30.10.2003, 09:55
Zitat:MoD cuts back to cope with deficitDie Vorzeichen verdichten sich immer mehr dazu ,dass es ein ganz ordentliches Kürzungsdisaster im MoD geben wird.
By Michael Evans, Defence Editor
THE Ministry of Defence has ordered urgent cuts be made because it is suffering from a cash deficit of hundreds of millions of pounds this year.
One defence source said that over the next few years the deficit could amount to “several billion pounds”. The financial crisis is so severe that, according to Treasury sources, the Chancellor has had to agree to give an extra £400 million to the MoD.
However, the “black hole” is believed to be considerably larger, and cuts will have to be imposed immediately to keep within this year’s budget of £31 billion. All the MoD’s main budget-holders have been told to come up with a list of cutbacks, and defence sources said that military exercises may have to be pruned, fuel for training reduced and equipment projects delayed.
One defence official said the problem was “cashflow”, and that the MoD needed an overdraft from the Treasury just to maintain the running costs of the Armed Forces.
The unprecedented financial challenge for the MoD has nothing to do with the operational commitment in Iraq, which is already funded by the Treasury to the tune of £3 billion, nor the rocketing costs of new equipment.
The problem has arisen because the Treasury has ordered every government department to switch to an accounting system based on the total assets of each ministry.
For the MoD, the exercise has been hugely complex. It has not been easy to put a value on a tank which has 1,000 miles on the clock and a tendency to suck in sand in the desert.
However, after totting it all up, the MoD told the Treasury it had assets worth £86 billion. But the Treasury thought differently, and put a lower price on the MoD’s value. This has created an embarrassing gap in the MoD’s finances, and it has meant there is now less cash available this year