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Background: Brown’s military funding row

By Lewis Hannam

Updated on 05 March 2010

Gordon Brown has been accused of being "unsympathetic" towards defence spending during his stint as Chancellor – a claim he today denied. A military funding explains to Channel 4 News how army cash tensions arise.

British troops in action

Ahead of the prime minister's appearance at the Iraq Inquiry, Lord Guthrie, who led the Armed Forces from 1997 to 2001, said: "He (Mr Brown) should be asked why he was so unsympathetic towards defence and so sympathetic to other departments."

Lord Guthrie's comments follow a revelation by Sir Kevin Tebbit, a former top civil servant, that in September 2003 Brown had taken a "complete guillotine" to defence spending.

Combating the criticism, Brown today told the inquiry that he had never turned down a request for urgent funding from British troops.

He said: "No urgent operational requirements (UORs) were turned down; I told my staff (at the Treasury) that all UORs must be met. At the same time any request of under £10m was accepted without this process.

"I think it is a good system because it allows money to be paid quickly, to do things in days and weeks, rather than months."

He added that no "financial restraint" had been placed on military action in Iraq.

But does Brown's assertion that he always met UORs tell the full story about the controversial subject of military funding?

Professor Malcolm Chalmers, of the Royal United Services Institute, explains why tensions between the Ministry of Defence (MoD) and Treasury arise, and why the pressure of war in Iraq and Afghanistan could have caused problems.

He told Channel 4 News: "The system is that the MoD has a long-term budget – they are set this as a core budget.

"But when the MoD is involved in military action then the additional costs of those operational requirements is paid for separately. It comes from the Treasury reserve.

"Where there's dispute is the grey area between the two: the core budget and the additional spend, the latter includes UORs.

"For example, recently Bob Ainsworth (defence secretary) indicated he was buying new Chinook helicopters, but was scaling back the Air Force in part to pay for it. 

"The need for money for Chinooks is a result of what's happening in Afghanistan, but most of them won't be ready for five years – by which time it is hoped we will be out anyway– so that's something they will argue about. Is it a core budget issue, or an additional spend?

"I suspect the issues between Brown and MoD spending in the past were precisely around this issue, but I don't know that for sure.

"Military budget planning is long-term but a new conflict places new strain on any agreement.

"If it is something that is needed immediately then the Treasury usually agrees, but they would still have an argument about it.

"But for something more long-term – like the controversial subject of helicopters in Afghanistan – then the Treasury will ask for the MoD to cut something else in order to pay for it.

"The core budget for the MoD has grown in real terms in the past decade, but only by about 1 per cent per year. If the budget had risen like the health budget then there would be no problem

"But there is always reluctance from the Treasury to give a blank cheque to the MoD; it is not always an easy relationship.

"I think from the Treasury's point of view the problem is that the MoD hasn't been able to manage its affairs within the resources it has been given, because it has ended up having to micro-manage particular projects.

"Additional operational costs are not just made up of UORs – which could be something like money to build a bunker – but also such things as: extra fuel costs, paying contractors, urgent operational requirements (UORs) – such a building a new bunker – overseas allowances etc…"

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