TAVRA Funding
42. The working group will also address the controversial
question of the control of TAVRA funding. Currently, the TAVRAs
are allocated annual budgets by Land Command. Once the budget
is set, the Associations have full control of it, subject to the
usual requirements of accountability. This independence is seen
as central to preserving the independence and effectiveness of
the TAVRAs. If detailed decisions about the allocation of funds
delegated to them is handed over to the Chain of Command, it will
leave them holding a merely administrative role in TA and Cadet
finances. The TAVRAs have aired their opposition to such a proposal
on several occasions[138]
and Colonel Putnam reiterated them to us—
At the moment we work very well in partnership with
the local chain of command. If that chain of command holds the
purse strings, that partnership swings the wrong way in my view
and is no longer a partnership.[139]
The TAVRAs also believe that such a move would have
important implications on their ability to attract the right calibre
of unpaid volunteers to serve on an Association.[140]
Colonel Taylor commented that—
... the reason they are involved and are prepared
to give up their time is because they feel that they can make
a difference. If you stop feeling you are making a difference
because you are not decision making, because you are not in control
of the financial arrangements, [unpaid volunteers] simply will
not be there.[141]
43. The Minister acknowledged that the working group
would have to draw its own conclusions on the subject of TAVRA
budgets, but he intimated that options were already being formulated
within the MoD—
The question of budgets is something where there
are changes which devolve power in fact to the TAVRAs. I am not
sure we have finalised all of the details on that but in general
principle the TAVRAs will be able in the future to allocate their
expenditures without reference to the centre, more so than they
have been able to do in the past.[142]
If the Minister's position is reflected in the outcome
of the working group's deliberations, we will welcome it. Budgetary
independence is a cornerstone of the TAVRAs' independence and
should not be diminished.
44. The TAVRAs receive their budget allocations quarterly
and invest the money allocated to them until such time as it is
spent. The interest accrued under this system has provided the
TAVRAs with an additional stream of income. However, the MoD recently
modified the system of budget allocation so that the following
year's budget allocation would be off-set against the level of
investment income gained in the previous year. As they explained
in a supplementary memorandum—
We believe that the previous system of funding the
TAVRAs is capable of improvement and some changes have already
been introduced: as the Committee noted in its report, income
derived from TAVRA investments is now taken into account in setting
budgets, as is forecast income from the sale of properties; the
TAVRAs now play a full part in the Department's annual Long Term
Costing process; and we have increased delegated financial powers.
Recent audits have highlighted a number of areas of concern, and
these are being addressed both by the TAVRAs and by the Department.[143]
Whilst we understand the MoD's need to make savings,
we believe that the ability to accrue income from investment in
itself offers the TAVRAs incentives to achieve greater efficiencies.
We believe that the promotion of effective financial management
by the TAVRAs (which has been achieved in the past) will be threatened
if they have no incentive to efficiency savings other than being
forced to work within steadily shrinking budgets.
45. The TAVRAs also generate income from sub-letting
properties within their estate. This is not an insubstantial amount
and Land Command estimate that the TAVRAs generate, nationally,
nearly £1 million a year.[144]
The TAVRAs argue that this extra income is very important to their
ability to assist the TA. In previous evidence to us witnesses
from the TAVRAs explained that such income helps to provide extra
services needed by the reserves.[145]
To off-set this income against future budget levels, in a similar
way to investment income, would have the effect of reducing the
amount of money at the TAVRAs' disposal even further. It would
also act as a disincentive for the TAVRAs to explore new avenues
of generating money. Whilst there may be an argument in favour
of the MoD recouping income accrued from investment, it should
not include income derived from the investment of money saved
from improved efficiency. Nor should income derived from sub-letting
property, which provides the TAVRAs with a valuable source of
additional income, be included in any form of net-budgeting. We
recommend that the budgeting system for the TAVRAs allows them
to retain for their own use at least 50% of any efficiency savings
made on their annual budget and 100% of accruals from other income
generating activities.
46. In spite of their concerns, the TAVRAs were at
pains to point out that the "TAVRAs are not against change.
We are not against making economies and we actually believe that
we could do more with the regular services than we do now".[146]
The Minister also emphasised his commitment to the working group
and promised that he would not allow it to be rushed into making
the wrong decisions.[147]
He assured the Committee that—
The working party should look at these issues, take
advice, hopefully come to a conclusion. You have my assurance
that there will be detailed ministerial scrutiny over what happens.[148]
We welcome this assurance.
138 ibid, QQ 2588-89 Back
139
Q 78 Back
140
Q 79 Back
141
Q 79 Back
142
Q 218 Back
143
Ev p 36 Back
144
Ev p 41 Back
145
Eighth Report, Session 1997-98, The Strategic Defence Review,
HC 138-II, Q 520 Back
146
Q 76 Back
147
Q 208 Back
148
Q 216 Back
| 
