Supplementary evidence submitted by the Ministry of Defence

 

Follow up questions from oral evidence session on 1 December 2015

 

  1.                In his response to a question in the Defence Committee evidence session on December 1st regarding how the 2% of GDP expenditure is constituted, Air Marshal Sir Stephen Hillier stated that 23% would be spent on equipment, 38% on personnel, 3% on infrastructure and 36% ‘covering a range of things from operations, maintenance, research and development’. What is the exact breakdown, by percentage, of this 36%?

 

All UK Defence spending data released by NATO can be found on the NATO website here: http://www.nato.int/cps/en/natohq/topics_49198.htm

 

UK Defence Expenditure – 2015

%

Breakdown of ‘other’

%

Equipment and R&D

23

 

 

Personnel

38

 

 

Infrastructure

3

 

 

Other

36

Ammunition and explosives

0.4

 

 

Petroleum Products

1.3

 

 

Other equipment and supplies

16.6

 

 

Rents

3

 

 

R&D (not dedicated to major equipment)[1]

1

 

 

Property management

4.8

 

 

IT and comms

3.3

 

 

Utilities

0.9

 

 

Transport and movement

1.5

 

 

Professional fees

1.9

 

 

External education and training

0.6

 

 

Other costs

0.5

 

  1.                By analogy to the breakdown by percentage of the current 2% expenditure, what was the figure for total UK defence expenditure in 2010 in GDP, and the breakdown by percentage spent on different areas of defence expenditure for that year, in exact analogy to the figures given in question 1a above?

 

Defence spending in 2010 as a percentage of GDP was 2.6%.

 

UK Defence Expenditure – 2010

%

Breakdown of ‘other’

%

Equipment and R&D

24.5

 

 

Personnel

35.7

 

 

Infrastructure

1.6

 

 

Other

38.3

Ammunition and explosives

1

 

 

Petroleum Products

1.6

 

 

Other equipment and supplies

16.3

 

 

Rents

2.5

 

 

R&D (not dedicated to major equipment)

0.9

 

 

Property management

4.2

 

 

IT and comms

4

 

 

Utilities

0.9

 

 

Transport and movement

2.2

 

 

Professional fees

1

 

 

External education and training

0.5

 

 

Other costs

3.3

 

  1.                By analogy to the breakdown by percentage of the current 2% expenditure, what was the figure for total UK defence expenditure in 1991 in GDP, and the breakdown by percentage spent on different areas of defence expenditure for that year, in exact analogy to the figures given in question 1a above?

 

Defence spending in 1991 as a percentage of GDP was 4.3%.

 

UK Defence Expenditure - 1991

%

Equipment and R&D

19.4

Personnel

41.7

Infrastructure

4.4

Other*

34.5

 

 

 

 

 

 

 

 

Due to changes to accounting methods, we do not have the information necessary to provide a more detailed breakdown of ‘other’ expenditure for 1991.

 

  1.                The Prime Minister on 23 November 2015 stated: “In 2010 we committed to an expeditionary force of 30,000. […] by 2025 we are increasing that number to 50,000”. How much will the readiness of such a force cost? Are you able to deliver those costs in addition to major equipment programmes such as Lightning II and Successor?

 

In 2010 we were planning for a one-off deployment of three brigades with maritime and air support.   In SDSR 2015 we have increased our ambition for Joint Force 2025 to deploying an expeditionary force of up to 50,000 including greater contributions from the air and maritime domain.  The most significant change is the reprioritisation of our forces to achieve a greater level of ambition which will be enabled by a more productive force preparation process.  Within this, there will be some increases in readiness, but there is no readily identifiable new cost associated with this higher level of ambition and we are satisfied that the components of the Defence programme that make it possible, whether these involve personnel, equipment, training or logistics, are affordable.

 

  1.                In total, how much of the Defence budget will be spent on cyber? What percentage is this of the total defence expenditure?

 

The MOD recognises the importance of investing in cyber security but we do not tackle the issue in isolation. Our approach to protecting against, and mitigating the impact of, cyber attacks spans technical, organisational, procedural and physical measures. Investment in multiple projects and activities across all Top Level Budgets contributes to Defence cyber capability, but it is not possible to break out specific funding that is attributed to cyber within each of them, or provide a comprehensive total of Defence spending on cyber. However, within the equipment programme, Defence plans to spend some £580M over the next five years specifically on cyber capability. This is in addition to the £1.9Bn (previously announced by the Chancellor) that we will invest in the Defence budget protecting the UK from cyber attack and developing our sovereign capabilities in cyberspace, giving a total investment of nearly £2.5Bn specifically in cyber over the next five years.

 

6.  What proportion of the recently announced extra £1.9 billion to be spent on cyber will be allocated to ensuring the resilience of critical systems against the likelihood of attack?

