MPs: Ministry of Defence used "creative accounting" to hit 2% spending target

Department points out that shift to include spending on war pensions and intelligence gathering falls within Nato guidelines

By John Ashmore

21 Apr 2016

The government has been accused of using "creative accounting" to reach Nato's target of spending 2% of GDP on defence. 

A report by the Defence Select Committee says the government had only managed to meet the target by including spending on war pensions and intelligence gathering, neither of which have traditionally figured in the Defence budget. 

The Ministry of Defence rejected the claims, pointing out that the way it has calculated spending falls within Nato guidelines.

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But the cross-party group of MPs called for more transparency on how the MoD allocates resources.

"We note that the Nato minimum would not have been fulfilled if UK accounting practices had not been modified, albeit in ways permitted by Nato guidelines," the committee's report reads.

"The only way that the Ministry of Defence can refute claims of 'creative accounting' is to outline, clearly and unambiguously, what the new inclusions are, how much they constitute, and from which department each was previously funded."

The committee also warned that pressures on public spending meant consistently meeting the 2% target would become progressively more difficult.

"We remain to be convinced that the current financial settlement is sufficient to rectify the decline of defence as a national priority," the report says.

A spokesperson for the Ministry of Defence said the UK's military was set for a major increase in resources over the course of the parliament.  

"When defence spending will increase by £5bn over this parliament, it is nonsense to suggest there is no new funding," they said.

"Our plans will deliver more ships, more planes, more troops at readiness, better equipment for special forces, and more on cyber to help keep Britain safe."

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