Ministry of Defence Annual Report and Accounts 2013-2014 Ministry of Defence Annual Report and Accounts 2 013 -14 For the year ended 31 March 2014 Accounts presented to the House of Commons pursuant to section 6(4) of the Government Resources and Accounts Act 2000 Departmental Report presented to the House of Commons by Command of Her Majesty Annual Report and Accounts presented to the House of Lords by Command of Her Majesty Ordered by the House of Commons to be printed 27 November 2014 HC 764 This is part of a series of departmental publications which, along with the Main Estimates 2014-15, the document Public Expenditure: Statistical Analyses 2014, and the Supply Estimates 2013-14: Supplementary Budgetary Information, present the Government’s outturn for 2013-14 and planned expenditure for 2014-15. © Crown copyright 2014 You may re-use this information (excluding logos) free of charge in any format or medium, under the terms of the Open Government Licence v.2. To view this licence visit www.nationalarchives.gov.uk/doc/open-government-licence/version/2/ or email [email protected] Where third party material has been identified, permission from the respective copyright holder must be sought. This publication is available at www.gov.uk/government/publications Any enquiries regarding this publication should be sent to us at AnnualReport&[email protected] Print ISBN 9781474111713 Web ISBN 9781474111720 Printed in the UK by the Williams Lea Group on behalf of the Controller of Her Majesty’s Stationery Office ID 20101401 11/14 Printed on paper containing 75% recycled fibre content minimum Contents Part One – Strategic Report Preface 4 Foreword by the Secretary of State for Defence 6 Introduction by Chief of Defence Staff and Permanent Secretary 7 Indicators 8 Section A: Operations and other Major Responsibilities 1 – Operations 11 2 – Standing Commitments 15 3 – Contingent Operations 21 Section B: Transforming and Delivering Defence 4 – Restructuring the Armed Forces 31 5 – Restructuring the Armed Forces – Personnel 35 6 – The New Defence Operating Model 47 7 – Delivering Defence 55 Part Two – Directors’ Report 73 Part Three – Remuneration Report 75 Part Four – Governance 1 – Statement of Accounting Officer’s Responsibilities 86 2 – Governance Statement 86 Part Five – Annual Accounts 1 – The Certificate of the Comptroller and Auditor General to the House of Commons 99 2 – Report of the Comptroller and Auditor General on the 2013-14 Accounts of the Ministry of Defence 102 3 – Financial Statements 108 4 – Notes to the Accounts 117 Annexes A – Defence in the Public Eye 164 B – Accountability to Parliament 168 C – Trading Fund Performance 171 D – Fraud 174 E – Sustainability 178 F – Annual Data Summary 179 G – Votes A Statement – Statement of Approved Maximum Armed Forces Numbers 181 3 Part One – Strategic Report Preface The Defence Vision: Our vision is to deliver versatile, agile and battle-winning Armed Forces, working effectively with each other, directed and supported by a professional Ministry of Defence, with people ready to lead, accept responsibility and spend wisely, protecting our security in a changing world. Defence Priorities Our priorities for 2013/2014 reflect the Defence Vision. They are: ● to succeed in Afghanistan; ● to continue to fulfil our standing commitments; ● to succeed in other operations we are required to undertake; ● to transform Defence by: – restructuring the Armed Forces and their capabilities; – implementing the new Defence Operating Model; – delivering Defence in the most effective, efficient and sustainable way. Report Structure This report is structured in line with these priorities and the MOD Business Plan which is revised annually and can be found on the internet at the following internet address: https://www.gov.uk/government/collections/mod-business-plan SECTION A: The first half of the Strategic Report covers our progress on operations and our other major responsibilities. Chapter 1 – Operations details our progress in Afghanistan, the main effort for the MOD. Our Armed Forces are working to protect the UK by creating security and stability in Afghanistan and training members of the Afghan National Security Forces (ANSF). By the end of 2014, the UK will have reduced its force levels in Afghanistan significantly and will no longer be in a combat role but will continue to support the post-2014 mission by providing the ANSF with training, advice and assistance. Chapter 2 – Standing Commitments details how we continue to fulfil our standing commitments, including strategic intelligence, the strategic nuclear deterrent, defence against direct threats to the UK and its overseas territories, counter-terrorism and military aid to the civil authorities. Carrying out these roles is essential to our security and supports key British interests around the world. Chapter 3 – Contingent Operations details our work in providing the defence contribution to the UK’s influence throughout the world by succeeding in other operations we are required to undertake at home and overseas, by providing a defence contribution to UK influence (including working with the Department of Business, Innovation and Skills (BIS) to promote defence exports), by defending our interests through projecting power strategically and through expeditionary operations, by providing security for stabilisation, and by providing a defence contribution in support of other government departments. 