Armed Forces are facing a further £1.2bn budget cut to plug a pensions shortfall
THE Armed Forces face a £1.2billion funding shortfall by 2022, alarming new figures have revealed.
The black hole has emerged due to the Government setting aside £4 billion too little to cover its pension commitments to public sector employees between now and the end of the current parliamentary term in 2022.
The Treasury has since offered to cover additional public sector pension costs for one year only.
But it has ordered departments to find the remaining two years’ worth of pension costs from existing budgets.
It means the Ministry of Defence would be left to soak up two years’ worth of additional pension costs for servicemen and women - totalling £1.22 billion by 2022 unless the Treasury plugs the shortfall in next year’s departmental Spending Review.
It sparked fresh fears of further spending cuts to the Armed Forces before the next election.
And it comes days after the former Chief of the General Staff Lord Richard Dannatt said government cuts in recent years have left the British Army half as capable as it once was.
The calculations were made by the independent House of Commons library in an analysis of how much each public sector employer would be affected by the Treasury’s changes to the rate of employer contributions that government departments pay.
It would be the second time in two years that the Government has asked departments to make cuts to cover changes in public sector pension costs.
A similar squeeze in 2016 forced departments to find an extra £2billion in savings.
Labour called on Chancellor Philip Hammond to pledge he will plug the black hole and reassure Britain’s Armed Forces that they don’t have to fear further cuts.
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Shadow Chief Secretary to the Treasury Peter Dowd said: “Our Armed Forces have been slashed under this government’s failing austerity programme. Now it looks as though billions more are to be cut from the military.
“You simply cannot trust the government’s claim that they will end austerity for our Armed Forces. Their refusal to pay up immediately suggests that they are preparing for further cutbacks.
“The Chancellor must immediately own up and commit to meeting these extra costs, not just push them on to our Armed Forces personnel who have already endured significant cuts.”
A Treasury source said any decisions on how to plug the pensions shortfall beyond 2020 would be set out in next year's departmental Spending Review.
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