By Anthony Reuben Business reporter, BBC News
When Chancellor George Osborne says that he wants to cut real spending on defence by 8% by 2014-15, what does he mean?
It seems obvious: it means that the Ministry of Defence's spending in 2014-15 will be 8% less than it was in 2010-11.
Unfortunately, when it comes to government spending, it is not that simple.
The complications are not just a result of difficulties with individual departments, for example, there will be extra money from government reserves to fund the war in Afghanistan if it is needed.
The main problem is that there are several measures of government spending and it is not always obvious which one is being used.
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“Start Quote
The budget for the Ministry of Defence will reach £33.5bn in 2014-15. A saving of 8% over this period.”
End Quote George Osborne Chancellor of the Exchequer
The major division in spending is between Departmental Expenditure Limits (DEL) and Annually Managed Expenditure (AME).
This is an important distinction, because in the simplest terms, DELs cover spending over which departments have some control, while they can do much less about AME items.
DEL spending covers things like employing staff, paying for buildings and buying equipment, which is why the Spending Review concentrated on this measure.
These are the full cuts in DEL spending. While some departments appear to have an increase in cash terms by 2014/5, when adjusted for inflation they will have less funding in percentage terms.
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