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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.
MR BROWN’S EVIDENCE TO THE INQUIRY ON INCREASES IN THE MOD’S
CORE BUDGET
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
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