The MoD Main Estimate 2013-14
Resource and Capital Expenditure
Requests
Components of the MoD budget
4. The MoD is requesting total net resources of some
£38.7 billion plus net capital of some £9.8 billion
for 2013-14. The MoD told us that the total resource request did
not exceed the Spending Review agreement in 2010.[5]
The main components of the MoD's budget are given in Table 1.
Table 1: Components of the MoD's budget for 2013-14
| Resource Spending within Departmental Expenditure Limit*
| £ million |
Percentage |
| Provision of Defence Capability
| 31,508 | 87 %
|
| Administration | 2,096
| 6% |
| Operations | 2,651
| 7% |
| Total Resource Departmental Expenditure Limit
| 36,255 | 100%
|
| Annually Managed Expenditure*
| 2,471 |
|
| Total Net Request for Resources
| 38,726 |
|
| Capital Expenditure
| | |
| Provision of Defence Capability
| 9,429 | 97%
|
| Operations | 325
| 3% |
| Total Net Request for Capital Departmental Expenditure Limit
| 9,754 | 100%
|
Notes: *Departmental Expenditure Limits (DEL) are firm plans
for three years for a specific part of a department's expenditure.
DEL covers all administration costs and programme expenditure
except where some programme expenditure cannot reasonably be subject
to close control over a three year period or spending relates
to non-cash costs other depreciation and impairments.[6]
Annually Managed Expenditure (AME) is spending
that does not fall within DELs. Expenditure in AME is generally
less predictable and more difficult to control than expenditure
in DEL.[7]
Source: MoD Main Estimate[8]
and MoD Memorandum[9]
Comparison of estimates for 2013-14 with 2012-13
5. The overall Resource Departmental Expenditure
Limit for 2013-14 is some seven per cent less than 201213
and the Capital Departmental Expenditure is some two per cent
less. The reduction in spending on defence capability is in line
with Spending Review agreement as is the cut in administration
costs. A comparison of estimated expenditure for 2013-14 and 2012-13
is given in Table 2.
Table 2: Comparison of the Request for Resource
and Capital Expenditure 2013-14 and 2012-13
| Resource spending
| 2013-14
£ billion
| 2012-13
£ billion
| Percentage change
|
| Defence capability |
31.5 | 31.6
| -0.4% |
| Administration | 2.1
| 2.2 | -4.1%
|
| Operations | 2.7
| 2.9 | -10.0%
|
| Total Resource DEL
| 36.3 | 36.7
| -7.1% |
| Annually Managed Expenditure
| 2.5 | 3.1
| -19.4% |
| Total Resource spending
| 38.8 | 39.8
| -2.8% |
| |
|
| |
| Capital spending
| |
|
|
| Defence capability |
9.4 | 9.2
| 2.9% |
| Operations | 0.3
| 0.8 | -56.7%
|
| Total capital DEL
| 9.7 | 10.0
| -1.6% |
Source: MoD Main Estimate[10]
and memorandum[11]
ADDITIONAL COSTS OF MILITARY OPERATIONS
6. The additional costs of military operations are met from the
Treasury Reserve and not from the MoD core budget. These costs
relate to operations in Afghanistan, the Wider Gulf and Mali.
7. The MoD now estimates the bulk of the costs of
operations in Afghanistan and elsewhere at the time of the Main
Estimates. The Treasury has asked the MoD to request only 80 per
cent of the cost of operations in Afghanistan in the Main Estimate
and to request any remaining funds at the time of the Supplementary
Estimates.[12] We asked
the MoD why the Treasury did not require it to cover 100 per cent
of the costs of operations in the Main Estimate. The MoD told
us that this was standard practice recognising that costs are
subject to change and, given the current drawdown of troops in
Afghanistan, any change in costs was more likely to be downward.
The MoD stressed that this practice did not undermine the principle
whereby all additional costs of operations are met by the Treasury
Special Reserve.[13]
8. The MoD identified the costs of operations in
Afghanistan and the Wider Gulf separately in its memorandum. The
amount requested for these operations in 2013-14 is some £2.7
billion, a reduction of some £0.4 billion from the sum requested
for 2012-13. A summary of the cost of operations is given in Table
3 below.
