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13 Jul 04. Richard Norton-Taylor OF The Guardian reported that widely expected increases in the defence budget of more than £1bn a year will not be enough to avoid cuts in planned spending by the armed forces, already suffering from overstretch.

This was the consensus among defence analysts as the chancellor disclosed that the cost of British military operations in Iraq and Afghanistan had so far reached £4.4bn – more than the total planned increase in the defence budget over the next three years.

The cost of those operations will continue to be paid by the Treasury’s contingency reserves – not by the Ministry of Defence – said Gordon Brown.
He also announced an annual average 10% increase in real terms over the next three years on spending on national security. In three years, the annual budget for the security and intelligence agencies – MI5, MI6 and GCHQ – and what the government calls “civil protection” will total more than £2bn.

Spending on local authority emergency planning will be doubled, said the chancellor, who singled out nuclear and chemical decontamination projects. The defence budget will rise from £29.7bn to £33.4bn in three years.
Geoff Hoon, the defence secretary, described the increase as “a vote of confidence in the superb performance of our armed forces”. He added: “As well as sustaining our investment in new capability, this settlement enables the continued modernisation of our armed forces.” However, the MoD still faces severe financial problems as it deals with years of underinvestment in the most basic areas and ambitious and expensive procurement projects.

General Sir Mike Jackson, the head of the army, recently described the state of some barracks as appalling. At the same time, defence ministers have yet to decide what to do about long-delayed projects such as the Eurofighter and the Nimrod maritime reconnaissance aircraft.

Mr Hoon is expected to announce cuts in the number of Royal Navy ships and sub marines, RAF squadrons, and army battalions and tanks next week.

Under pressure from the Treasury, the MoD has agreed to find more than £2.8bn in efficiency savings by 2007-08, through more efficient procurement policies and logistics systems and cuts in “back office” and support functions.

It has agreed to cut the number of backroom jobs by 15,000 and move 3,900 posts out of London and the southeast.

A “defence modernisation fund” will be increased from £578m to £1bn by 2008. Lord Garden, a former assistant chief of defence staff, yesterday described the increases as insufficient given that the defence budget was in “such a deep hole”.

Paul Keetch, Liberal Democrat defence spokesman, welcomed defence budget increases but said they should be spent on “relieving the pressure on our overstretched forces, not bottomless procurement projects”. He added: “Armed forces personnel still come second to costly technology programmes, but people should come first.”

Research by the Liberal Democrats last year showed the MoD faced potentially serious problems balancing its books in the future, with costly projects, including two aircraft carriers and the Joint Strike Fighter, and hi-tech communications equipment to be paid for.

Twelve out of 19 projects will require peak expenditure between 2007 and 2011. Spending commitments for the next 10 years amount to about £65bn. Maintaining the weapons procurement budget at existing levels will provide £50bn, according to the research.

The security and intelligence agencies will spend more on technology and linguists – notably Arabic speakers. MI5 will increase its capacity to mount surveillance operations and is expected to set up “intelligence cells” out of London, including the west Midlands and north-west England.

Mr Brown yesterday announced increases in the Foreign Office budget from £1.5bn this year to £1.6bn by 2007-08. The money will be spent on relocating some British embassies from vulnerable spots and upgr

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