New Defence Secretary
Short Blunt Shock
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New Labour is far more than just Tony Blair
16B
L'enfant Terrible
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Definitely have to agree about Davis; the guy seems like a real leader (a former SAS reservist also).
Interestingly enough, GQ ran an article about him being the new Prime Minister in 2010.
Interestingly enough, GQ ran an article about him being the new Prime Minister in 2010.
TAC Int Bloke
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'Fat Boy' Soames, the most arrogant MP I've had the misfortune to witness in action has withdrawn from the front bench to spend more time with his dinner or something.....
Quotes from the BBC
Translated, to mix metaphors, to be free to knife Howard when he's down - nice to see nothing's changed in ‘the Nasty party’
No kidding - Soames as leader? That will mean another five years out of power - hold on, YES! Vote for Soames!
Quotes from the BBC
Mr Yeo and Mr Soames both said they wanted to be free to play a role in rethinking the party's future.
Mr Soames says Europe and planning are also important, but says suggestions he wants the leadership are "stupid".
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RAB was debated in some detail a couple of years back:
____________________________
Never thought that I get into this dicussion here, but here's where accouting becomes important. Resource Accounting is nothing more exotic than standard commercial accounting, in which you pay for something when you commit to it (rather than when the bill arrives) and you spread the cost of things over their useful life, rather than considering it all at once. What does this do? It forces decision makers to consider the long term impacts of their decisions, and helps them make beter ones.
Here's how. Let's assume that the RAF has a knackered fleet of jets. It has two choices: (a) do a big overhaul and mid-life update, giving 15 years more service or (b) buy new jet with 30 year life and lower direct operating costs. Now, let's assume that option (a) costs 2/3rds of (b). In the world of cash budgets, departments tended to select the lower cash cost -- despite the fact that it was poorer militarily and poorer value for money. Because the new accounting system makes you consider the whole cost of the programme, the decisionmaker would chose (b) -- because the better value would be clear from day one, not just later.
-- the cost of capital charge forces people to make choices about what they invest in and how. It is currently set at 3.5% (reduced from 6%) and budgets were increased to cover the capital charge a couple of years ago. Now, if departments are smarter about the amount of capital they use -- mostly land and buildings -- then money is released for other things. Again, all the incentives are there for MOD to concentrate on the front line rather than on the administration of the organisation. And that should include looking at the Group Structure, (required now?) the number of bases and their location (if 16AMB are in Colchester and Wattisham, why not stick transports at Woodbridge / Bentwaters) and the number of civilians / service personnel doing administration and what may politely be describes as "non-core activity"!
Does this demand a different set of leadership skills from yesterday -- yes. Is this a good thing -- absolutely, as it demonstrates efficiency and value for money to the taxpayers who fund this. And the climate is such that demonstrable efficiency is key. Does it mean that the overblown promises of kit in the SDR need looking at again? Yep! But is this a bad thing? No.
Forgot
___________________________________
The point is that as long as the baseline is correct, then the system works. If MOD got it wrong, then there is a problem, and a quick look at the "shadow" RAB accounts - the two year practice period that all departments had to get it right - shows that MOD improved with time but were still all over the shop. Tough on the front line, but hard to see why MOD should be given a freer ride by the Public Accounts Committee than any other department - and this is what drives me nuts: poor administration and atrocious project management in MOD are responsible for poorer kit on the front line for those that need it.
A new broom would be most welcome!
S41
____________________________
Never thought that I get into this dicussion here, but here's where accouting becomes important. Resource Accounting is nothing more exotic than standard commercial accounting, in which you pay for something when you commit to it (rather than when the bill arrives) and you spread the cost of things over their useful life, rather than considering it all at once. What does this do? It forces decision makers to consider the long term impacts of their decisions, and helps them make beter ones.
Here's how. Let's assume that the RAF has a knackered fleet of jets. It has two choices: (a) do a big overhaul and mid-life update, giving 15 years more service or (b) buy new jet with 30 year life and lower direct operating costs. Now, let's assume that option (a) costs 2/3rds of (b). In the world of cash budgets, departments tended to select the lower cash cost -- despite the fact that it was poorer militarily and poorer value for money. Because the new accounting system makes you consider the whole cost of the programme, the decisionmaker would chose (b) -- because the better value would be clear from day one, not just later.