 

The £1.9Bn increase in cyber spending announced by the Chancellor will fund cross-government cyber activity; detailed planning for the allocation of these resources is ongoing. It will be difficult to break out specific funding for the resilience of critical systems; systems of varying levels of criticality are likely to benefit from individual lines of expenditure. The Committee should also note that cyber security is already part of routine business across Government, and the extra £1.9Bn is therefore only one source of critical system resilience funding.

 

7.  Does the funding for the Trident successor programme fall within the 2% defence expenditure remit? Is the Trident successor programme funded from the equipment budget?

 

Yes, the Successor programme is part of the Defence Equipment Programme and counts towards the NATO 2% guideline.

 

8.  How robust are the costings of £31 billion and contingency funding of a further £10 billion for the Trident successor programme, and how can you be so sure without a Main Gate programme review of the overall picture? What proportion of the defence budget will be committed to the Trident successor programme?

 

These costs have been subjected, and will continue to be subjected, to cross-Government scrutiny.

 

The contingency of £10Bn, which represents around 35% of the cost to completion, is a prudent estimate based on past experience of large, complex projects, such as the 2012 Olympics. 

 

The Defence budget beyond 2020/21 will be set in future Spending Reviews. It is not therefore possible to calculate the proportion that will be committed to the Trident Successor programme over its lifetime. On average, we expect it to amount to 0.2% per year of government and, once in service, 6% of Defence spending.

 

9.  If the Trident successor programme was not managed by the MoD what impact would this have on the current defence budget and the commitment to spend 2% of GDP on defence?

 

The funding and control remain rightly with the MOD. The Chancellor and Defence Secretary agree it is essential to reform delivery to ensure we sustain Continuous at Sea Deterrence and value for money. Spending on the Successor programme falls within the NATO guidelines of Defence spending and this government has committed to meet the properly measured NATO guideline to spend 2% of GDP on Defence for every year of this parliament.

 

10. The SDSR has identified £11.2 billion efficiency savings that the MoD, security and intelligence agencies and cross-government counter-terrorism spending can make. Where will these savings come from, and does the overall defence budget rely on the full amount being realised?

 

The SDSR refers to more than £11Bn of savings identified through a Cabinet Secretary-led process. These savings, totalling just over £9Bn from MOD, will be re-invested in our national security priorities.

 

This Defence component is made up of £7Bn of efficiency savings and £2Bn of reprioritised spend.  The efficiency savings break down as approximately a third of pay and people related savings such as pay restraint, a third savings from the Equipment Programme and the remainder a mix of savings identified by Front Line Commands in their own specific areas and other non-front line savings such as Professional Fees.

 

Given these savings are being reinvested into the Defence Programme there is no impact on the NATO 2% pledge.

 

11. Is the £11.2 billion of savings intrinsically part of the 2% calculation?

 

These savings will be reinvested into the Defence Budget and are therefore a reprioritisation of spending. This means that there is no funding being removed from the Defence budget and therefore there will be no impact on the 2% calculation.

 

  1.            Are there any areas of UK capability or capability deficiencies that could— in the foreseeable future— require funding in excess of the 2% commitment?

 

A robust settlement agreed early has enabled us to plan for a Joint Force 2025 which matches up to the challenges facing the UK.

 

13.  Will current and future operations in Syria and Iraq be funded from the advertised 2% expenditure of GDP on defence? If so, which costs of operations in Iraq and Syria will be funded from within a). The defence budget and b). The Treasury reserve, and how much do these costs amount to?

 

Yes. The cost of current and future operations in Syria and Iraq will fall within the commitment to spend 2% of GDP on defence every year of this decade.

 

In line with current arrangements with HM Treasury, the Defence budget will fund the base salaries of Service personnel and civilians involved; a base level of equipment usage including fuel and maintenance, such as occurs during standard training and limited operational usage; and most significantly, the procurement costs of equipment which will stay with the MOD after the operation. As a consequence these costs are not captured separately.

 

The HM Treasury Special Reserve will meet all legitimate net additional costs associated with operations in Syria and Iraq. These net additional costs include, but are not limited, to costs of additional fuel and munitions consumption; extra maintenance requirements; spares; the deployment and recovery of equipment and personnel from theatre; accommodation; and theatre-specific individual pre-deployment training. These costs are estimated to be around £200m for FY15/16.

 

14. How much has been budgeted to allow for expenditure within the defence budget on current operations in Syria and Iraq?

 

There is no allocation within the Defence budget specific to current operations in Syria and Iraq.  The Defence budget will fund the costs of personnel, equipment, and support that would have been incurred if the operation had not taken place.  Legitimate net additional costs will continue to be met from the HM Treasury Special Reserve.

 

18 January 2016

 


[1] MOD’s research and development expenditure, covering both that for major equipment and that not dedicated to major equipment, includes expenditure on the centralised research budget, the Defence Science and Technology Programme, under the Department's Chief Scientific Adviser. The Government continues to dedicate 1.2% of the Defence budget to Science and Technology.