This story was originally published April 20, 2016, at 7:08 p.m. EST.

LONDON — The British government resorted to "creative accounting" to meet its NATO commitment of spending 2 percent of gross domestic product (GDP) on its armed services last year, according to a parliamentary Defence Committee report due to be released April 21.

The report said the government had failed to come clean on exactly what is included in the definitive defense budget both now and in the past.

Although the Ministry of Defence's (MoD) action of counting items like war pension and civil service pensions for the first time is permissible under NATO guidelines, the redefinition undermines the credibility of the claim the 2 percent figure represents a significant increase in defense expenditure, said the committee.

"If the MoD is to disprove the assertion that its 2 percent figure is substantially dependent on creative accounting, it must set out in detail the exact proportion of the 2 percent that constitutes new money," the committee said.

Julian Lewis, the committee chairman, said it was unclear what the impact was of switching spending between budget lines.

"If the MoD has only achieved this [the 2 percent promise] by including things like war pensions and intelligence gathering which previously came under other budgets, you wonder what effective, battle-winning spending increases have actually been made. The MoD have shed insufficient light on this confusion," Lewis said.

A spokeswoman for the MoD said the committee's assertion that there was no new money was false.

"The committee's own report confirms that all UK spending on defense including intelligence, cyber and war pensions falls firmly within NATO's guidelines. When defense spending will increase by £5 billion over this parliament it is nonsense to suggest there is no new funding. Our plans will deliver more ships, more planes, more troops at readiness, better equipment for special forces, and more on cyber to help keep Britain safe," she said.

The government is planning to spend £178 billion (US $255 billion) on equipment over the next ten years. Part of that money will come from a 3.1 percent increase in real terms spending up to 2019/2020 as well as access to part of a new £2.1 billion security fund.

Much of the additional procurement spending is slated to come from the MoD's ability to find large efficiency savings — something there is much skepticism about here.

Under new rules, any savings can now be used by the MoD rather than handed back to the Treasury.

November's strategic defence and security review said efficiency savings would generate £11.2 billion, but details on exactly how they will be achieved are scarce, and it's not entirely clear all the money will land back in defense, rather than in a wider budget pot marked for national security.

The committee said it wanted a detailed explanation of how the savings were to be achieved and recommended the MoD provides regular updates on progress and whether the savings are being reinvested in full in defense.

Despite reservations over how the 2 percent was achieved, lawmakers welcomed the government's commitment not to fall below the NATO target up to 2020. But, they said, meeting the minimum requirement does not mean defense is "adequately resourced, following decades of successive cuts … the government must be clear that 2 percent is a minimum not a target," the report said.

It said the government had to be prepared to increase expenditure further in order to reflect the increasing threats faced by the UK and its allies.

The lawmakers said that while the 2 percent target had value as a political statement, the more important question was whether this level of spending can possibly provide a sound defense for the UK.

At one point during the Cold War, British defense spending represented 7 percent of GDP, but a series of cuts led to London facing the prospect in 2015 of its £36.8 billion budget spendslipping to 1.97 percent before it revised its budget criteria. 

Britain is one of only three European NATO members who meet the NATO spending requirement — Poland and Estonia being the other two.

The MoD's poor record of investing in science, technology, research and development also drew the attention of the committeee.

The report said it wanted to see evidence from the MoD that expenditure was sufficient to address the increasing demands to counter-hybrid warfare such as cyber and information operations.

Britain spends £1 billion (2.9 percent) of the budget annually on research and development, and £400 million (1.2 percent) on science and technology.

Andrew Chuter is the United Kingdom correspondent for Defense News.

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