-- the cost of capital charge forces people to make choices about what they invest in and how. It is currently set at 3.5% (reduced from 6%) and budgets were increased to cover the capital charge a couple of years ago. Now, if departments are smarter about the amount of capital they use -- mostly land and buildings -- then money is released for other things. Again, all the incentives are there for MOD to concentrate on the front line rather than on the administration of the organisation. And that should include looking at the Group Structure, (required now?) the number of bases and their location (if 16AMB are in Colchester and Wattisham, why not stick transports at Woodbridge / Bentwaters) and the number of civilians / service personnel doing administration and what may politely be describes as "non-core activity"!
Does this demand a different set of leadership skills from yesterday -- yes. Is this a good thing -- absolutely, as it demonstrates efficiency and value for money to the taxpayers who fund this. And the climate is such that demonstrable efficiency is key. Does it mean that the overblown promises of kit in the SDR need looking at again? Yep! But is this a bad thing? No.
Forgot
___________________________________
The point is that as long as the baseline is correct, then the system works. If MOD got it wrong, then there is a problem, and a quick look at the "shadow" RAB accounts - the two year practice period that all departments had to get it right - shows that MOD improved with time but were still all over the shop. Tough on the front line, but hard to see why MOD should be given a freer ride by the Public Accounts Committee than any other department - and this is what drives me nuts: poor administration and atrocious project management in MOD are responsible for poorer kit on the front line for those that need it.
A new broom would be most welcome!
S41
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Squirrel
Again I am not disputing the facts of whether RAB operates more efficiently or provides an accurate whole life cost, but it does prevent direct comparisons of how the budget operates to the pre-RAB days. That is why I disbelieve Pr00nes claim about increases in the defence budget, particularly if you are making in year comparisons such as:
"The current defence budget grew 7% in 2003 and 18% in 2004, compare this to Thatchers 3% increase at the height of the cold war."
From your explanation if I have understood it correctly, the 3% increase quoted for the Thatcher year would only be for the intial procurement of equipment. However, the 7 and 18% increases in 03/04 are to pay whole life costs and are amortised over the life of the system. The wet finger ILS models that I recall, stated about 50% of project cost was spent on procurement and the remaining 50% on through life support.
Therefore, in real terms the budget has decreased because funding for the next 20 years or so is now being accounted for in the initial provisioning of project cost and allocated to a single year.
I do not entirely agree with your decision making scenario, the proocurements I dealt with in the mid 90s accounted for changes in LTC, so the impact on the next 10 years was looked at.
"poor administration and atrocious project management in MOD are responsible for poorer kit on the front line for those that need it. " I think that you can say that about most government departments. Look at all their IT buys - shocking.
Never thought accounting could be so interesting.
regards
Retard
Again I am not disputing the facts of whether RAB operates more efficiently or provides an accurate whole life cost, but it does prevent direct comparisons of how the budget operates to the pre-RAB days. That is why I disbelieve Pr00nes claim about increases in the defence budget, particularly if you are making in year comparisons such as:
"The current defence budget grew 7% in 2003 and 18% in 2004, compare this to Thatchers 3% increase at the height of the cold war."
From your explanation if I have understood it correctly, the 3% increase quoted for the Thatcher year would only be for the intial procurement of equipment. However, the 7 and 18% increases in 03/04 are to pay whole life costs and are amortised over the life of the system. The wet finger ILS models that I recall, stated about 50% of project cost was spent on procurement and the remaining 50% on through life support.
Therefore, in real terms the budget has decreased because funding for the next 20 years or so is now being accounted for in the initial provisioning of project cost and allocated to a single year.
I do not entirely agree with your decision making scenario, the proocurements I dealt with in the mid 90s accounted for changes in LTC, so the impact on the next 10 years was looked at.
"poor administration and atrocious project management in MOD are responsible for poorer kit on the front line for those that need it. " I think that you can say that about most government departments. Look at all their IT buys - shocking.
