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inadequate for us to express it in this way, and partly because at present it is difficult enough to estimate the true cost of our own training activities, let alone that of training we provide for others. There will, however, be a continuing need to ensure that mismatches between supply and demand do not develop, and that F&C training activities, including those that arise at short notice from the defence sales programme, properly reflect defence and foreign policy priorities. DMAO and Head of Sec(0)(C) have therefore been tasked to co-chair an F&C Training Committee to coordinate all interests in this area and conduct a year-on-year review of training resources and priorities.
14. Charges and Subsidies. We will need coherent policies. for charging and subsidising customers for F&C training when the New Management Strategy is in place. The present guidelines were built on the principle of "no net extra cost" and there is concern that the consequent level of charges is making the UK increasingly less attractive as a source of training. The difficulty lies in identifying a more satisfactory basis for setting charges. In theory, charges should be set equal to the long-run marginal costs of providing the training which approximated to the full costs. Any shortfalls between these figures and what the customer is prepared to pay should be made up by means of a policy where it is in our interest to provide one. In practice, for all training except for flying training and that developed specifically for F&C customers, charges are based on extra costs (which approximate to short run marginal costs) and exclude the cost of overheads. For the present, there seems to be no practical alternative to this overall approach although it is possible to achieve additional price flexibility in cases of genuine short term spare capacity. Further options are being considered as part of work on budgets to be introduced under the NMS.
Appendices:
1.
2.
F&C Statistics - Student/Weeks.
Analysis of Costs of F&C Training (£million).
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