UK — Defence Secretary balances MOD budget

The MOD’s bud­get deficit has been wiped out for the first time in a gen­er­a­tion, Defence Sec­re­tary Philip Ham­mond has announced today.

A Roy­al Marine and a Chi­nook heli­copter in Afghanistan [Pic­ture: Lead­ing Air­man (Pho­tog­ra­ph­er) Dave Hill­house, Crown Copyright/MOD 2011]
Source: Min­istry of Defence, UK
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Through a series of tough but nec­es­sary deci­sions, com­bined with rad­i­cal reforms of the MOD’s finan­cial process­es, the £38bn black hole in the Defence Bud­get that the Gov­ern­ment inher­it­ed in 2010 has now been elim­i­nat­ed.

It means that, for the first time, the MOD’s core equip­ment pro­gramme is ful­ly fund­ed and afford­able.

A ful­ly cost­ed pro­gramme pro­vides the Armed Forces with the sta­bil­i­ty and assur­ance they need for the future. The MOD can now con­fi­dent­ly invest in new equip­ment know­ing its deliv­ery is guar­an­teed because the pro­gramme is accu­rate­ly cost­ed and afford­able.

The com­mit­ted core equip­ment pro­gramme amounts to just under £152bn over ten years, against a total planned spend of almost £160bn. That £152bn includes, for the first time, a cen­tral­ly-held con­tin­gency of over £4bn.

The pro­gramme also includes an addi­tion­al £8bn of fund­ing over the next ten years which is unal­lo­cat­ed. This means that the bud­get will have guar­an­teed head­room to respond to emerg­ing equip­ment require­ments.

The Ser­vice Chiefs have con­firmed that this ful­ly com­mit­ted core equip­ment pro­gramme and the extra head­room will enable the MOD to deliv­er the capa­bil­i­ties required for Future Force 2020, as set out in the Strate­gic Defence and Secu­ri­ty Review of 2010.

Defence Sec­re­tary Philip Ham­mond said:

“The Gov­ern­ment is deter­mined to get to grips with a lega­cy of poor project man­age­ment, weak deci­sion-mak­ing and finan­cial indis­ci­pline with­in the MOD. We have made a sym­bol­ic break with the failed prac­tices of the past, and the vast black hole that blight­ed defence spend­ing has gone.

“For the first time in decades we have deliv­ered a cred­i­ble and sus­tain­able bud­get and we can now con­fi­dent­ly pledge to deliv­er to our Armed Forces almost £160bn worth of equip­ment over the next decade that we know we can afford.

“This allows us to begin to put the uncer­tain­ty of the last few years behind us and build for the future on a sol­id foun­da­tion as we move for­ward with Defence Trans­for­ma­tion.”

Chief of the Defence Staff, Gen­er­al Sir David Richards, said:

“Tak­ing tough deci­sions and deal­ing with unaf­ford­able projects has giv­en us clar­i­ty to plan. We are now on a firm foun­da­tion and build­ing the Armed Forces of the future. We are now well-placed to adapt and respond to threats around the world and to deliv­er the capa­bil­i­ties we need for the nation’s defence.

“Going for­ward, the Armed Forces Com­mit­tee, which I chair, will pri­ori­tise future com­mit­ments and bring into ser­vice the equip­ment we are now get­ting.”

Today’s announce­ment means the MOD can now guar­an­tee the deliv­ery of projects for the Army, Roy­al Navy and Roy­al Air Force, includ­ing:

  • 14 new Chi­nooks, Apache life-exten­sion and Puma upgrade
  • a pro­gramme of new armoured fight­ing vehi­cles worth around £4.5bn over ten years, and a £1bn upgrade of the War­rior armoured fight­ing vehi­cle
  • the build­ing of the two Queen Eliz­a­beth Class air­craft car­ri­ers, the remain­der of the Type 45 destroy­ers and the new Type 26 frigates, and the Astute Class and Suc­ces­sor nuclear sub­marines
  • invest­ment in new Wild­cat heli­copters, the Mer­lin upgrade pro­gramme and the assess­ment phase for Mer­lin marin­i­sa­tion
  • intro­duc­tion into ser­vice of the Voy­ager air-to-air refu­eller and troop trans­porter, the A400M air trans­porter and the Air Seek­er sur­veil­lance air­craft
  • an addi­tion­al C‑17 air­craft
  • con­tin­ued invest­ment in Typhoon and Joint Strike Fight­er
  • £7bn invest­ed in com­plex weapons — the smart mis­siles and tor­pe­does that give our Navy, Army and Air Force their fight­ing edge.

Bal­anc­ing the pro­gramme means the MOD can now con­firm the fol­low­ing projects will also be part of the core equip­ment pro­gramme:

  • a £4bn plus invest­ment in intel­li­gence, sur­veil­lance, com­mu­ni­ca­tions and recon­nais­sance assets across the Cipher, Solomon, Crowsnest, DCNS and Fal­con projects
  • the out­right pur­chase of three off­shore patrol ves­sels which are cur­rent­ly leased
  • capa­bil­i­ty enhance­ments to the Typhoon
  • a range of sim­u­la­tors, bas­ing and sup­port equip­ment for the new heli­copters and air­craft we are intro­duc­ing.

The scruti­ny and finan­cial con­trols that have been put in place will allow the MOD to ensure projects deliv­er against time and cost. As they do so, we will be able to release the funds we have put in place to add any uncom­mit­ted capa­bil­i­ties to the com­mit­ted core equip­ment pro­gramme.

Reach­ing a bal­anced bud­get rep­re­sents an impor­tant mile­stone in the trans­for­ma­tion of Defence which builds upon the rec­om­men­da­tions of Lord Levene’s review of the depart­ment.

Press release
Min­istry of Defence, UK