Select Committee on Defence Minutes of Evidence

Examination of Witnesses (Questions 80 - 99)



  80. You did provide us with a helpful couple of pages when the briefing was sent. I am not yet clear how this is going to work in practice, and I would be grateful for some clarification. I understand that this is supposed to facilitate what is described as "pro-active spending, to prevent human suffering and greater expenditure that arises from conflicts and their aftermath". The intention is to get in early and stop bureaucratic delays and interdepartmental studies between the MoD, DfID and the Foreign Office. I can see the logic of that. How is it going to work in practice? Could you summarise it and I will come in with a small question?
  (Mr Tebbit) There are two of them, one for Sub Saharan Africa and one for the rest of the world. Three departments put money into it, the FCO, MoD and DfID, and there has been a top-up from the Treasury. The levels that came from departments basically represent the amount of money they spend at present in these areas. When the MoD put in £32 million, for example, to the rest of the world budget it reflects what we are spending, more or less, at present on these sort of things, the Russian resettlement programme for officers, teaching programmes, the training teams that we send out around the world to train-up local ministries of defence or armed forces, these sorts of things. We will all sit around in a room together and we will take collective decisions on how the money should be spent. We could end up by doing exactly what we do already, and effectively. DfID, the MoD and the Foreign Office will still spend, more or less, what they do at present according to the existing divisions, or I might say, "It is much more sensible to apply diplomatic instruments to this problem rather than a few military people running around doing a training programme, you have it, my dear fellow", or John Kerr, I am sure, because he is such a generous chap, might say, "No, no you must take it for your military people because you are much more useful than we are", or we might get this from DfID. That is how it will work. The value of it is that is it transferring, it forces us to think in an integrated way about crisis management and it should enable us to make quicker decisions on what to do.

  81. The MoD puts £32 million into the pool for the rest of world but according to the paper, this is Foreign Office led, for Sub Saharan African you put a very small amount in, £1.5 million, and that is DfID led. Given the experiences and the arguments with DfID over Mozambique humanitarian relief, what guarantee is there that there will be consensus? What guarantee is there that there will not be delays because you cannot agree who is paying, for example, if your £32 million has already been spent?
  (Mr Tebbit) Firstly, this will encourage us to set joint objectives and have joint priorities. There was a misunderstanding about Mozambique, it was not a fundamental problem.

  82. I appreciate that.
  (Mr Tebbit) There can still be disagreements, obviously there are already.

  83. What role does the Treasury have?
  (Mr Tebbit) They topped up the money.

  84. They are doing more than that, are they not, the public service agreement is described as a key PSA target?
  (Mr Tebbit) It is one of our targets.

  85. Does the Treasury have an arm-twisting role if you cannot agree with the other departments? I would have thought that Treasury's attitude would be that they would rather not spend it.
  (Mr Tebbit) It is the other way around, we would be the ones on the front foot, ensuring that we use this money effectively for these policy purposes. A further point, this does not cover the big issues of Kosovo, for example, that does not have to be squeezed within this strait-jacket.

  86. Can I clarify, the budget arrangements appear to say that there will be a separate pot of money for programme expenditure and then there will be a separate pot for major peacekeeping tasks. Will the MoD be in charge of managing the costs of potentially significant unprogrammed peacekeeping, like Kosovo, for example, and will you be able to do that regardless of the fact that the rest of the world budget has already been spent and you just go ahead and then assume that the Treasury is going to top it up, or do have you other problems? Will you be expected to get it from your own budget? Are we not still going to be in that fundamental problem of uncertainties and extra expenditure? Earlier questions referred to Bosnia in the 1997-98 budgeting, are we going to have the same problem in regard to the Balkans or some other conflicts?
  (Mr Tebbit) This reduces uncertainty for relatively minor, smaller scale operations. It does bring a certain discipline to the process. In one sense the MoD would not be able to do certain things unless everyone agreed to give us more money. For the large enterprises it does not work like that. The Prime Minister, the Defence Secretary, the Foreign Secretary and the Chancellor collectively agree on something and money is found from the Reserve for things like Kosovo.
  (Mr Balmer) Bosnia and Kosovo will be additional.

