Clarification of Autumn Statement on Defence
(Source: UK Ministry of Defence; issued Dec. 6, 2012)
Various media report on the reduction in the Defence Budget announced during the Chancellor's Autumn Statement yesterday. The budgetary changes mean that in 2013/14 and 2014/15 the MOD's resource budget will be reduced by approximately £250m and £490m respectively.

Due to the fact that the MOD has, for the first time ever, included annual 'unallocated provisions' in its budget, and because of exceptional flexibilities agreed with the Treasury, the reductions announced yesterday can be absorbed without impacting on planned military manpower totals or on the Defence Equipment Programme in 2013/14 and 2014/15.

The Financial Times claims that the decrease will see the MOD entering the next Spending Review with a lower baseline. It argues that this means the Department must now plan to have £490m less in its bank account every year from 2015 to 2020 - the date by which it must deliver Future Force 2020.

The budget for 2015/16 and beyond will be set out in the next Spending Review. When the time comes, we will vigorously be making the case that the assumptions we currently hold, which include an agreed one per cent annual increase in the MOD's Equipment Programme, remain valid.

The Daily Telegraph reports that spending on military operations in Afghanistan this year is already being cut by £650m. This money does not come from the MOD's budget but from the Treasury Reserve - a separate pot of money used to fund military operations.


(EDITOR’S NOTE: So, we are to believe that, in just a few short months, the MoD has gone from living with a £38 billion “black hole” to being prosperous enough to shrug off £740 million of unexpected cuts to its budget.
Defence Secretary Philip Hammond must surely be congratulated for his financial wizardry.
It is thus all the more surprising that Amyas Morse, Britain’s Comptroller and Auditor General, said Dec. 6 that he has again refused to sign off the financial accounts of the Ministry of Defence.)


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