The FT is reporting that the MoD has been given dispensation to retain its widely reported £1.6b two year underspend instead of handing back to the Treasury.
Good financial discipline means financial credibility, something I have said for a long time the MoD needs more than anything. The reporting will be finalised and published this week.
The article is behind the paywall so will probably take a while to filter out into other outlets;
http://www.ft.com/world/uk/politics
@TD
Does the article give any indication of what MoD now plan to do with the money?
Are there unfunded programmes that will now be progressed or brought forward as a result?
Peter, I expect it has already been spent on stuff that was planned so I don’t think there will be any new stuff
Excellent news, thank you.
@TD
Spending money before its approved? That hardly sounds like the brave new world of dicipline and credibility…
It won’t have been actually “spent” yet, but I suspect there are a number of projects on the SICPL that will be fighting tooth and nail for it!
This is the usual accountancy bollocks.
The ‘Underspend’ will doubtless allready have been earmarked to deal with the ‘overspend’ on so many other areas. It’s not ‘Real money’, so don’t get carried away with spending it on more Astutes. T45′s etc……
What is the unit cost of a third QE CVF?
Just a thought…
Underspend is surely a misnomer? This is unallocated funds (outwith existing plans) that will be retained within the 10-year expenditure-plan, no? [Or, atleast, the next two years.]
Simply put: Income £20, Expenditure: £19, 19s 6d. Joy! Without reading the article ( I don’t pay for that part of the Pearson empire so cannot confirm) I assume that the 2%-cut Ozzie announced has been rescinded. Is there an election near Portsmouth soon…?
If you do a Google search on this
“Defence budget to carry over £1.6bn”
You might be able to see it
@NAB
Yes – on the face of it that is what I would understand.
So it is just possible that something relatively modest in scale but very desirable, (like Sentinel upgrade, or Crowsnest main gate, or more C17, or a handful of C-295, or Weapons or Software for Typhoon) might get brought forward as a result.
@Ixion / Gloomy
The overall scale of our Teeth arms is clearly set in stone until 2015. What I am talking about the small enablers and force multipliers, ie bra and knickers for @TD to wear under his fur coat.
I’d not get too excited – it will either be used as a primer against funding cuts elsewhere, or go towards the cost of finding £4.7 billion to add to the EP.
If you read the details closely on the 10 year programme, its predicated on finding £4.7 billion in funding from elsewhere, and I suspect this may help meet those targets.
No point in wishlisting new kit either as there is no longer term funding for this money.
so, good news, but not brilliant news.
Was there not an item saying defence has a £2 to 3 billion black hole in 2015-16? This £1.6 billion will probably go towards filling this hole.
“No point in wishlisting new kit either as there is no longer term funding for this money.”
I don’t know. We could always replace SA80 for a few hundred million. Now where did I leave that ‘phone number for IWI……?
Talking of SA80, isn’t it supposed to be out of service in 7-8 years?
“The MoD will publish figures on Wednesday that show that the £1.6bn has not been spent this year for various reasons. Some of the costs of implementing the Strategic Defence and Security Review changes to the armed forces will now fall in future years.”
That’s the key part for me. It’s money that was planned for programmes needing funding this year, which have been delayed into future years. We still have to fund those programmes when they’re eventually carried out.
There is no new money. At best, it seems the MOD won’t lose it forever and have to fund this year’s delayed projects and next year’s projects out of next year’s funds alone. I wouldn’t say it means no cuts at all in practice (unlike my simple example below) as some of the delayed expenditure will have no doubt incurred additional expenses in the meantime.
E.g.
Before:
2012 Budgeted Expenditure £100 (what the MOD plans to do in 2012)
2012 Funding allocated £100 (2012 Treasury grant)
2012 Actual Expenditure £98 (less than budgeted due to delayed projects)
2012 Actual unused funding £2 (lost to Treasury)
2013 Budgeted Expenditure £102 (what the MOD plans to in 2013 + what it still needs to do from 2012)
2013 Funding Allocated £100 (2013 Treasury grant)
2013 Actual Expenditure £100
2013 Actual cut £2 (cut 2013 projects to fit in delayed 2012 projects (or forego the delayed 2012 projects)
Whereas with this exception:
2012 Budgeted Expenditure £100
2012 Funding allocated £100
2012 Actual Expenditure £98 (less than budgeted due to delayed projects)
2012 Actual unused funding £2 (retained by MOD)
2013 Budgeted Expenditure £102
2013 Funding Allocated £102 (£100 Treasury grant + £2 from last year)
2013 Actual Expenditure £102
2013 Actual cut £0 (Delayed 2012 projects funded from left over 2012 budget).
‘underspends’ are a misnomer …. this is a fiscal year timing difference. Previous policy, and in line with most annual budgets it is a ‘use it or lose it’ problem that has been avoided.
Re SA80
tactical-life.com has an item that Australia has just adopted a new updated Steyr Aug to replace their old Steyr Aug. Looks quite good, but still in 5.56 sadly. Got a quite neat grenade launcher though.
@ John H
But, but, I have already spoken with the Israelis.