Select Committee on Defence Written Evidence


Further memorandum from the Ministry of Defence

WINTER SUPPLEMENTARY ESTIMATES 2004-05

Commander-in-Chief Fleet (RfR1-A); Commander-in-Chief Land (RfR1-C); and Commander-in-Chief Strike Command (RfR1-D) are to have a decrease in Net Provision of some £836 million. The decrease for Commander-in-Chief Strike Command is some 12% of the present Net Provision. What is the reason for these decreases in Net Provision, and what areas within these commands will be affected?

  The alterations to budgetary allocations for the CinC Fleet, CinC Land and CinC Strike included in Winter Supplementary Estimates represent decreases in depreciation and cost of capital charges relating to previously planned fixed asset holdings. The changes brought these Top Level Budgets into line with the revised defence programme announced on 21 July 2004.

  Since the Winter Supplementary Estimate was laid, internal allocations of budgets to TLBs have changed further to reflect normal management processes and adjustments within the defence programme, including the movement of funds between TLBs where the responsibility for carrying out a task has changed. These changes will be reflected in Spring Supplementary Estimates.

The Defence Procurement Agency (RfR1-K) is to have an increase in Net Provision of just over £1 billion. What is the reason for this substantial increase (a 50% increase over the present Net Provision)? To what extent does it relate to cost increases to major defence equipment projects reported by the National Audit Office?

  The increase in the budgetary allocation for the DPA represents the non-cash consequences of changes in provisions for liabilities and charges and is not linked in any way to cost increases on major defence equipment projects.

January 2005





 
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