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Ministry of Defence Departmental Overview 2019

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Ministry of Defence Departmental Overview 2019 A picture of the National Audit Office logo DEPARTMENTAL OVERVIEW 2019 MINISTRY OF DEFENCE OCTOBER 2019 If you are reading this document with a screen reader you may wish to use the bookmarks option to navigate through the parts. If you require any of the graphics in another format, we can provide this on request. Please email us at www.nao.org.uk/contact-us MINISTRY OF DEFENCE This overview summarises the work of the Ministry of Defence including what it does, how much it spends, recent and planned changes, and what to look out for across its main business areas and services. Bookmarks and Contents Overview CONTENTS THEMES IN DEFENCE About the Department How the Department is structured VALUE FOR MONEY Where the Department spends its money The Department’s assets and liabilities Major developments in 2018-19 OVERVIEW PART [01] Major developments and programmes page About the Department Affordability of the Department’s page Major developments3 and programmes– continued page15 – 22 PART [05] MoD approaches to procurement of projects and programmes Equipment Plan What to look out for Major equipment programmes– in Howthe 2018 the Equipment Department Plan is structured – Major equipment programmes in the 2018 Equipment Plan continued Exiting the European Union – Where the Department spends its money Managing public money Risks to managing public money The Department’s assets and liabilities – PART [02] Part [01] – Affordability of the Department’s Equipment Plan page16 – Major developments in 2018-19 – Accounting Officer scrutiny of challenges 2 Part [02] – Major programmes in 2018-19 to major programmes in 2018-19 Exiting the European Union Accounting Officer scrutiny of– challenges to major programmes Accounting Officer scrutiny of challenges to major programmes continued – Managing public money Part [03] – Commercial relationships Part [04] – Reforming the civilian workforce page18 PART [03] Reforming the civilian workforce continued Reforming the civilian workforce continued – Commercial relationships Part [05] – What to look out for PART [04] page19 – Reforming the civilian workforce The National Audit Office (NAO) helps Parliament hold government to account for the way it If you would like to know more about the NAO’s work on the Ministry of Defence, please contact: If you are interested in the NAO’s work and support for spends public money. It is independent of government and the civil service. The Comptroller and Parliament more widely, please contact: Jeremy Lonsdale Keith Lloyd Auditor General (C&AG), Gareth Davies, is an Officer of the House of Commons and leads the NAO. Director, Value for Money Audit Director, Financial Audit [email protected] The C&AG certifies the accounts of all government departments and many other public sector [email protected] [email protected] 020 7798 7665 bodies. He has statutory authority to examine and report to Parliament on whether government is 020 7798 7412 020 7798 7092 delivering value for money on behalf of the public, concluding on whether resources have been used efficiently, effectively and with economy. The NAO identifies ways that government can make better use of public money to improve people’s lives. It measures this impact annually. In 2018 the NAO’s work led to a positive financial impact through reduced costs, improved service delivery, or other benefits to citizens, of £539 million. Design & Production by NAO External Relations – DP Ref: 007337-001 © National Audit Office 2019 OVERVIEW DEPARTMENTAL OVERVIEW 2019 [MoD] – About the Department The Ministry of Defence (the Department) is both a Department of State and a military headquarters. It is responsible for providing the military capability necessary to deliver the government’s objectives and define future military requirements. Its main purpose Spending Round is to deliver, alongside other government departments, security for citizens of the UK and the Overseas Territories by defending The 2019 Spending Round them, including against terrorism, and to act as a force for good by strengthening international peace and stability. announced £2.2 billion of additional funding for the Department in 2019-20 and 2020-21, including Long-term strategic direction £700 million for increased employer Project our The Department undertakes Strategic pensions contributions, and Protect Promote our global Defence and Security Reviews (SDSR), most £1.5 billion on new and priority our people prosperity influence recently in 2015, to set policy for the next five capability programmes. years. In 2017, the government launched a Focus of National Audit National Security Capability Review (NSCR) to Office work support the implementation of the