Ministry of – Defence Annual Report and Accounts 2015-2016 ReportAnnual and Accounts Ministry of Defence Annual Report and Accounts 2015-2016 Ministry of Defence Annual Report and Accounts 2 015 -16 For the year ended 31 March 2016 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 14 July 2016 HC 342 1 This is part of a series of departmental publications which, along with the Main Estimates 2016-17, the document Public Expenditure: Statistical Analyses 2016, and the Supply Estimates 2015-16: Supplementary Budgetary Information, present the Government’s outturn for 2015-16 and planned expenditure for 2016-17. © Crown copyright 2016 This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. 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This publication is available at www.gov.uk/government/publications Any enquiries regarding this publication should be sent to us at: [email protected] Print ISBN 9781474136372 Web ISBN 9781474136389 Printed in the UK by the Williams Lea Group on behalf of the Controller of Her Majesty’s Stationery Office ID 12071601 07/16 Printed on paper containing 75% recycled fibre content minimum Contents Performance Report Overview Foreword by Secretary of State for Defence 8 Introduction from the Chief of Defence Staff and Permanent Secretary 9 Our Vision 10 Strategic Objectives 10 Strategic Defence and Security Review 13 Defence Budget and Spending 14 Departmental Structure 15 Defence Operating Model 17 Changes In Year 18 Performance Analysis Strategic Objective – 1: Protect Our People 21 Strategic Objective – 2: Project Our Global Influence 33 Strategic Objective – 3: Promote Our Prosperity 41 Strategic Objective – 4: Maintain a strategic base & integrated global support network, and manage the Department of State 45 Accountability Report Corporate Governance Report 68 Remuneration and Staff Report 84 Parliamentary Accountability and Audit Report 101 Annual Accounts Financial Statements 121 Annexes A: Core Tables 173 B: Statement of Approved Maximum Armed Forces Numbers 175 C: The MOD Art Collection and Freedom of Information 178 3 Performance Report 6 Annual Report and Accounts 2015-2016 Overview Part One – Annual Report Foreword by Secretary of State for Defence Over the last year the threats to international security grew – from Daesh spreading terror across the world, to Russian belligerence, and mass migration – but the UK’s response was unequivocal. We continued to deter and confront aggression wherever we found it. There were three key moments. First, last year's summer budget: the Government not only chose to stick to NATO's 2 per cent target but ensured it would grow in real terms for the first time in six years and increase in every year of this parliament. Second, the Strategic Defence and Security Review unveiled Joint Force 2025 bolstered by a ten-year £178bn equipment budget. On land we’ll have 112,000 Regulars and Reserves equipped with digital armoured vehicles. In the air there will be more F-35 more quickly as well as new P8 maritime patrol aircraft. At sea we’ll have new frigates and two new carriers – the most powerful ships ever built in Britain. And beneath the waves we’ll retain our continuous-at-sea deterrent – with four new nuclear submarines replacing the four existing Vanguard Class Boats. Third, Parliament reversed the damaging 2013 Syria vote and overwhelmingly decided to extend air strikes to targets in Syria. Since then the RAF have been striking Daesh day and night, with the terrorists pulling back from 40 per cent of the territory they once held in Iraq. Our Middle East operation is just one example of our Armed Forces’ impact worldwide. Last year RAF personnel worked with around 60 nations on operations, exercises and defence engagement. Our 80,000 British soldiers deployed on more than 380 commitments in 69 different countries around the world. And more than 30,000 sailors took part in over 700 ship visits, from Africa to Asia, Europe to Latin America. In the coming year, the dangers we face are likely to grow in complexity, concurrency and multiplicity. So we're going to keep working harder. Our budget might be growing but we must become ever more efficient – especially as every pound we save can be reinvested into the frontline. So we’ll be doing more to sweat our assets and release surplus land from the Defence estate – freeing up space to build 55,000 new homes so more people have the opportunity to own a place of their own. We will also be investing in our people – with more flexible working and a more efficient pay model. And we’ll be investing in innovation. 1.2% of our budget will go towards the science and technology that keeps us ahead of the curve. We will be working ever harder with our allies as leading members of NATO, the UN Security Council, the Commonwealth, the Organisation for Security and Cooperation in Europe, the Northern Group of European nations, the Five Power Defence Arrangements in the Far East and the Five Eyes intelligence alliance. Finally, since national security and economic security are two sides of the same coin, exports will become integral to our agenda. We'll be working closely with UK Trade and Investment to promote defence exports while spending even more with our Small and Medium Enterprises. As we look ahead to the next twelve months on the world stage, UK defence is stronger. We have the fifth largest defence budget in the world and we stand ready to protect our people, to project our influence, and to promote our prosperity. 8 Annual Report and Accounts 2015-2016 Introduction from the Chief of Defence Staff and Permanent Secretary This has been another operationally challenging year with the Syria vote increasing the UK commitment to countering Daesh. Over the year the Armed Forces have provided assistance to the migrant crisis, we activated the very high readiness Joint Task Force to provide manpower and equipment in support of the flood crisis in the North, while continuing to support the stabilisation operation in Afghanistan through the delivery of training to the Afghan National Training Academy. We have significantly increased our levels of Defence Engagement, have commenced the build up of additional UN commitments in Africa and are enhancing our contribution to NATO’s reassurance and deterrence posture. The early Summer Budget settlement has seen Defence expenditure grow for the first time in 15 years. This announcement was followed by the outcome of the Strategic Defence & Security Review, which set our priorities and put Defence on a strong footing going forward. This settlement will enable an expeditionary force of 50,000 rather than the 30,000 we had envisioned five years ago. We will have an Armed Forces that are increasing with additional manpower for both the Navy and the RAF, and we will have an Army that is refocused on war-fighting at the divisional level with the creation of two new strike brigades. The UK has committed to providing a Very High Readiness Task Force which will be able to support both war fighting and stabilisation operations. Separately we have further developed the Joint Expeditionary Force, which now consists of six other contributing partners and we have validated the operating concept of the UK/French Combined Joint Expeditionary Force. In promoting prosperity we will deliver against the Government’s target to release land for 55,000 homes by 2020, and, as at 1 May 16, land to build 22,000 new homes has already been released. We will continue to implement the reforms which form part of the Armed Forces’ Covenant and work towards delivering against those outstanding recommendations from Lord Ashcroft’s Veterans’ List. Retaining suitably qualified and experienced personnel to operate and maintain our equipment continues to be a challenge and through the People Strategy we have implemented a number of measures to address this including the introduction of a new Armed Forces Pay Model and Future Engagement System to give greater employment flexibility. The SDSR directed that we will reduce the number of civilians employed by the MOD by almost 30% to 41,000 by the end of Parliament. This reduction will be challenging and will consist of three broad parts: the first related to programmes well underway or complete, including the Army’s return from Germany; the second comprises some planned change programmes such as the Footprint Strategy; and the third identifying potential reduction through a series of reviews of the civilian workforce on a MOD-wide basis. In January 2016, Lord Levene published his 4th and final report on Defence Transformation. This report highlights the significant progress that has been made by the Department since 2011 and makes five further recommendations going forward. One of the recommendations is to streamline further the organisational structures at the top of the Department, work which is ongoing. It has been a busy year operationally and in conducting the Strategic Defence and Security Review. We remain immensely proud of the men and women of the Armed Forces and Civil Service working together to protect the security and interests of the UK and its citizens at home and abroad.