to enter HE.
We will deliver these additional savings through reforming the way we spend our money so that our expenditure is effectively and sustainably focussed towards meeting the UK’s short and long term economic and social goals.
We will work with the Learning and Skills Council and the Higher Education Funding Council for England on the implementation of these approaches and will be writing formally to HEFCE and LSC in the next few weeks.
Within this framework we are maintaining the Science and Research Budget ring-fence. This continued protection highlights the importance the Government attaches to science and research. All Research Councils have seen increases in their budgets over this spending review period, delivering world class research and helping tackle difficult challenges like climate change. The Councils will be developing plans over the next few months to refocus their research programmes for 2010-11 into new priority areas such as the green economy, life sciences, the digital economy, high-value manufacturing systems and services and cultural and creative industries. As part of a conversation started by DIUS Ministers, these are the key research priorities that the research community has identified as being the most promising areas of research for the future economy.
The Research Councils already have a strong programme of VfM to support the delivery of their spending on research. As the Budget sets out, DIUS will now work with the Research Councils to secure delivery of an additional £106m of value for money savings in 2010-11. These savings will be reinvested as part of the detailed plans expected from Research Councils and will fund a range of new opportunities for staff exchanges with industry, post graduate research studentships and collaborative research.
I hope you will agree that, within the current economic climate this package of measures from Budget 2009 represents a strong commitment to the place of skills at all levels, science and innovation in supporting the economy.
JOHN DENHAM
