Monday, June 21, 2010

A Fresh perspective reminds how complicated analysis of the UK Defence Budget remains

A Fresh perspective reminds how complicated analysis of the UK Defence Budget remains
June 21, 2010

I received contact today from a journalist representing a global financially orientated newspaper requesting advice on accessing figures comparing UK defence expenditure against GDP.

After a few minutes I began to relive many debates, discussions and research times in libraries in search of the unattainable. It is perhaps, a reflection on the gamesmanship between MOD and Treasury that such analysis of basic accounting is impossible. It may also possibly link to a desire to manage budgets creatively in order to achieve the desired effects which POlitical leadership requires but without appropriate resources.

The MOD was reliant on cash accounting forever, from Henry VIII through until the early 1990s. The reporting of budgets was single-service in nature until the end of the cold war when an array of TLB's or Top Level Budgets were created. The aim was to break down single-service stovepiped organisations - which it did at the cost of creating more mini-stovepipes.

Resource Accounting & Budgeting (RAB) brought home a higher degree of accuracy, plus the ability to finance off-balance sheet (ie. through Public Private Partnership or Private Finance Initiative (PPP/PFI)). Unfortunately the concepts were poorly grasped and after a couple of years the figures were drastically revised with the net effect that the numbers were more or less impossible to make sense of).

Decades of Industry pushing to have the MOD share elements of its budget for equipment were vaguely addressed by Defence Industrial Strategy (DIS) - which had a short honeymoon.

So, whilst finding numbers which date back from 1945 is rather difficult on a comparative basis, reliving the story is quite intriguing. Thank you very much for the prompting...

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