Never thought accounting could be so interesting.
regards
Retard
Last edited by engineer(retard); 10th May 2005 at 09:07.
And just to add more confusion to this already off thread topic....
When RAB came into being many senior personnel (who did not fully understand RAB) set about the wholesale disposal of spares, not just the excess that the system was partially designed to counter, but items that were required. This saw "spare" engines being sold off to maintenance companies/manufacturers because they would attract RAB depreciation charges. We would have the assets off our balance sheet (despite having paid for them) and would go to "just in time" spares systems.
Anyone remember the armoured Land Rovers fiasco? We would have paid RAB depreciation and cost of capital charges on the vehicles even if they were in storage ready for use when required, so they were disposed of at, IIRC, £3K each. Hey presto, no depreciation RAB or cost of capital charges (that is the amount of the Defence budget that is then paid back to HMT to cover the cost of capital ie the interest charges levied on each government department for them buying equipment - in effect each department is borrowing money from HMT). Then of course we needed armoured Land Rovers for Iraq so we bought them back again IIRC at £6K each. Now we originally owned the Land Rovers so we (the tax payers) have now bought them - twice!!
RAB is an accountants dream, because nobody (and not even the Treasury) understand all the implications. It has led to many barking mad decisions in all government departments as much of it is based on commercial best practice, which IMHO is not a way of running the Armed Forces. Defence cannot afford to be at the behest of suppliers, we need kit in storage ready to use because we do not know where we are going to be operating next! Desert? Arctic/Mountainous? Tropical? All have their own different kit requirements and yet the Armed Forces are expected to just go and get on with it - now! Hence insufficient desert boots and desert clothing for GW 2 despite the fact the last major conflict involving UK forces had been fought in the desert and we had personnel permanently based in the Middle East since 1991!
Much of prOOnes assertions about an increase in the Defence Budget are purely smoke and mirrors (and I do not just attribute this to New Liabour but all mainstream parties). If you look at the pre-RAB Defence Budget it stood at IIRC £23B, it is now quoted as £32B. There HAS NOT been a £9B increase in cash available to MOD!! Much of the quoted 7 and 18% increases is the money that is paid back to the Treasury.
And prOOne you are wrong on the savings measures. Much of it is NOT reinvested in the Defence Budget it is returned to the HMT to pay for Liabours other bloated sacred cows, Health, Education and Social Security. Now I would like to see some savings targets placed on those departments!
When RAB came into being many senior personnel (who did not fully understand RAB) set about the wholesale disposal of spares, not just the excess that the system was partially designed to counter, but items that were required. This saw "spare" engines being sold off to maintenance companies/manufacturers because they would attract RAB depreciation charges. We would have the assets off our balance sheet (despite having paid for them) and would go to "just in time" spares systems.
Anyone remember the armoured Land Rovers fiasco? We would have paid RAB depreciation and cost of capital charges on the vehicles even if they were in storage ready for use when required, so they were disposed of at, IIRC, £3K each. Hey presto, no depreciation RAB or cost of capital charges (that is the amount of the Defence budget that is then paid back to HMT to cover the cost of capital ie the interest charges levied on each government department for them buying equipment - in effect each department is borrowing money from HMT). Then of course we needed armoured Land Rovers for Iraq so we bought them back again IIRC at £6K each. Now we originally owned the Land Rovers so we (the tax payers) have now bought them - twice!!
RAB is an accountants dream, because nobody (and not even the Treasury) understand all the implications. It has led to many barking mad decisions in all government departments as much of it is based on commercial best practice, which IMHO is not a way of running the Armed Forces. Defence cannot afford to be at the behest of suppliers, we need kit in storage ready to use because we do not know where we are going to be operating next! Desert? Arctic/Mountainous? Tropical? All have their own different kit requirements and yet the Armed Forces are expected to just go and get on with it - now! Hence insufficient desert boots and desert clothing for GW 2 despite the fact the last major conflict involving UK forces had been fought in the desert and we had personnel permanently based in the Middle East since 1991!
