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17 Apr 02. The Chancellor of the Exchequer, Gordon Brown, concentrated all his efforts on the national Health Service in his budget delivered today giving little hope for the beleaguered defence budget which is already bending under the strain of increased commitments and suffering a current moratorium on spending.
Combating terrorism. The terrorist attacks of 11 September had repercussions around the world, directing attention toward a new sort of warfare. The Government has provided additional funding for measures to counter the security and economic implications of the September attacks, which include:
· allocating an additional £155 million to the Ministry of Defence for new military equipment and urgent operational requirements;
· funding humanitarian assistance to Afghanistan, and elsewhere, with over £120 million of new support for the region;
· an additional £20 million of resources to strengthen the UK’s tough anti-terrorist financing regime and to fund other anti-terrorism measures. Before the fall of Kabul the UK froze $100 million of assets belonging to the Taleban, Usama Bin Laden and al-Qa’ida. Of these funds, $85 million have been unfrozen and are being returned to the new Afghan authorities;
· ensuring that the aviation industry could continue business by providing airlines with an insurance guarantee;
· providing a further £30 million of funding to the Metropolitan police and other forces; and
· entering into a unique partnership with the tourism industry in a major promotional campaign in the United States and Western Europe. The Government has allocated £20 million, which will be matched by the industry, to the Million Visitor Campaign
The main PSA targets for defence focus on implementation of elements of the 1998 Strategic Defence Review (SDR). A number of these SDR targets have been met, including the establishment of the Joint Helicopter Command, the launch of the Procurement Executive as the Defence Procurement Agency, and a reduction in the value of non-munitions stockholdings by £2.2 billion. The public-private partnership (PPP) for the Defence Evaluation and Research Agency was not completed in April this year as planned, but the majority of its business has been vested as Qinetiq plc, and the PPP is now expected during the course of 2002-03. The targets for raising manning levels in the armed forces have been rolled forward to 2004
BATTLESPACE will be giving a full Budget review in its April issue.
Defence Spending Forecasts
£ Billion

2000-01 19.2
2001-02 18.9
2002-03 18.9
2003-04 18.9

Defence PFI Spending Forecasts
£ million

2002-03 262
2002-03 105
2004-05 0

Estimated aggregated capital value of projects at preferred bidder stage
£ million
2002-03 879
2003-04 198
2004-05 0

· Economic growth of 2.2% for 2001/02
· £37bn of national debt repaid in 2000/01
· Symmetrical inflation target of 2.5% to be maintained
· Economic growth forecast of 2-2.5% for 2002/03 and 3-3.5% for 2003/04
· Debt interest expected to fall to £21bn in 2002/03
· Budget surplus projected to be £3bn for this financial year
· Net public borrowing projected to be £11bn this year and £13bn next year
· Debt projected to be 30.2% of national income this year
· £4bn extra for public services next year
· Public spending to be £390 billion for 2002/03, rising to £471bn for 2005/06

(source: HM Treasury Web Site
http://www.hm treasury.gov.uk/Budget/bud_bud02/budget_report/bud_bud02_repchapc.cfm?)

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