From The Telegraph:
Hundreds of millions of pounds will be taken from the ring-fenced budgets for health and education and used to protect the Armed Forces from a fresh round of spending cuts, under plans being drawn up in Whitehall.
Philip Hammond, the Defence Secretary, is in talks with the Treasury about transferring money earmarked for the Department of Health and the Department for Education and using it to ease the impact of cuts on the Ministry of Defence.
The Daily Telegraph understands that the plan could see as much as £500 million from the two protected departments’ budgets reallocated to defence.
The MoD plan is set out in a confidential document being drawn up as part of the Government’s increasingly acrimonious Spending Review, which will allocate departments’ budgets for 2015-16.
Poor economic growth and tax revenues mean the Government is still borrowing £120 billion a year, forcing ministers to extend the austerity programme into the next parliament.
The Treasury is looking for cuts worth £11.5 billion from Whitehall departments whose budgets have not been protected.
Spending on the NHS, schools and international aid has all been ring-fenced in the review.
Spending on defence equipment will rise in 2015-16, but the remaining part of Mr Hammond’s budget, which funds Armed Forces personnel, could be cut by up to 5 per cent.
Defence chiefs have said that could force yet more military redundancies.
To avert such job losses, Mr Hammond is arguing that some of the protected departments’ cash should be transferred to his department.
The Ministry of Defence currently pays hundreds of millions of pounds a year towards the costs of health care for Armed Forces personnel and the education of their children.
In a formal submission to the Treasury due to be made this week, Mr Hammond is expected to argue that cash from the health and education budgets should be “reclassified” to help meet the MoD’s costs.
The final figures for the MoD request will be finalised on Monday, but sources said that at least £200 million could come from health and at least £120 million from education.
David Cameron has already indicated that some money from the fast-growing international aid budget could also be reallocated to fund some of the Armed Forces’ work in unstable states.
A source estimated that the final sum requested by the MoD from other departments’ budgets could be almost £500 million in all. The Treasury is said to be “quite receptive” to Mr Hammond’s argument.
But his bid for other ministers’ cash is likely to further fuel the Government’s internal row over the Spending Review, which is due to conclude in June.
Along with several other Cabinet ministers, Mr Hammond has been vociferous in resisting cuts to his department’s spending.
In March, he told The Daily Telegraph that he would resist any further cuts to his department and instead suggested that the welfare budget — which is being shielded from cuts by the Liberal Democrats — should be cut instead.
“I shall go into the Spending Review fighting the case for the defence budget on the basis that we have made very large cuts to defence, we’ve done that with the collaboration and cooperation of the military,” he said at the time.
Conservative MPs are also putting pressure on ministers over the ring-fencing. Mark Pritchard, MP for The Wrekin, said: “There will be much support on the Conservative benches for these funds to be taken from departments which are ring-fenced rather than the MoD. The defence budget has shrunk far enough as it is. In an uncertain world, there is a strong case for increases in defence spending rather than decrease.”
The MoD is still implementing the current round of spending cuts, having already made thousands of troops redundant. In all, 30,000 Armed Forces posts will be lost.
Mr Hammond has said that any further reduction in spending, other than minor efficiency savings, will seriously affect the capacity of the Services to carry out their function.
The Defence Secretary is just one of several Cabinet ministers targeting the ring-fenced departments’ budgets.
Vince Cable, the Business Secretary, said today that he would be arguing for his department’s spending on science, innovation and further and higher education to be protected from cuts because it was “absolutely critical for economic growth”.
Mr Cable told Sky News that he was “very critical of ring-fencing as a matter of public spending management”.
In another challenge to the ring-fencing, it emerged last week that £1 billion was likely to be stripped from the NHS budget and transferred to local authorities to cover the costs of social care.
The Government has decided to act to transfer the money away from the Department of Health amid fears that hospitals are admitting elderly patients who could be better cared for at home.
While the MoD budget is falling by around 8 per cent over five years, the Department for International Development is getting more cash.
To the irritation of some Conservatives, DfID’s budget is growing by a third as Britain tries to hit a United Nations target of spending 0.7 per cent of its GDP on overseas aid.
DfID, the MoD and the Foreign Office already pay into a central “conflict pool” that funds some stabilisation work.
Mr Cameron said earlier this year that arrangements for sharing money would be extended in the Spending Review.