Summary: Chancellor George Osborne took centre stage today (Wednesday 26 June) to deliver the 2013 Spending Review, billed as the next stage in the government’s plan to move from rescue to recovery.
The Chancellor’s speech outlined departmental budgets for 2015-16, and the big headline was the £11.5bn cut from the overall government budget, meaning major reductions in funding for many departments.
Amid the cuts for public sector workers and changes to benefit the unemployed, the news for defence at least was positive.
During his speech the Chancellor said: “Britain has the finest armed forces in the world – and we intend to keep it that way”.
He said the government would get “the maximum value for money” from one of the largest defence budgets in the world.
The defence department faces a budget frozen at £24bn. However, armed force personnel in the field will not be cut and the military equipment budget will be increased by 1% above inflation.
Osborne also said intelligence services will get a 3.4% boost in budget.
Savings will be made through reduction of civilian employees of the MOD, and renegotiation of procurement and private finance initiative (PFI) contracts.
In response to the announcements, Defence Secretary Philip Hammond made this video announcement: http://www.youtube.com/watch?v=xFy-rKZT17g&feature=youtu.be
He said: “From the start of this spending review process, I’ve been open about the fact that we can make some genuine efficiency savings, but that we shouldn’t take out further military capabilities. I’m pleased that we’ve reached an agreement with the Treasury that protects military manpower and military capabilities, but which delivers genuine efficiency savings equivalent to 1.9% off our 2014-15 baseline.”
Read the full Spending Review reforms here.
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