First Further memorandum from the Ministry
of Defence
ANSWERS TO
THE HOUSE
OF COMMONS
SELECT COMMITTEE'S
QUESTIONS RELATING
TO THE
MINISTRY OF
DEFENCE MAIN
ESTIMATES AND
ESTIMATES MEMORANDA
2008-09
1. What is the level of the MoD's End Year
Flexibility (EYF) at the start of the CSR period?
The CDEL carry forward available from 2006-07 is
£195 million. We have yet to finalise our 2007-08 outturn,
and reach agreement with Treasury on the level of any EYF entitlement
(Resource DEL and Capital DEL) for the CSR period.
2. The Committee would be grateful if the
MoD could set out where it expects to find the £2.7 billion
of efficiency savings required under the CSR settlement by 2010-11
(setting aside the energy efficiency and administration savings
cited in the Estimates memorandum), and indicate the expected
scale of savings in each area.
The CSR settlement requires MoD to deliver value
for money savings totalling £2.7 billion by 2010-11. We identified
savings worth £2.4 billion, as shown in the following table.
We expect to identify further savings in due course, sufficient
to meet the target.
| VfM Savings £m
|
| Category | Near Cash Resource
| | Capital
|
| FY 2008-09 | FY 2009-10
| FY 2010-11 | FY 2008-09
| FY 2009-10 | FY 2010-11
|
| Corporate Enabling Services(1) | -172
| -275 | -369 |
| | |
| Equipment Support (1) | -116
| -186 | -253 |
| | |
| Science Innovation Technology (2) | -25
| -25 | -25 | |
| |
| Overseas Operating Bases(3) | -2
| -3 | -3 | |
| |
| Northern Ireland Normalisation (4) | -114
| -117 | -120 |
| | |
| Shared Services (5) | -23 |
-37 | -59 | |
| |
| Commodity Procurement and Travel (6) | -24
| -33 | -34 | |
| |
| Additional Efficiency (7) | -132
| -198 | -285 | -22
| -30 | -39 |
| Absorbed Pressures (8) | -77
| -77 | -80 | -10
| -7 | -7 |
| Other savings, including to equipment plans (9)
| -222 | -255 | -305
| -429 | -508 | -807
|
| TOTAL | -907 |
-1,206 | -1,533 |
-461 | -545 | -853
|
(1) Corporate Enabling Services (CES) and Equipment Support
VfM savings are the Department's Priority Projects and incorporate
a number of Departmental initiatives such as Head Office Streamlining,
and the Defence Equipment & Support transformation project
to minimise overheads—Performance, Agility, Confidence and
Efficiency (PACE).
(2) A Departmental review of the Research Programme to better
align it to MOD strategic needs and eliminate low priority activity
has enabled SIT to achieve savings of £25 million per annum
across the CSR 2007 period.
(3) The savings identified in Overseas Operating Bases are
the estimated benefits of Project Montgomery: the rationalisation
of British Forces Cyprus Command and Control, and Project Wavell:
the contractorisation of British Forces Cyprus support activities.
(4) Estate closures and disbandment of the three Royal Irish
(Home Service) battalions as a result of the cessation of Op BANNER
and Northern Ireland Normalisation have generated VfM savings.
(5) These savings are derived from the delivery of Shared
Service activities and functions within Civilian and Military
Human Resources.
(6) These savings are derived from the procurement reform
of primarily travel, but also energy, professional services, and
technical support.
(7) These savings are a series of specific measures identified
by individual TLB holders including travel and subsistence savings,
manpower and estate reductions and organisational changes.
(8) These savings come from central planning and programme
actions to eliminate costs from TLB programmes. They cover a wide
spectrum—examples include inflationary pressures within
Science contracts, pay and allowances for locally employed civilians
on overseas operating bases, the cost of running on project teams
due to disband, and building maintenance work.
(9) These savings measures are derived from decisions taken
in the MOD planning process to reprioritise the Department's resources.
3. What are the grounds for the MoD claiming £0.27
billion of efficiency savings from 2007-08 as contributing to
the CSR savings target (VFM Delivery Agreement, p 3)?
In SR04, the Department had a target of £2.8 billion
of efficiencies. The MoD has overachieved against this target,
including by bringing forward some planned efficiencies into the
SR04 period, notably in the Defence Logistics Transformation Programme.
We have agreed with HMT that we can score up to £270 million
of savings against the CSR 07 target. To have disqualified such
savings would have been perversely to incentivise the Department
to forgo benefits in a particular Spending Review period once
the target for that Spending Review had been met.
5 June 2008
| 