Much of prOOnes assertions about an increase in the Defence Budget are purely smoke and mirrors (and I do not just attribute this to New Liabour but all mainstream parties). If you look at the pre-RAB Defence Budget it stood at IIRC £23B, it is now quoted as £32B. There HAS NOT been a £9B increase in cash available to MOD!! Much of the quoted 7 and 18% increases is the money that is paid back to the Treasury.
And prOOne you are wrong on the savings measures. Much of it is NOT reinvested in the Defence Budget it is returned to the HMT to pay for Liabours other bloated sacred cows, Health, Education and Social Security. Now I would like to see some savings targets placed on those departments!
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Accountancy? Interesting?
Engineer
IMHO accountancy actually isn’t very interesting, but the policy implications of it can be. My understanding was that the 2002 Spending Review restated previous years’ spending in a RAB world and that the subsequent increases were quoted on a like-for-like basis. The problem has been the bow-wave of project spending on Typhoon, CVF, Astute and all the rest of it which all came in together.
Roland
Your examples demonstrate typically short-term thinking – and a shocking waste of public (ie yours and mine) money. What RAB does – and it can be a useful tool – is to demonstrate the real cost of owning things; all good – until you sell things that you might need…. like the Land Rovers or engines.
When government went onto RAB, the capital charge was added as additional resource to cover the capital charges on the capital base at that time (2002, I think) – so there was initially no effect. Hence, there was no need to sell off anything in the war reserve or elsewhere that might be needed! The incentive on Departments was that if they got rid of unnecessary buildings and what not, their budgets would not go down, but the capital charge would not need to be paid, and therefore they could spend the capital charge on other things – and the savings ARE reinvested in the Departments rather than nicked by the Treasury, so prOOne is right about this.
However, what RAB does mean is that planning and foresight of what’s actually required, is vital!
S41
IMHO accountancy actually isn’t very interesting,
but the policy implications of it can be. My understanding was that the 2002 Spending Review restated previous years’ spending in a RAB world and that the subsequent increases were quoted on a like-for-like basis. The problem has been the bow-wave of project spending on Typhoon, CVF, Astute and all the rest of it which all came in together.Roland
Your examples demonstrate typically short-term thinking – and a shocking waste of public (ie yours and mine) money. What RAB does – and it can be a useful tool – is to demonstrate the real cost of owning things; all good – until you sell things that you might need…. like the Land Rovers or engines.
When government went onto RAB, the capital charge was added as additional resource to cover the capital charges on the capital base at that time (2002, I think) – so there was initially no effect. Hence, there was no need to sell off anything in the war reserve or elsewhere that might be needed! The incentive on Departments was that if they got rid of unnecessary buildings and what not, their budgets would not go down, but the capital charge would not need to be paid, and therefore they could spend the capital charge on other things – and the savings ARE reinvested in the Departments rather than nicked by the Treasury, so prOOne is right about this.
However, what RAB does mean is that planning and foresight of what’s actually required, is vital!
S41
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Squirrel
Thanks for the clarification. It appears that you are saying that the only like for like comparison that has been made is from 02 to 03.
I have experienced a RAB type system running a bar in the FI, where the cost of my stock appeared on the left hand side of my (previously) cash book with the credits, and the right hand side included the cost of stock once sold with the profit margin that was applied and the debits. But my cash book no longer told me how much money I had in the bank to go and buy beer unless I did a complete stock check and off book calculations.
Buying beer in short order was very important to the continued state of my health. Especially as it was for the armourers, and the accounting system made this v diffcult to do. I suspect that the government departments are in the same boat, they cannot work out how much money they really have without lots of work.
Regards
Retard
Thanks for the clarification. It appears that you are saying that the only like for like comparison that has been made is from 02 to 03.
I have experienced a RAB type system running a bar in the FI, where the cost of my stock appeared on the left hand side of my (previously) cash book with the credits, and the right hand side included the cost of stock once sold with the profit margin that was applied and the debits. But my cash book no longer told me how much money I had in the bank to go and buy beer unless I did a complete stock check and off book calculations.