Table 3: Main Estimate 2013-14 forecast costs
for operations in Afghanistan, the Wider Gulf, the Conflict Pool
and the Deployed Military Activity Pool
| Operation | Total Estimate 201213
£ million
| Direct Resource DEL
£ million
| Non cash Resource DEL
£ million
| Capital DEL
£ million
| Total Main Estimate AME request
£ million
| Total Main Estimate 2013-14
£ million
|
| Afghanistan | 3,098.2
| 1,723.8 | 621.3
| 320.4 | 3.5
| 2,669 |
| Wider Gulf | 42.7
| 40.0 | 0
| 5.0 | 0
| 45 |
| Conflict Pool |
54.4 | 61.0
| 0 | 0
| 0 | 61
|
| Deployed Military Activity Pool
| - | 25.0
| 0 | 0
| 0 | 25
|
| Total | 3,195.3
| 1,849.8 | 621.3
| 325.4 | 3.5
| 2,800 |
Source: Ministry
of Defence[14]
Breakdown of the costs of Afghanistan and the
Wider Gulf
9. The estimated cost of Operations as at the time
of the Main Estimate for 201213 is broken down between the
main cost headings, such as personnel costs, in Table 4 below.
The latest forecast figures for 2012-13, in the Supplementary
Estimates 2012-13, are given for comparison purposes.
Table 4: The Estimated Cost of Operations in the
Main Estimate for 2013-14
| Cost Type | Afghanistan
£ million
| Wider Gulf
£ million
| Total for 2013-14
£ million
| Total Estimate for 2012-13
£ million
|
| Direct Resource DEL
| | | |
|
| Civilian Personnel |
12.9 | 6.6
| 19.5 | 3212
|
| Military Personnel |
175.0 | 0.1
| 175.1 | 235.0
|
| Stock/Other Consumption
| 412.7 | 6.4
| 419.1 | 654.0
|
| Infrastructure Costs |
123.9 | 4.6
| 128.5 | 176.1
|
| Equipment Support Costs
| 605.8 | 14.4
| 620.2 | 482.3
|
| Other Costs and Services
| 414.3 | 7.9
| 422.2 | 415.0
|
| Income Foregone/ (Generated)
| (24.8) | 0
| (24.8) | (28.0)
|
| Non nuclear charge against provision
| 4.0 | 0
| 4.0 | 5.7
|
| Total Direct Resource DEL
| 1,723.8 | 40.0
| 1,763.8 | 1,972.2
|
| Non cash Resource DEL |
621.3 | 0
| 621.3 | 519.6
|
| Total Resource DEL
| 2,345.1 | 40.0
| 2,385.1 | 2,491.8
|
| Capital DEL |
| | |
|
| Capital Additions - single use military equipment (SUME)
| 160.8 | 0
| 160.8 | 213.7
|
| Capital Additions - fiscal
| 159.6 | 5.0
| 164.6 | 383.3
|
| Total Capital DEL
| 320.4 | 5.0
| 325.4 | 597.0
|
| TOTAL ESTIMATED DEL COSTS
| 2,665.5 | 45.0
| 2,710.5 | 3,088.8
|
Source: Ministry of Defence[15]
10. The MoD told us that operational costs in Afghanistan
reflect the planned UK force levels in theatre in support of the
NATO-led international mission in Afghanistan for 2013-14. The
costs are significantly driven by the tempo of operations which
affects equipment support costs and fuel and ammunition consumption.[16]
The MoD also told us that the requested funding reflects the Prime
Minister's announcement in December 2012 that UK force levels
would drawdown to some 5,100 by the end of 2013.[17]
11. As we said in our recent Report on the MoD
Supplementary Estimates,[18]
we welcome the fall in the cost of operations in Afghanistan which
reflects the reduced involvement in combat operations. However,
given the possible increase in insurgent activity as NATO combat
troops are withdrawn, the MoD should not be afraid to request
additional resources for Afghanistan should the need present itself.
