Third Memorandum from the Ministry of
Defence on the Spring Supplementary Estimates 2005-06
You sought further details on the rationale, and
the historical basis, for the Ministry of Defence seeking Parliamentary
authority for expenditure on operational deployments (including
those of a long-term and anticipatable nature) only in the Spring
Supplementary Estimates.
Expenditure on operations such as those in Iraq
and Afghanistan varies depending on troop numbers, activities
and force protection requirements. As a consequence we cannot
provide a detailed forecast at the beginning of the financial
year that is accurate to the standards which we would normally
place before Parliament for figures for that financial year. At
the time the Winter Supplementaries Estimates are prepared, the
most up to date financial information on operations would be complete
up to August: clearly much can change between then and the end
of the year. We have therefore historically taken the view that
it would be better to wait to provide a forecast until later in
the year when the underpinning figurework is more robust and we
have a more detailed understanding of the likely operational profile
to the end of the year. We have therefore delayed the Estimate
for operations such as Iraq and Afghanistan to Spring Supplementaries.
Funding for the operations in the Balkans, which
is now considered to be financially stable, is currently sought
by the FCO at Main Estimates, and transfer made to MoD at Spring
Supplementary Estimates.
You asked why we judge we need to include such
a large element of contingency, so near to the end of the financial
year and how each of the contingency figures given in Table 1
and Table 2 of our memorandum of 6 March were calculated.
The Request for Resources is based upon forecast
costs two thirds of the way through the financial year. Due to
the often rapidly changing operational situation it is prudent
to include a contingency figure within the estimates. This figure
is based upon a comparison of previous years' final outturn figures
and the latest forecasts available when we prepare Spring Supplementaries
(effectively November), and an analysis of past UOR costs to give
an indication of potential short notice operational equipment
requirements.
More specifically, in Direct Resource DEL the
contingency figure for Afghanistan was added because when we prepared
the Estimate there were remaining uncertainties over the planned
expansion of our commitments. In the case of Iraq the contingency
of £40 million represents only around 5% of the total cost
and reflects the uncertainties mentioned above. In addition to
this HM Treasury has recently approved additional expenditure
for equipment support to the Iraq Security Services of which £15
million is expected to be expended in this financial year.
In Capital DEL the bulk of the contingency arises
from our need to be able to respond to the rapidly evolving threat
to our forces on both a tactical and technical level. Against
that need we seek additional funding for unforeseen Urgent Operational
Requirements (UORs) for the purchase of, for example, force protection
equipment.
You asked what the "income foregone"
in Table 1 is, in respect of each operation.
When bidding for RFR1 at Main Estimates the
MoD reduces its request by known income generating activities
from spare capacity. This anticipated receipt is included in the
"Appropriation in Aid" section in the Main Estimate.
If during the course of the year this spare capacity is used on
operational activities and the expected income is foregone, the
loss of programmed income is a legitimate charge to the operation.
You asked if all the costs of overseas operations
fall under RfR2 ("conflict prevention").
MoD charges the net additional costs it has
incurred on the three Conflict Prevention Operations Op Telic
(Iraq), Op Herrick (Afghanistan) and Op Oculus (Balkans) to RFR2.
The costs that the Department would have incurred regardless of
the operation taking place, such as wages and salaries, are not
included. Savings on activities that have not occurred because
of the operationtraining exercises for exampleare
taken into account in arriving at the net figures.
The MoD also charges to RFR2 the cost of Conflict
Prevention Programme expenditure. This is a number of peacekeeping
strategies agreed by the Conflict Prevention Pool partners (MoD,
FCO and DFID), the bulk of the MoD element of which is bid for
at Main Estimates. The total estimated cost for 2005-06 is £51
million.
MoD conducts other overseas activities in support
of UN and humanitarian aid activities which are funded either
through RFR1 or on a repayment basis.
You asked for the Department to provide a breakdown
by financial year, and by purpose, of the £1 billion estimated
cost of UK deployments in Afghanistan over the five years 2005-06
to 2009-10.
As highlighted above, expenditure on operations
varies depending on troop numbers, activities and force protection
requirements. As a consequence we cannot currently provide a breakdown
of the estimate that is accurate in detail to the standards which
we would normally place before Parliament.
9 March 2006
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