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Ministry of Defence Annual Report and Accounts 2010-11 for the Year Ended 31 March 2011

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Ministry of Defence Annual Report and Accounts 2010-11 for the Year Ended 31 March 2011 Ministry of Defence Annual Report and Accounts 2010-11 For the year ended 31 March 2011 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 18 July 2011 HC 992 London: The Stationery Office £37.00 This is part of a series of Annual Reports and Accounts which, along with the Main Estimates 2011-12 and the document Public Expenditure: Statistical Analyses 2011, present the Government’s outturn and planned expenditure for 2011-12. © Crown copyright 2011 You may re-use this information (excluding logos) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit http://www.nationalarchives.gov.uk/doc/open-government-licence/ or e-mail: [email protected]. Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned. Any enquiries regarding this publication should be sent to us at: DefRes-AnnualReport&[email protected] This publication is available for download at www.official-documents.gov.uk and also available from our website at www.mod.uk. ISBN: 9780102974744 Printed in the UK by The Stationery Office Limited on behalf of the Controller of Her Majesty’s Stationery Office ID P002443514 07/11 Printed on paper containing 75% recycled fibre content minimum. 2 Annual Report and Accounts 2010-2011 Contents Part One – Annual Report Preface 4 Foreword by the Secretary of State for Defence 6 Introduction by Chief of Defence Staff and Permanent Secretary 7 Performance and Key Facts 8 Section A: Major Responsibilities 11 1 – Afghanistan (including other Operations) 11 2 – Standing Commitments 15 3 – Other Operations (Contingent) 25 4 – Defence Exports 27 Section B: Structural Reform 29 5 – SDSR Implementation 29 6 – Armed Forces Covenant 33 7 – Defence Reform Review 41 8 – Delivering Defence in the most effective, efficient and sustainable way 45 Part Two – Annual Accounts 87 1 – Statement of Accounting Officer’s Responsibilities 87 2 – Statement on Internal Control 88 3 – The Certificate of the Comptroller and Auditor General to the House of Commons 94 4 – Report of the Comptroller and Auditor General on the 2010-11 Accounts of the Ministry of Defence 96 5 – Financial Statements 102 6 – Notes to the Accounts 108 7 – Votes A Statement – Statement of Approved Maximum Armed Forces Numbers 166 Annexes 168 A – Accountability to Parliament 168 B – Defence Agencies, Trading Funds and Non Departmental Public Bodies 171 C – Government Standards 174 3 Preface i. The Ministry of Defence’s (MOD) Annual Report and Accounts is an overview of UK Defence and how the MOD has used the resources authorised by Parliament from April 2010 to March 2011. Part One: Annual Report ii. The principal activity of the Department is to deliver security for the people of the United Kingdom and the Overseas Territories by defending them, including against terrorism, and to act as a force for good by strengthening international peace and stability. The MOD Business Plan 2011-15 was published in November 2010 and lists the Department’s priorities as: ● to succeed in Afghanistan; ● to continue to fulfil our standing commitments; ● to succeed in other operations we are required to undertake; ● to promote defence exports consistent with export control criteria; ● to implement the Strategic Defence and Security Review (SDSR); ● to deliver the Defence Reform Unit’s review; and ● to deliver Defence in the most effective, efficient and sustainable way. The MOD Business Plan splits this list into ‘Major Responsibilities’ and ‘Structural Reform Priorities’. The Structural Reform Priorities also includes a separate heading on the Armed Forces Covenant, reflecting the importance that the Government places on our Service personnel. This report is structured around the seven priorities contained in the Business Plan, plus an additional chapter for the Covenant. Further information on the MOD Business Plan is at: http://www.mod.uk/DefenceInternet/AboutDefence/CorporatePublications/BusinessPlans/ ModBusinessPlans/management Further details of the SDSR, Defence Reform and Transparency are available at: http://www.mod.uk/DefenceInternet/AboutDefence/WhatWeDo/PolicyStrategyandPlanning/ DefenceReform/ and http://www.mod.uk/DefenceInternet/AboutDefence/WhatWeDo/Transparency/ iii. The Defence Board uses the Defence Performance Framework to assess and manage Defence’s performance and provide direction and guidance to the Department. The framework, which includes the reporting of performance against the actions articulated in the Structural Reform Plan within the MOD Business Plan, involves a quarterly performance and risk report that is focused on the Defence Board’s strategic objectives, and an annual performance and risk report. This allows the Board to assess whether strategy needs to be adjusted and provides oversight of performance in individual areas. The performance section of this report is set out against the priorities articulated in the MOD Business Plan and informed by reporting generated by the Defence Performance Framework. 