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DEFRA under re for £200M overspend

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'IRRESPONSIBLE OVER-OPTIMISM and complacent budgeting' landed the Department of the Environment, Food & Rural Affairs (DEFRA) £200M in the red last year, MPs concluded last week.

DEFRA's gross financial mismanagement had disrupted the spending plans of a number of its agencies, including the Environment Agency and British Waterways, Parliament's Environment, Food & Rural Affairs Committee said.

In a report on DEFRA's budget, published last week, the committee warned that capital spending would be affected into 2008 as a result.

It also warned that unless DEFRA can rapidly get its budget under control it will lose its clout within government at a time when it will want to inuence the drafting of the forthcoming Climate Change Bill.

'The financial problems . . .occurred because the department made budgeting commitments based on unsubstantiated assumptions about the generosity of HM Treasury in a tight fiscal period, ' the report says.

DEFRA officials counted on being able to carry over £110M funding from 2005/6 into 2006/7.

DEFRA had been able to carry unspent funding over in previous years, but Treasury rules had been tightened, cutting the amount that could be carried over to only £10M.

The Committee also reported that '£95M of the £200M deficit originates from costs deferred.

'Examples of programmes and projects delayed into 2006/7 include work to be undertaken by the Countryside Agency and English Nature, and work on ood management, waste, IT and research and development, ' says the report.

The Environment Agency's budget took a £23.7M hit last year, equivalent to 7% of its funding.

British Waterways lost £3.9M in budget cuts.

DEFRA last year pledged to save money by axing 2,400 jobs by 2007/8.

But the committee warned that the department was still likely to miss its target.

DEFRA has made no formal response.

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