05 Dec 2012

Autumn Statement 2012: no defence equipment losses

In an Autumn Statement heavy on revised figures, darker outlooks and further cuts, defence budgets for the year ahead was one area to receive a modicum of good news amidst the gloom.

Chancellor George Osborne announced in his statement that the MOD would be largely saved from the further 1% efficiency savings being requested by Mr Osborne from other Whitehall departments.

This means no reductions in military manpower or the core defence equipment programme over the course of the current Parliament.

The MOD managed to escape manpower and equipment losses due to a special deal made with Mr Osborne over unspent funds at the end of the financial year. Under traditional Treasury regulations, government departments ‘use or lose’ their annual budgets, meaning that failure to spend the allocated cash means the unspent funds are returned to the Treasury.

However, it has become apparent that a deal has been struck allowing Defence Secretary Philip Hammond to roll his unspent budget over into the next financial year without the need to refund the underspend to the Treasury.

The statement is likely to be seen as a victory for the MOD and in particular for Mr Hammond, who had previously spent a great deal of effort balancing the defence budget which led to this underspend.

For more information on the 2012 Autumn Statement, visit www.govopps.co.uk