12. The MoD told us that the purpose behind the operations
in the Wider Gulf was as follows:
UK Forces are deployed to the Gulf to sustain
UK influence in the region, reassure our regional allies and support
deployment/redeployment access and over flight for operations
in Afghanistan. UK Forces also contribute to energy and trade
security, and support the Government's regional counter terrorism
and counter piracy policies.[19]
Funding of Operations in Mali
13. The UK Government decided to support French operations
in Mali in 2012-13.[20]
As the costs of operations in Mali did not appear on the face
of the 2013-14 Main Estimate or in the associated memorandum,
we asked the MoD how much the UK was spending on operations in
Mali. It told us that the costs were currently being compiled
for 2012-13 and would be published in the MoD Annual Report and
Accounts 2012-13. We asked the MoD from where in the MoD's budget
the UK's contribution to military operations in Mali was being
met. The MoD told us:
The costs of the UK's contribution to military
operations in Mali are being met from the Deployed Military Activity
Pool. The costs of the UK's contribution to the EU training Mission
are being met from the Conflict Pool.[21]
14. We recommend that the MoD put forward any
continuing costs of operations in Mali in the 2014-15 Main Estimate
and include the funding split between the Deployed Military Activity
Pool and the Conflict Prevention Pool in the associated Main Estimate
memorandum. However, we further recommend that costs of Mali operations
should come from the Treasury Special Reserve. We consider this
issue further in paragraphs 15-17 below.
The Deployed Military Activity Pool
15. The concept of the Deployed Military Activity
Pool (DMAP) was introduced for the first time in the 2013-14 Main
Estimate. The MoD described the DMAP as follows:
The DMAP is a new joint Treasury and MoD initiative
to make available resources to fund the initial and short term
costs of any unforeseen military activities, as authorised by
the National Security Council. As with the policy for Afghanistan
and the Wider Gulf, only the net additional costs of certain activities
are charged. The Special Reserve element is £25 million and
is matched by £25 million available within the MoD's allocation
for Defence Capability. [22]
16. We asked the MoD if the creation of the DMAP
meant that future operations would be funded from the DMAP rather
than the Treasury Special Reserve. The MoD told us:
The DMAP is one way of funding operations—usually
in their early stages. The precise criteria for the use of DMAP
are the subject of discussions with HM Treasury. The principle
remains that the HM Treasury Reserve will continue to be available
for funding the net operational activities.[23]
17. We are concerned that the establishment of
the Deployed Military Activity Pool is a breach of the principle
that all net additional costs will be met from the Treasury Special
Reserve and outside general discussions on the MoD core budget.
In response to this Report, the Government should explain the
intention behind the creation of the Deployed Military Activity
Pool. We strongly recommend that the Treasury should not undermine
the principle of the funding of operations from the Treasury Special
Reserve rather than from the MoD's core budget.
5 Ev 2 Back
6
Public Expenditure Statistical Analyses 2011 (Cm 8104) page 205 Back
7
Ibid , page 202 Back
8
HM Treasury, Central Government Supply Estimates 2013-14 Main
Supply Estimates, HC1079, 18 April 2013 Back
9
Ev 1 Back
10
HM Treasury, Central Government Supply Estimates 2013-14 Main
Supply Estimates, HC1079, 18 April 2013 Back
11
Ev1 Back
12
Ev 5 Back
13
Ev 14 Back
14
Ev 5, Table 8 Back
15
Ev 5 -6, table 9 Back
16
Ev 5 Back
17
Ev 5 Back
18
MoD Supplementary Estimates 2012-13, First report of Session 2013-14,
HC291 Back
19
Ev 5 Back
20
HC Deb, 14 january 2013, cols 621-623 and HC Deb, 29 January 2013,
col 781 Back
21
Ev 14 Back
22
Ev 6 Back
23
Ev 14 Back
| 