  87. Given that the Treasury with its Public Service Agreement Review is now recognising that this is a key target and that conflict prevention has a role, and peacekeeping comes into that, is there going to be a greater onus on the Treasury to come up with extra money earlier than there has been in the past?
  (Mr Tebbit) They have already come up with extra money just in creating these budgets. There has already been a move from the Treasury to put £20 million each year into the Sub Sahara fund and 12, 20, 30 million across the three years into the rest of the funds. To that extent that is positive.

  88. Will the Permanent Secretary and the Treasury say, "You have had your 20 million, that is it. You are on your own now". Then you have to make special pleas and seven months later you get some more money, so, in fact, the culture has not necessarily changed?
  (Mr Tebbit) That is always a risk. Look at the positive side. Here is a demonstration of Britain's commitment to helping people whose lives are at risk. The message goes out to the world, these budgets have been set up and Britain is doing more. That is surely good news.

  89. There is no argument about that.
  (Mr Tebbit) It is not perfect, it does not solve every issue.

  90. We are exploring the process.
  (Mr Tebbit) It does not solve every issue, it does ease some of them.

  91. The question is, will the Treasury be more speedy? Will it be more forthcoming earlier when you get into very expensive commitments like Bosnia and Kosovo, which we have had for several years?
  (Mr Tebbit) That description of the Treasury's attitude does not sound very promising to me.

  92. That is what I feared. Can I conclude with a couple more points, the intention of this conflict prevention pooled budget is to ensure the departments spend funds according to shared objectives and priorities. Is that going to mean those areas which are not included, like Kosovo, for example, which are not, therefore, shared objectives and priorities will largely be paid for by the MoD?
  (Mr Tebbit) No, I do not think it means that at all. I suspect what they are thinking of here are things like helping to give effective reports under the UN where there will be pressure for enhanced early warning of crises. I do not think that is going to alter some of those other issues that you are discussing.

  93. There is one other point, in your paper that you sent to us there is a reference to what might happen to money that comes back from the UN for payment for our peacekeeping contributions. If the Americans pay their arrears and the UN is able to meet the obligations that it has entered into when that money comes back, is that money going to be money that will come to the MoD automatically, will it go proportionately to the departments that spent it or will it be part of the money the Treasury keep?
  (Mr Tebbit) That is a very good question. The money would come back to the department that has incurred the cost in the first instance.
  (Mr Balmer) It ought to be the case that if the MoD has incurred expenditure, which the UN will in due course pay, the Foreign Office will already have reimbursed us. It is the Foreign Office which is currently out of pocket and they will have turned to the Treasury because they are out of pocket and the Treasury will bail them out. When the arrears turn up it effectively goes to the Treasury.

  94. We had two different answers there.
  (Mr Tebbit) Under the current arrangements with the UN the Foreign Office does the immediate business with the UN, they are the department that pays. The monies are taken onto their budget in the case of UN operations and they are the ones that get the reimbursement. We, as it were, get paid by the Foreign Office while, as it were, they are waiting to get the recovery.

  95. If the conflict prevention budget was used in support of the UN operation—
  (Mr Tebbit) That principle would change.

  96. The Treasury is putting money into this conflict prevention budget, does that mean that the money that comes in will then be divided out and the Treasury will claim its portion back as opposed to it being used by DfID, yourselves or the FCO?
  (Mr Tebbit) The Treasury money is there for collective purposes. If at the end of the year it is unspent I dare say the Treasury will be keen to get it back. That is the only circumstance in which that would happen.
  (Mr Balmer) Any UN contributions, when they are applicable, would be in addition to this budget. If it is an operation where we are allowed to charge the UN we will continue to do so.

  97. The money will come back to who?
  (Mr Balmer) We spend the money, we claim it from the Foreign Office and they claim it from the United Nations.

  98. When it comes back who does it come back to? You said it came back to the Treasury.
  (Mr Balmer) It comes back to the Foreign Office. If it is arrears then usually the Foreign Office has been out of pocket for a year or so and they would have been reimbursed by the Treasury. Therefore, the Treasury is the one who get the arrears when they arrive.

  99. I am still not clear. Perhaps you can send us a note to explain this archaic procedure?
  (Mr Tebbit) It is called the Armstrong Formula.

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