Buying beer in short order was very important to the continued state of my health. Especially as it was for the armourers, and the accounting system made this v diffcult to do. I suspect that the government departments are in the same boat, they cannot work out how much money they really have without lots of work.
Regards
Retard
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Forensic Accountancy
Engineer
It’s possible to do the conversions based on the estimates and the annual reports – Jacko could always get stuck in (though this may al actually be available from the Treasury under Freedom of Information if anyone was really interested) – but I suspect that the easiest figures to calculate real growth rates are going to be 2002-03 to date.
On spending, I’m not convinced that it fundamentally change the terms of engagement, as the equipment programme was already a mess by 2002.
Cheers
S41
It’s possible to do the conversions based on the estimates and the annual reports – Jacko could always get stuck in (though this may al actually be available from the Treasury under Freedom of Information if anyone was really interested) – but I suspect that the easiest figures to calculate real growth rates are going to be 2002-03 to date.
On spending, I’m not convinced that it fundamentally change the terms of engagement, as the equipment programme was already a mess by 2002.
Cheers
S41
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Squirrel
It sounds like death by a 1000 cuts to me, I'll leave the beancounting to those who are allergic to sunshine.
Unless someone can demonstrate how the defence budget has really increased by contracts placed, fine pay rises or equipment delivered, nobody with any common dog is going to believe these claimed massive budget increases and the political spin that goes with them.
Regards
Retard
It sounds like death by a 1000 cuts to me, I'll leave the beancounting to those who are allergic to sunshine.
Unless someone can demonstrate how the defence budget has really increased by contracts placed, fine pay rises or equipment delivered, nobody with any common dog is going to believe these claimed massive budget increases and the political spin that goes with them.
Regards
Retard
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The demise of Buff is one of the best things to happen to the Forces for some time - whatever people think, John Reid is not the sort of man to bend over and take a reaming from HMT. Not without a fight, at any rate. As with Health, he will demand the resources he needs for his people.
He is a bulldog politician. All politicians toe the party line, that's something we just have to get on with. Reid, however, will tell the PM what he thinks. There were, apparently, blazing rows when he was moved to health. He is extremely keen on defence, and sees it as his own project - we finally have a man who is interested in defence, knows about defence, and cares about it - not a wheedling, lily-livered jellyfish of a man who can do nothing but roll out the trite party phrases while systematically reducing Britain's ability to punch above its weight.
Whether John Reid will deliver remains to be seen. But I'm feeling confident, as are most of my colleagues.
I think this quote sums the man up:
Not exactly the sort of line you'd expect from Geoff "It's not my fault!" Hoon.
He is a bulldog politician. All politicians toe the party line, that's something we just have to get on with. Reid, however, will tell the PM what he thinks. There were, apparently, blazing rows when he was moved to health. He is extremely keen on defence, and sees it as his own project - we finally have a man who is interested in defence, knows about defence, and cares about it - not a wheedling, lily-livered jellyfish of a man who can do nothing but roll out the trite party phrases while systematically reducing Britain's ability to punch above its weight.
Whether John Reid will deliver remains to be seen. But I'm feeling confident, as are most of my colleagues.
I think this quote sums the man up:
It's unfair to blame servicemen and women for the judgement of politicians. I believe the judgements we made were right, but if others think they were wrong they should lay the responsibility with me not with those in the Armed Forces who are working so hard to make things better for the people of Iraq. I hope I can encourage the press to see this is an important distinction.
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tablet_eraser,
I saw that quote too and was fairly taken aback. At last a politician who will call it as it is. (Possibly)
I look forward to his announcements once he has got his feet under the desk but it is certainly a good start.
I saw that quote too and was fairly taken aback. At last a politician who will call it as it is. (Possibly)
I look forward to his announcements once he has got his feet under the desk but it is certainly a good start.
I don't own this space under my name. I should have leased it while I still could
A whole day and no one bit.
Buff, as far as I know, has not sent out any farewell and thanks message. Probably Sir Humphrey didn't feel the need.
Buff, as far as I know, has not sent out any farewell and thanks message. Probably Sir Humphrey didn't feel the need.