SDSR. Transform Support Over the past year our work Objectives delivery of Following the conclusion of the NSCR, the the way we has focused on whether the do business EU Exit Department undertook the Modernising 3 Department’s plans are affordable; Defence Programme during 2018 to plan how it plans to deliver major how to respond to the changing international programmes and manage its security context and to deliver better commercial relationships; and military capability and value for money. whether it has the right skills The Department published interim headline among both military and civilian findings in July 2018, and in December 2018 personnel to deliver its objectives. announced a final update. This concluded We have also examined a number that the Department had “established a set of of key contracts – for army Defending the UK policy approaches and capability investments Providing strategic Providing nuclear recruitment, submarine defueling and its Overseas that will help us keep on track to deliver the intelligence deterrence and dismantling, and military Territories right UK Defence for the coming decade”. flying training. This work identified three broad priorities, which the Department has stated are to: • mobilise to make the most of Responsibilities Supporting civil Defending our existing capabilities; interests by projecting Providing a defence emergency Providing security power strategically and contribution to organisations in for stabilisation • modernise to embrace new technologies through expeditionary UK influence times of crisis interventions to assure its competitive position; and • transform to radically improve the way it does business. Source: Ministry of Defence Single Departmental Plan and Strategic Asset Management Plan OVERVIEW DEPARTMENTAL OVERVIEW 2019 [MoD] – How the Department is structured The Department is organised into seven top-level budgets, a portfolio of enabling organisations and regulatory bodies: DefenceDefence ministers Council Chief of the Defence Staff and Permanent Secretary Top-level budgets Navy Command Army Command Air Command Joint Forces Head Office Defence Defence Nuclear Army Command Army Command Air Command Joint Forces Head Office and Defence Defence Nuclear Command and Corporate Infrastructure Organisation Command Corporate Services Infrastructure Organisation Services Organisation Organisation 4 Information Defence Business Information Defence Business Systems and Services Systems and Services Services Services Ministry of Defence Defence Business Police Services Defence Electronics Defence Equipment Defence Science and Oil and Pipelines Submarine Delivery UK Hydrographic Enabling Defence Electronics Defence Equipment and Defence Science and Oil and Pipelines Submarine Delivery UK Hydrographic Office and Components and Support (DE&S) Technology Laboratory Agency (OPA) Agency (SDA) Office (UKHO) organisations and Components Support (DE&S) Technology Laboratory Agency (OPA) Agency (SDA) (UKHO) Agency (DECA) (DSTL) Agency (DECA) (DSTL) Regulatory bodies Defence Safety Single Source Defence Safety Single Source Authority Regulations Office Authority Regulation Office (SSRO) (SSRO) Part of the Department Managed on an arm’s-length basis Non-departmental public body OVERVIEW DEPARTMENTAL OVERVIEW 2019 [MoD] – Where the Department spends its money In 2018-19, spending by the Department was £38.1 billion. This total is made up of Breakdown of total defence spending, 2018-19 both cash resource delegated expenditure limits and capital delegated expenditure limits. Delegated expenditure limits represent the government budget allocated to the Capital expenditure, Department for the year. This expenditure consists of spend on civilian and military £10.294bn staff, infrastructure, equipment support costs and investment in military equipment. The total does not include: adjustments to the accounts, such as the impact Service personnel, of changes to the HM Treasury discount rate on the valuation of nuclear £9.093bn decommissioning provisions; non-cash depreciation and impairment of non-current assets; and adjustments to correct errors in prior-period balances. In 2018-19 the Arm’s-length bodies, net effect of these movements was £0.02 billion. £0.204bn Equipment support, Cost of operations, £6.793bn £0.626bn Spending across major business areas Capital The Department spent £10.3 billion on capital items, including expenditure equipment, and £6.8 billion on equipment support (45% of total Total defence 5 and equipment defence spending). War Pension benefits, spending Infrastructure, support £0.697bn £4.259bn The Department’s forecast costs for its equipment plan exceed £38.060bn budgets by £7 billion over the next 10 years, although in some scenarios costs could increase further (see page 15). People The Department spent £12.6 billion1
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