Government response
The Government welcomes the Committee's report on
the Ministry of Defence Winter Supplementary Estimates 2009-10,
published on 10 December 2009, as HC 150. The Government's response
to the conclusions and recommendations, which were contained in
the Committee's Report, is set out below.
1. (Recommendation 1) We are grateful to the
MoD for developing with us a new timetable for forecasts and formal
approval of monies for operations over the course of this Parliament.
(Paragraph 3)
The MoD is committed to providing Parliament with
the latest forecast of the cost of operations at the earliest
opportunity.
2. (Recommendation 2) We hope that the House's
scrutiny of the Supplementary Estimates will be taken up in the
new Parliament: increasing the capacity of select committees to
conduct more detailed financial scrutiny in a more reasonable
time table must be a key component of reviving the role of Parliament.
(Paragraph 5)
After discussions between relevant Commons committees
and the Government, changes to House of Commons Standing Orders
in 2004 increased the period between presentation of Supplementary
Estimates and the related vote from 8 to 14 days. Given the various
constraints on timing at all stages of the Estimates process,
the Government's position is that it is very difficult to extend
this further.
In the slightly longer term, the Clear Line of Sight
project—which aims to simplify and better align public spending
controls, is led by the Treasury, and on which the Liaison Committee
published a favourable report in July 2009—will require
changes to the Supply Estimate process. The Liaison Committee
report itself recommended changes to the number of Estimates Days
and other issues related to financial scrutiny. The Government's
response, whilst noting that some issues were for the House itself,
made it clear that it was willing to consider appropriate changes.
3. (Recommendation 3) Although we understand
that HM Treasury cannot write a blank cheque for the MoD even
in the current circumstances that obtain in Afghanistan, we would
like further information from the MoD as to the circumstances
in which the change of practice relating to the costs of Urgent
Operational Requirements might impact on the MoD's core budget
in future. (Paragraph 13)
The MoD recognises the very substantial spend on
UORs from the Reserve. However, it may be appropriate to fund
operational equipment partly or wholly by Defence for a number
of reasons including:
- "Bring forwards"—where
there are existing funded programmes in the MoD's future equipment
plan these may be brought forward for urgent operational reasons.
These capabilities will have widespread operational benefit in
the long term. If Reserve funding is used to accelerate delivery,
it may be subject to repayment.
- Equipment known to have longer term benefit—on
occasions when an urgent capability is theatre specific but will
also bring long-term benefit to the MoD—the Treasury may
fund part of the requirement, in recognition of the urgency to
bring the capability into operations, with MoD also contributing
to the cost.
- Part UOR—requirements that partially meet
the UOR criteria may be partially met by Treasury funding, with
MoD also providing a contribution.
This does not change the position that Urgent Operational
Requirements are funded in-year from the Reserve but it does gives
MoD time to undertake the necessary planning action.
Military operations drive the scale of the estimate
rather than the availability of funds. However, it is right that
we should work with the Treasury to plan the Government's spending
commitments by estimating our requirements as accurately as possible,
especially so in the current financial climate. Consequently we
are currently working with the Treasury on an estimate for financial
year 2010-11 that will be just that—an estimate—not
a limit to in-year Reserve funding for Urgent Operational Requirements.
4. (Recommendation 4) In its response to this
Report, the MoD should confirm that the MoD is contributing to
the Protected Mobility Package now because the assets obtained
or improved under this process are more likely than other UORs
to have a potential use in theatres other than Afghanistan. (Paragraph
16)
The Protected Mobility Package is a prime example
of a UOR that will have long term utility for Defence. We expect
to benefit from the vehicles procured as part of the package in
the future beyond their initial role in Afghanistan as part of
the core-equipment fleet and in future operations. Consequently
MoD is contributing to the cost.
5. (Recommendation 5) In its response to this
Report the MoD should set out to what extent and under what conditions
the HM Treasury contribution to the Protected Mobility Package
might change should its cost rise significantly, leaving the MoD
otherwise to bear a greater proportion of the costs than previously
anticipated. (Paragraph 16)
The Protected Mobility Package is worth £600-700
million of which the HMT contribution is limited to £500
million. We have agreed to meet all additional costs in recognition
of the wider long-term utility of these vehicles. This arrangement
also acts as an incentive for MoD to drive down the cost of urgent
equipment procurement and ensure rapid delivery within budget.
6. (Recommendation 6) While there will always
be need for reprioritisation and redistribution of funds between
programmes, it seems unwise to cut the research budget, especially
in such an area as C4ISTAR which is so very crucial not only to
the MoD's future capability but also to the success of current
operations. We call on the MoD to provide enough information for
us to understand the reasons for the strategic reprioritisation
of research, the exact state of funding for its research programmes,
and the extent of any cuts to those programmes. (Paragraph 22)
There have been major changes to the global availability
of high quality science and technology. MoD is adapting to this
broader availability and has developed an approach to better access
and exploit sources of innovation—increasingly from small
businesses and academia. While the Department must balance resources
to best effect across Defence, it continues to recognise the importance
of long-term Research & Development and its impact on capability.
This is clearly demonstrated in the support of Science & Technology
to current operations.
The current planning assumption is that the Science,
Innovation, and Technology budget will be approximately £439
million in 2010-11 and there are currently no plans to reduce
this at this stage. The Department's Research & Development
spend is currently around £2 billion a year, of which the
overwhelming proportion is unaffected. Any reduction in funding
is carefully considered by the Defence Research & Development
Board, with priority given to projects that will enable the Department
to maintain overall military capability. The scope of future research
programmes in C4ISTAR has reduced compared to previous plans,
as a consequence of the recent reduction in research expenditure.
7. (Recommendation 7) We recommend that the
House of Commons approve the request for resources set out in
the MoD's Winter Supplementary Estimates. The sums requested serve
to maintain the capability of the MoD to sustain operations in
theatre and to meet other future challenges. (Paragraph 23)
We welcome the Committee's continued support.
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