Appendix: Government response
The Government welcomes the Committee's report on
the Ministry of Defence Spring Supplementary Estimates 2006/07,
published on 12th March 2007, as HC 379. The Estimate sought Parliamentary
approval for funding, additional to the MoD's core budget for
2006/07, including further funding for the cost of operations
in Iraq and Afghanistan, and full funding for the cost of operations
in the Balkans. The Government's response to the conclusions and
recommendations contained in the Committee's report is set out
below.
1. In our view, the term "conflict prevention"
is confusing, as it appears to cover military operations of all
kinds, from war-fighting to peace-keeping operations. (Paragraph
3)
"Conflict prevention" is a generic term
used to describe the Department's Request for Resources 2 (RfR2).
The Department notes the Committee's comments, and is currently
reviewing the layout of the Estimate with a view to providing
greater clarity in future Estimates.
2. While we accept that it is difficult for the
MoD to provide accurate estimates of the costs of operations at
the beginning of the financial year, we cannot see how this can
be a sufficient reason for making no forecast at all. We recommend
that the MoD reflect the forecast costs of operations in Iraq
and Afghanistan in its Main Estimates for 2007-08. The MoD could
usefully include in its Estimates Memorandum (which we would intend
to publish) an account of its planning assumptions for the costs
of these operations. (Paragraph 4)
3. We remain of the opinion that provision for
all operations should be made in the MoD's Main Estimates, rather
than left to Supplementary Estimates. (Paragraph 5)
The Department's position remains as set out in HC1136
and HC1601. Requests for resources for Conflict Prevention have
normally been made in the Supplementary Estimates because costs
are difficult to forecast in fast moving operational circumstances:
Supplementary Estimates are the first occasion when the Department
can reach a reasonably firm conclusion on likely costs.
Cost of Operations in Iraq
4. While it was expected that the Spring Supplementary
Estimate would request additional funding for operations in Iraq,
the scale of the increase is surprising… The cost of operations
in Iraq in the current year appears to be over 10% higher than
the MoD was expecting last November. (Paragraph 8)
The Department does not consider this surprising,
since the additional costs are a reflection of the inherent unpredictability
of operations and the difficulty of forecasting detailed costs
accurately in advance.
5. It is striking that the cost of operations
in Iraq in 2006-07 is now expected to exceed the outturn cost
in 2005-06 by £44 million… We call on the MoD to explain
in its response to this report why it expects the costs of operations
in Iraq to be greater this year than last despite the reduced
number of UK Forces in that theatre . (Paragraph 11)
The reasons for the increase in forecast costs for
2006/7 in Iraq compared with 2005/6 are set out at Table 2 of
the Committee's report. They include the introduction of the new
operational allowance (£28M); increased fuel costs resulting
from higher prices and a change to the sourcing arrangements (£28M);
and additional capital expenditure (£35M) on Urgent Operational
Requirements.
Estimated costs of operations in other theatres
6. We recommend that the MoD clarify in its response
to this report in which other theatres it has been carrying out
conflict prevention operations during 2006-07. (Paragraph 18)
The £4.2M referred to in paragraph 18 represents
the MoD's contribution to the tri-departmental (MoD, FCO and DfID)
Conflict Prevention Pools. This contribution is particularly focused
on Security Sector Reform and Capacity Building in targeted countries
and involves military and civilian mentoring, training and support,
both in the UK and overseas. The Conflict Prevention Pools fund
programmes in North and sub-Saharan Africa, Iraq, Afghanistan,
the Balkans, Latin America and the Caribbean, Sri Lanka, India
and Pakistan, Indonesia, East Timor, the Middle East, Nepal, and
Russia and the Commonwealth of Independent States.
Votes A
7. We recommend that the MoD clarify in its response
to this report what it sees as the purpose of the Votes A, and
how the maxima stated relate to the actual strengths of the Armed
Forces. (Paragraph 22)
Votes A represent the uppermost limits for Service
manpower. They do not predict actual strengths nor are they used
directly to manage the numbers employed in the Armed Forces.
Votes A maxima for Regulars are based on 110% of
the highest recorded actual strength for the previous year in
each Service manpower category and are amended to take into consideration
any planned change to manpower levels (for example, the effect
of the Government's 2004 Future Capabilities White Paper). To
this calculation, a contingency percentage is applied to avoid
the Vote being breached due to brief fluctuations in manpower
levels. For Reserves a similar approach is followed.
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