8.This section provides the statutory basis for the retention and use by departments of income they receive. Under resource accounting appropriations in aid (a-in-a) will be recorded on an accruals basis (ie it will be recognised when the income is earned) rather than on a cash basis as is the case at the moment. However, additional provisions are required to deal with the cash effects of a-in-a.
9.Subsections (1) and (2) enable the Treasury to direct, by Treasury Minute, that income on a resource basis may be applied as a-in-a of resources authorised by Parliament to be used for the service of a particular year. This is subject to the overall limits on the amounts of a-in-a which has been approved by Parliament and are set out in the relevant Appropriation Act. The intention of this subsection is to give the Treasury powers in the RAB system similar to those it has under sections 2(2) and 2(3) of the Public Accounts and Charges Act 1891 in the present system.
10.Subsections (3) to (5) deal with the cash consequences of resource amounts that have been authorised for use as a-in-a. Timing differences between the recognition of a-in-a on a resource basis and the actual receipt of cash require special provisions for dealing with the cash.
11.Subsection (4) applies in the situation (which should apply in the great majority of cases) where cash is received in the same financial year as the resource a-in-a is authorised. In this case the department may retain the cash provided it is used for the purpose authorised in the Treasury direction. If it cannot be so used then the cash must be surrendered to the Consolidated Fund.
12.Subsection (5) applies in cases where cash is received in a year other than that for which the related resource a-in-a is authorised. This might happen where the time between the recognition of the income (inclusion as resource a-in-a) and the payment by the debtor straddles the end of a financial year or similarly where a payment is received in advance of the department carrying out the service to which it relates (the resource a-in-a will not be recognised until the service is carried out and the income thereby earned) and these events falling into different financial years. Under these circumstances subsection (5) will enable the cash to be used towards the authorised purposes of the year in which it is received. If this is not possible then it will be surrendered to the Consolidated Fund. The ability to use this cash will reduce the department's overall cash requirement for the year (and hence reduce the amount it has to draw out of the Consolidated Fund) but it will not increase the level of resources available to the department in that year.
Commentary on Sections Section 2: Appropriations-in-aid