13.1 |
Resources
395.
In early 2002,
Mr Hoon wrote to Mr Brown to request an additional £500m
for
2002/03
above the MOD’s 2000 Spending Review settlement.231
He argued
that the
inadequate
size of the MOD’s 2000 Spending Review settlement, and the cost
of
expeditionary
warfare, had produced a £770m hole in the MOD’s budget. The
MOD
was prepared
to absorb £270m of that.
396.
No.10 wrote to
the Treasury on 19 March 2002 to record that the MOD
and
Treasury
had reached agreement that the bid would be considered
sympathetically
within the
context of the 2002 Spending Review (which was already under
way).232
397.
Mr Blair
attended a meeting with the Chiefs of Staff, Mr Hoon and
Sir Kevin Tebbit
on 21 May,
to discuss current operations and resources.233
Adm Boyce
said that the
Armed
Forces had “been under‑resourced since the SDR” and they “could not
continue
to make
do”.
398.
Mr Boateng
wrote to Mr Hoon on 10 July, confirming the MOD’s settlement
in
the 2002
Spending Review.234
Mr Boateng
stated that the settlement represented
1.2 percent
annual average real growth in the MOD’s total DEL, and 1.7 percent
annual
average
real growth in the MOD’s near‑cash DEL (the previous budgeting
basis), and
that it
would permit the phased implementation of the SDR New Chapter. The
table
below
summarises the settlement.
2002/03
29.3
2003/04
30.9
2004/05
31.8
2005/06
32.8
399.
The settlement
also provided an additional £500m in 2002/03 to “sustain
activity
levels and
retention levels, and help offset the wider impact of the rate of
military
operations”.
400.
Annex A to the
settlement letter confirmed that: “In general, the Ministry of
Defence
will have
unlimited ability to move funds between separate resource and
capital
sub‑programmes
within its budget.”236
401.
Budgets
allocated in the 2002 Spending Review reflected, for the first
time, the
implementation
of full Resource Accounting and Budgeting (RAB).
231
Letter Hoon
to Brown, 31 January 2002, ‘The Defence Budget in
2002/03’.
232
Letter
Heywood to Bowman. 19 March 2002, ‘Defence Spending –
2002/03’.
233
Note
Rycroft, 21 May 2002, ‘Prime Minister’s Meeting with Chiefs of
Staff’.
234
Letter
Boateng to Hoon, 10 July 2002, ‘SR2002: Ministry of
Defence’.
235
Defined in
the settlement letter as RDEL plus CDEL minus
depreciation.
236
Letter
Boateng to Hoon, 10 July 2002, ‘SR2002: Ministry of Defence: Annex
A: Spending Plans’.
507