4 Annual Report and Accounts 2013-2014 SECTION B: The second half of the Strategic Report covers our progress on transforming and delivering Defence. Chapters 4 & 5 – Restructuring the Armed Forces details our work in implementing the Armed Forces’ Covenant, developing a New Employment Model for Armed Forces personnel, transforming the role of reserves and our progress towards the Future Force 2020 structure. Chapter 6 – The New Operating Model covers our progress in implementing the Defence Operating Model. Our goal is to create a simpler and more effective organisation whilst significantly reducing our running costs. Chapter 7 – Delivering Defence covers our progress in transforming Defence by delivering Defence in the most effective, efficient and sustainable way by meeting benchmarking, efficiency and Government sustainability development targets. ANNEXES Annex A – Defence in the Public Eye Annex B – Accountability to Parliament Annex C – Trading Fund Performance Annex D – Fraud Annex E – Sustainability Annex F – Annual Data Summary Annex G – Votes A Statement – Statement of Approved Maximum Armed Forces Numbers 5 Part One – Annual Report Foreword by Secretary of State for Defence The Ministry of Defence exists to keep the United Kingdom safe and protect our national interests overseas. As the Secretary of State for Defence, my highest priority is ensuring the success of our Armed Forces on operations – completing our work in Afghanistan; supporting the government of Iraq against ISIL; and our humanitarian mission to Sierra Leone to help tackle the outbreak of Ebola. During 2013-14, our role in Afghanistan was increasingly focused on training, advising, and assisting the Afghan National Security Forces as they took on lead responsibility for security across the country. As planned, UK forces were reduced to just over 5,000 personnel in early 2014 and in October this year the UK’s involvement in combat operations in Helmand came to an end. I pay tribute to the 7 UK Service personnel who lost their lives and the 10 who suffered serious injury in Afghanistan during 2013-14. The sacrifice of our servicemen and women has stopped Afghanistan being a launch pad for terrorist attacks in the UK and laid the foundations for a strong Afghan security force, which enabled the first democratic transition of power in the country’s history. Our commitment to supporting Afghanistan will continue through institutional development, the Afghan National Army Officer Academy, and development aid. At the heart of Defence are our people, the men and women of the Armed Forces, as well as the civilian staff and contractors who support them. The moral obligation that the nation owes to our Service personnel, veterans, and their families is reflected in our commitment to the Armed Forces Covenant. I am pleased that the new Help to Buy scheme has already assisted over 1500 service personnel to buy their first home. We are also investing nearly £2Bn in building up our Reserve forces, who are playing an increasingly important and wider role in Defence alongside their regular counterparts. We are continuing to re-structure and re-equip our Armed Forces to create Future Force 2020, to meet the threats the UK will face in the coming years. The first of our two new aircraft carriers, HMS Queen Elizabeth, was formally launched in July this year and in September we announced an order for 589 Scout vehicles for the British Army. The first of the new ‘Rivet Joint’ signals intelligence aircraft was delivered in November 2013 and further Typhoons were delivered the following month. And there are many other new platforms and systems arriving all the time as we continue to invest in the best equipment for our forces. Our reforms also took major steps forward in 2013-14. My predecessor’s work to put Defence on a strong and sustainable footing has enabled greater authority to be delegated to the four military Commands to manage their own budgets during the first year of the new delegated operating model. The transition of our Defence Equipment and Support organisation, which became a bespoke trading entity with greatly enhanced freedoms on 1 April this year, opens the way to improved defence acquisition. In parallel, our earlier decision to bring in a private-sector partner to manage the Defence Infrastructure Organisation came into effect on 3 September. Substantial progress has been made since the 2010 Strategic Defence Review. Although there are many challenges still ahead, I am confident that we are increasingly delivering our vision of versatile, agile, and battle-winning Armed Forces, working together effectively and supported by a professional Ministry of Defence, people ready to lead, accept responsibility, and spend wisely – keeping Britain safe in an uncertain world.