Treasury blunder forces Ministry of Defence to ask for £438m from emergency reserves

The money relates to the Armed Forces Compensation scheme – a service which exists to compensate those injured in military service

The Armed Forces Compensation scheme is available to serving and former serving personnel who are injured as a result of their service in the military (Getty)

The Ministry of Defence has been forced to ask for £438 million from emergency reserves to pay for a compensation service to members of the armed forces, following an administrative blunder by the Treasury.

The slip-up by Treasury officials emerged after Mark Lancaster, the parliamentary under-secretary in the Ministry of Defence, submitted a written statement to the Commons on Tuesday describing an “inadvertent publishing error”.

According to Mr Lancaster there was a shortfall of £438,193,000 to the Armed Forces Compensation scheme – a service available to serving and former personnel who are injured as a result of their service in the military.

The deficit in the net cash requirement arose due to the error by the Treasury, which appeared in the Central Government Main Supply Estimates published in July.

It means the Ministry of Justice has now asked the Treasury to match the sum from its contingency funds, which are used to finance payments for urgent services and to provide funds required by government departments “to meet temporary cash deficiencies”.

A Treasury spokesperson refused to identify the individual responsible for the blunder, simply adding the “wrong figure” was added by “mistake”. It is understood, however, that no one will be underpaid or given a late payment - it is "just rectifying the error" added another official.

Nia Griffith, the shadow Defence Secretary told The Independent: “I am deeply concerned that this Government appears to have underfunded the Armed Forces Pension and Compensation schemes by over £438 million.”

She added: “These important schemes exist to support our veterans in retirement and to compensate those who have been injured in service. Our veterans and service members need urgent reassurance that the Government’s accounting blunder won’t leave them out of pocket”.

The written statement added: “This will be corrected at the Supplementary Estimate stage, however, a Contingencies Fund advance has been sought in the interim, which will be repaid once the Supplementary Estimate is approved by Parliament and Royal Assent of the accompanying Supply and Appropriation Bill has been obtained.

“Parliamentary approval for additional cash of £438,193,000 will be sought in the Supplementary Estimate for the Armed Forces Pension and Compensation Schemes. Pending that approval, urgent expenditure estimated at £438,193,000 will be met by repayable cash advances from the Contingencies Fund.”