Statutory Instruments
Government Trading Funds
Made
27th February 2008
Coming into force
1st April 2008
It appears to the Secretary of State for Defence (“the Secretary of State”) that—
the operations of the Ministry of Defence described in article 2 of, and Schedule 1 to, this Order are suitable to be financed by means of a fund established under the Government Trading Funds Act 1973(1) (“the 1973 Act”) and, in particular, to be managed so that the revenue of the fund would consist principally of receipts in respect of goods or services provided in the course of the operations in question, and
the financing of the operations in question by means of a trading fund would be in the interests of the improved efficiency and effectiveness of the management of those operations;
The Secretary of State has, in accordance with section 2 of the 1973 Act and with the concurrence of the Treasury, determined what Crown assets and liabilities are properly attributable to the operations in question and are suitable to be appropriated to the fund;
A draft of this Order has been laid before the House of Commons in accordance with section 6(2) of the 1973 Act and approved by a resolution of that House;
Accordingly the Secretary of State, with the concurrence of the Treasury, in exercise of the powers conferred by sections 1, 2(1), 2(7), 2AA(1), 2A(1), 2C(1) and 6(1) of the 1973 Act makes the following Order:—
1. This Order may be cited as the Defence Support Group Trading Fund Order 2008 and shall come into force on 1st April 2008.
2.—(1) From 1st April 2008, there shall be established a trading fund to be known as the Defence Support Group Trading Fund (“the fund”).
(2) The operations of the Defence Support Group described in Schedule 1 shall be financed by means of the fund.
3. The Secretary of State is designated as the source of issues to the fund by way of loan.
4.—(1) The Crown assets and liabilities set out in Schedule 2 to this Order shall be appropriated as assets and liabilities of the fund.
(2) 30 per cent of the balance of the amount by which the values of the assets exceed the amounts of the liabilities shall be treated as revaluation reserves in the accounts of the fund and shall be maintained as reserves.
(3) 50 per cent of the balance of—
(a)the amount by which the value of the assets exceed the amounts of the liabilities, less
(b)the amount to be treated as revaluation reserves in accordance with paragraph (2) above,
shall be treated as public dividend capital of the fund.
5. The aggregate of the following shall not exceed £300,000,000—
(a)the total outstanding at any given time in respect of amounts issued to the fund under section 2B of the 1973 Act (other than as originating debt), and
(b)the total at that time constituting public dividend capital issued to the fund under section 2A(2A) of the 1973 Act.
6. The ABRO Trading Fund Order 2002(2) is revoked.
Des Browne
Secretary of State for Defence
26th February 2008
We concur
Alan Campbell
Dave Watts
Two of the Lords Commissioners of Her Majesty’s Treasury
27th February 2008
Article 2
The operations of the Defence Support Group to be funded by the fund are—
(a)the provision of engineering and logistics support, including maintenance, repair, overhaul and upgrade services for equipment, and associated goods and services to the Ministry of Defence and to other Crown bodies;
(b)the provision of such goods and services to other customers in the United Kingdom and overseas; and
(c)operations incidental, conducive or otherwise ancillary to the foregoing.
Article 4
Land and buildings, as at 1st April 2008 used or allocated for use in the funded operations.
Plant, facilities, machinery, fixtures, fittings, vehicles, equipment and computer hardware and software, as at 1st April 2008, used or allocated for use in the funded operations.
Intangible assets arising from the funded operations as carried on as at 1st April 2008.
Current assets as at 1st April 2008 used or allocated for use in, or arising from, the funded operations.
Creditors, accruals, deferred income and provisions as at 1st April 2008 in relation to the funded operations.
(This note is not part of the Order)
This Order provides for the setting up, from 1st April 2008, of a fund with public money under the Government Trading Funds Act 1973 for the operations of the Ministry of Defence known as the Defence Support Group (DSG). The DSG is an engineering and logistics support organisation for equipment for Her Majesty’s armed forces and others. The DSG is a merger, from 1st April 2008, of all the operations of the Ministry of Defence known as ABRO (formally known as the Army Base Repair Organisation) and the Electronics and Large Aircraft business units of the Ministry of Defence known as the Defence Aviation Repair Agency.
Article 3 designates the Secretary of State for Defence as the authorised lender to the fund.
Article 4(1) provides for, and schedule 2 specifies, the assets (estimated at £139,000,000) and liabilities (estimated at £71,000,000) which are to be appropriated to the fund.
Article 4(2) provides for a proportion of the difference in value between those assets and liabilities to be treated as revaluation reserves in the accounts of the fund and shall be maintained as reserves.
Article 4(3) provides for 50 per cent of the balance of the net assets less the amount of the revaluation reserves to be treated as public dividend capital of the fund.
Article 5 specifies the maximum aggregate amount that may at any time constitute outstanding loan issued to the fund (other than as originating debt) and public dividend capital.
Article 6 revokes the ABRO Trading Fund Order 2002.
1973 c. 63, as amended by the Government Trading Act 1990 (c. 30). The 1973 Act, as so amended, is set out in Schedule 1 to the 1990 Act. The 1973 Act was further amended by section 119 of the Finance Act 1991 (c. 31) and Schedule 22 to the Finance Act 1993 (c. 34).