4 Annual Report and Accounts 2010-2011 Part Two: Annual Accounts 2010-11 iv. The MOD prepares accounts for each financial year detailing the resources acquired, held, or disposed of during the year and the way in which it has used them. Accounts are prepared in accordance with directions issued by HM Treasury including the accounting instructions in the Government Financial Reporting Manual. The accounts are audited by the Comptroller and Auditor General who provides an opinion as to whether: the financial statements give a true and fair view and have been properly prepared; expenditure and income has been applied to the purposes intended by Parliament; and the financial transactions conform to the authorities which govern them. Further Information v. Further information on the MOD, including Ministerial responsibilities and our organisation and administration is set out in the Defence Framework document which is published on the MOD website at www.mod.uk/DefenceInternet/DefenceFor/Researchers/. 5 Part One – Annual Report Foreword by Secretary of State for Defence The first duty of Government is defence of the realm. The requirement to fight, and win, the wars of today is not optional but necessary to protect national security and meet the national interest. The current operations in Afghanistan and, more recently in Libya remain the priority for the Ministry of Defence (MOD). 2010-11 saw continued progress towards our objective of a stable and secure Afghanistan. We now have the right number of troops there with the right equipment. The Afghans are not yet able to secure their own territory without the presence of coalition troops but the training of the Afghan National Security Forces is progressing ahead of schedule. Last financial year also saw the deployment of our Armed Forces in Libya alongside a wide international coalition to support UN Resolution 1973 that authorises the use of military force to protect civilians. We could not stand aside to witness the violence that Gaddafi was unleashing on those he had a duty to protect. Nor could we afford to see Libya again become a rogue state in Europe’s neighbourhood. The Coalition of Nations is united in our shared determination to enforce UN resolutions, and will continue The Secretary of State for Defence to protect the Libyan people for as long as it takes. The Right Honourable Liam Fox MP While the men and women of our Armed Forces fighting on the front-line get first call on MOD resources, we must also ensure that Defence is prepared for the challenges of protecting national security in the future. This year saw the completion of the first Defence Review since 1998. The Strategic Defence and Security Review (SDSR) set the direction for a reshaping of our Armed Forces to tackle future and emerging threats. Future Force 2020 must be based on a sound and sustainable financial base. So we are now bringing Defence policy, plans, commitments and resources into balance so that we can emerge with a coherent and affordable Defence programme for the future. Much work has been done to re-align the budget, but staying the course will require sustaining the strict cost-control regime I have put in place at the MOD. The SDSR also called for stronger Defence partnerships with our main allies, whose security interests and military capabilities are closest to our own. Last year we signed a Defence and Security Co-operation Treaty with France taking our co-operation to a new level and offering a number of mutual benefits. Developing partnerships of this kind is the right way forward at a time when resources are constrained. The SDSR alone will not be enough to solve the problems facing Defence. That is why an early priority of this Government was to launch a full review into how Defence is run. The Defence Reform Unit, led by Lord Levene, looked at how the MOD is structured and managed, and how we can reform the Armed Forces to produce more efficient provision of Defence capability, including the generation and sustainment of operations. There has been much public focus on equipment and how we procure the capabilities our Armed Forces need, but we should never forget that it is our people, the men and women of our Armed Forces, who are our greatest asset. Without them there is no Defence of the realm. That is why we have set out for the first time a tri-service Armed Forces Covenant so that not only the Government but all of society can help fulfil the moral obligation the nation has to our Armed Forces, their families and our veterans.
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