§ Ms SquireTo ask the Secretary of State for Defence if he will make a statement on changes to Class 1 cash limits and the defence operating costs limit for 1998–99.[71326]
§ Mr. George RobertsonThe Government have decided that, subject to Parliamentary approval of the Spring Supplementary Estimates, an addition of £310,104,000 should be made to the Defence budget in the current year. This will cover increased costs in 1998–99 due to slippage out of 1997–98 and costs of unprogrammed overseas operations, including those in the Former Yugoslavia, including the United Kingdom's contribution to the OSCE-led Verification Mission in Kosovo (KVM), the supporting KVM Extraction Force based in Macedonia, and on-going air operations over Iraq, including the United Kingdom's contribution to Operation Desert Fox. The figure includes full take up of the Ministry of Defence's entitlement to End Year Flexibility of £225,104,000 in respect of the Defence budget underspend in 1997–98. This figure is £56,617,000 lower than the figure announced by the Chief Secretary on 14 July 1998,Official Report, columns 132–36, under the Operating Costs and Capital equipment schemes which had been assessed on the provisional outturn for the Defence budget at the time. In the event, the final outturn for 1997–98 was higher than forecast.
The Supplementary Estimate will also provide for changes in the general pattern of expenditure, including adjustments between the PE equipment and Defence Operating Costs programmes; for the transfer of provision to the Home Office and the Foreign and Commonwealth Office in respect of MOD's contribution to jointly funded programmes; and the withdrawal of net accounting arrangements for the recovery of VAT on Contracted Out services.
Because of the adjustment between the equipment and operating costs programmes and the incidence of costs in respect of ongoing military operations in the Former Yugoslavia and Iraq, the additional funding will be drawn onto Class 1, Vote 1 and Class 1, Vote 2, with only a token Estimate being taken on Class 1, Vote 3 to reflect a realignment of Estimates provision within the Vote. The 486W Class 1, Vote 3 cash limit will be reduced to reflect the realignment of funding to the operating costs programme. The cash limit changes will be as follows:
£000 Class 1 Current cash limit Change Revised cash limit 1 10,713,809 171,983 10,885,792 2 4,669,236 357,975 5,027,211 3 6,856,925 -219,854 6,637,071 Defence budget 22,239,970 310,104 22,550,074 The impact of these changes on the Defence Operating Costs Limit (DOC) is as follows:
£000 Class 1 Current cash limit Change Revised cash limit 1 10,713,809 171,983 10,885,792 2 4,669,236 357,975 5,027,211 3 715,769 -17,569 698,200 Defence budget 16,098,814 512,389 16,611,203 As the increase in the Defence budget cash limit will be met from the Reserve, which is part of the Government Control Total, it will not add to the planned total of public expenditure in the current year.