Fine on MoD helps state out of a hole

Most of the Government’s £300m cash boost to avert a crisis in the National Health Service this winter was found by the proceeds of a £168m Ministry of Defence ‘fine’ and also from a £102m reduction in expected Department of Trade and Industry spending on the nuclear industry. The funds taken from MoD funding were […]

Most of the Government’s £300m cash boost to avert a crisis in the National Health Service this winter was found by the proceeds of a £168m Ministry of Defence ‘fine’ and also from a £102m reduction in expected Department of Trade and Industry spending on the nuclear industry.

The funds taken from MoD funding were described by the ministry as a Treasury ‘fine’. It exactly balanced the £168m the MoD had overspent on its 1996 97 budget.

‘The overspend is the consequence of the previous administration,’ said an MoD spokeswoman. ‘It was mainly due to earlier than expected delivery, and therefore payment, across a wide range of defence contracts. We were procuring something last year and didn’t expect to get it, but did. That makes up the bulk of the overspend.’

The MoD would not specify which projects the overspend related to.

According to the MoD, ‘the overspend position has been known for some time and measures were already in hand to rein back spending in the current financial year, but it will be painful for the MoD to absorb the fine’.

The ministry confirmed the current programme of efficiency-driven defence cuts, saying: ‘We’ll be doing our best to live within the resources that we’ve got.’

The DTI said the £102m it will provide will come from BNFL, which ‘now expects to improve its cashflow by £102m in 1997 98, compared to figures announced in the 1996 budget’.

‘The DTI, working closely with BNFL management, became aware of this over the summer, and the figures were confirmed late last week,’ the DTI said.

‘The Treasury was kept informed, making it possible for this additional £102m to be made available to the NHS.’

The Engineer understands the money may be coming from a reduced liability on nuclear decommissioning.