Q61 Chair: Don't tell us that you are getting better at it, because you are doing another planning round to cut more. "Broadly in balance" means you are not in balance, so just tell me how much over you are at present?
Ursula Brennan: I can't tell you the answer to that, because we don't-
Chair: I bet you can-you are just not willing to share it with me.
Ursula Brennan: No, no. I genuinely cannot tell you the answer to that, because we are in the middle of a planning round.
Q62 Chair: But you can tell me what the planning round is trying to identify.
Ursula Brennan: The planning round is trying to make sure that the process that we started in the strategic defence and security review, and that we took a stage further and nearly completed in the three-month exercise, needs to be completed in the planning round that we are doing now. The National Audit Office will actually be auditing these numbers very shortly and you will have an opportunity to see-
Chair: The NAO will audit it after you have done it, but for you to sit and tell the Committee, "We've now learned all these lessons; we're in balance", is not true, because you have had a three-month round and you are now having what you call a planning round, which to me is just an in-year budget cut because you have got too much. That must be right.
You are not willing to share with us by how much, but currently if you did not have this last bit of cuts you would be overspending in 2011-12. Am I right about that? Just tell me yes or no on that. Maybe that is the best way of putting it. If you did not have this final planning round-that is what you call the cuts exercise that you are currently engaged in-you would be overspending in 2011-12.
Ursula Brennan: The three-month exercise was predominantly not about 2011-12.
Q63 Chair: No, but you're doing another planning round now.
Ursula Brennan: We're doing a planning round, but not for 2011-12. 2011-12 is the current financial year. We are doing a planning round that is looking at forward expenditure, not at the current financial year.
Q64 Chair: And this year "broadly in balance" means "not in balance", but you are not prepared to share with us how much you are over.
Ursula Brennan: Just to be absolutely clear, we will deliver our budget in the current financial year. We have said, and it is correct, that we are broadly in balance over the decade. We are not yet completely in balance over the decade. That is what we are seeking to get to.
Q65 Chair: And how much are you out?
Ursula Brennan: Well, we are doing the planning round to reach that conclusion. We will deliver our budget in the current financial year. We are trying to get-it is very difficult to do this in one go. We made decisions in the SDSR; they have knock-on effects; in the three-month exercise, we made the change around reserves and regulars, and the Germany rebasing; and all of those things have to knock through. Our intention is to get to a balanced budget and to have it audited by the NAO.
Chair: So the SDSR is what we have all said-it was set without having regard to the financial implications of it. That is the problem you are now picking up.
Q66 Nick Smith: Does that mean that you will delay the implementation of the Warrior upgrade? What will happen to that?
Ursula Brennan: The previous Secretary of State announced that we would be proceeding with the Warrior upgrade when he made his statement in July.
Q67 Nick Smith: Will it happen on time or will it be delayed?
Ursula Brennan: When he made the announcement, I don't know that he-
Q68 Nick Smith: So the plan is for them to arrive on time. And what will happen to Scout?
Ursula Brennan: There were certain things that the former Secretary of State announced on 18 July, and those things we are clear about. We are engaged in the piece of work that the Army is doing about the rest of the equipment programme, within that envelope of funding that we have given it. So I cannot give you any other details yet, because the Army is working that through.
Q69 Austin Mitchell: In retrospect, it looks as though there is a certain amount of budget juggling going on at the Ministry of Defence, which speaks to a certain amount of chaos. You have spent £2.8 billion from the Treasury's reserve by the urgent operational requirements, but then you took out £1 billion from the standard vehicle budget to fund other areas of defence. This is juggling, isn't it? What other areas of defence were being funded from the standard budget?
Ursula Brennan: I would not quite describe it as saying we took it out of armoured fighting vehicles to fund defence, because if you are alluding to the-
Q70 Austin Mitchell: Well, you are getting money from the Treasury and not using your own budget.
Ursula Brennan: These are two distinct things. The urgent operational requirements are about specific vehicles to meet the specific threat-