13.1 |
Resources
470.
Sir Kevin
Tebbit told the Inquiry that Mr Brown’s decision to impose
cash controls
meant that
the MOD:
“… had to
go in for a very major savings exercise in order to cope with what
was
effectively
a billion pound reduction in our finances.”
“… the way
we went through this exercise was to preserve resources for Iraq,
for
the
operational scenarios that we were currently engaged in, and to
make cuts and
savings in
the areas which were least likely to be called upon
…”278
471.
In response to
a question from the Inquiry, Sir Kevin said that it was “very
difficult
to say”
that the reduction had had a long‑term impact on UK operations in
Iraq.279
472.
Mr Brown
told the Inquiry that the MOD had more funding available to it in
2002/03,
2003/04 and
2004/05 than it had secured in the 2002 Spending
Review:
•
the
additional £500m for 2002/03, which had been confirmed by
Mr Boateng in
July 2002;
and
•
authority
to transfer £400m from non‑cash to cash in 2003/04 and
2004/05.280
473.
Mr Brown
also emphasised that the size of the MOD’s core budget had “really
not
much to do
with Iraq, because Iraq was being funded completely
separately”.281
474.
Sir Kevin
Tebbit agreed with that analysis:
“I really
do not believe that our activities in Iraq were constrained by the
overall
size of the
MOD budget. My own view was that Afghanistan was – putting the
two
together
was where the strain came subsequently.”282
475.
Sections 6.3
and 14 describe how the MOD prioritised key military
capabilities.
476.
In October
2009, the House of Commons Library published a note
showing
defence
expenditure in near‑cash terms between 1955/56 and
2008/09.283
The
use
of
near‑cash terms allowed comparison between years before and after
the transition
from cash
accounting to RAB. The table below shows those figures for the
period from
2001/02 to
2008/09.
278
Public
hearing, 3 February 2010, pages 7 and 10.
279
Public
hearing, 3 February 2010, page 11.
280
Public
hearing, 5 March 2010, pages 127-128. Mr Heywood confirmed in
October 2003 that the MOD
could
transfer £400m from non‑cash to cash in 2003/04. Mr Boateng
confirmed in July 2004 that the MOD
could
transfer £350m from non‑cash to cash in both 2004/05 and
2005/06.
281
Public
hearing, 5 March 2010, page 128.
282
Private
hearing, 6 May 2010, page 42.
283
House of
Commons Library Standard Note, 16 October 2009, Defence
Expenditure.
521