Summer Supplementary Estimates

The Summer Supplementary Estimates booklet (HC 621), containing a Supplementary Estimate for HM Treasury, presented to the House of Commons yesterday seeks authority for additional cash expenditure by the department of £5.3bn on existing services. There is also a token increase in resource expenditure.

At the Budget the Treasury announced that the Bank of England loan facilities to Northern Rock would be replaced with direct Treasury funding during 2008-09 in line with restrictions on central bank financing of government undertakings set out in the Treaty Establishing the European Community. The Main Supply Estimates published in April included a sum of £14 billion, the amount of the outstanding loan facilities projected at the end of the 2008-09 financial year.

Since then, the date of transfer has been agreed by the parties involved and the Treasury will transfer the loan facilities over the summer, at which point the outstanding balance is projected to be £19.3 billion. This Supplementary Estimate updates the provision made in the Main Estimate and will enable the transfer of the Northern Rock loan from the Bank of England to the Treasury at the agreed time.

Northern Rock has been paying down these facilities to date and is expected to continue to do so. As set out in the Budget, the outstanding loan facilities at the end of March 2009 are projected to be £14 billion.

The Estimate does not involve any change in total spending plans.

Notes for editors

1. The Summer Supplementary Estimate is a technical requirement to bring into effect the decision announced at the Budget 2008 to transfer the loan facilities to Northern Rock from the Bank of England's balance sheet to the balance sheet of HM Treasury. It also enables the UK to meet its EU treaty obligations regarding central bank financing of government undertakings.

2. This is the earliest available opportunity to present a supplementary Supply Estimate, as Supply Estimates can only be presented while Parliament is sitting.

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