Ministry of – Defence Annual Report and Accounts 2014-2015 ReportAnnual and Accounts Ministry of Defence Annual Report and Accounts 2014-2015 Ministry of Defence Annual Report and Accounts 2 014 -15 For the year ended 31 March 2015 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 16 July 2015 HC 32 This is part of a series of departmental publications which, along with the Main Estimates 2015-16, the document Public Expenditure: Statistical Analyses 2015, and the Supply Estimates 2014-15: Supplementary Budgetary Information, present the Government’s outturn for 2014-15 and planned expenditure for 2015-16. © Crown copyright 2015 This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London T W9 4DU, or email: [email protected]. Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned. 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 9781474123358 Web ISBN 9781474123365 Printed in the UK by the Williams Lea Group on behalf of the Controller of Her Majesty’s Stationery Office ID 08071501 07/15 Printed on paper containing 75% recycled fibre content minimum Contents Stategic Report i Preface 4 ii Foreword from the Secretary of State for Defence 6 iii Introduction from the Chief of Defence Staff and the Permanent Secretary 7 iv Indicators 8 Chapter 1 Operations and other Major Responsibilities 1.1 Operations 11 1.2 Other Major Responsibilities 19 Chapter 2 Transforming and Delivering Defence 2.1 Transforming Defence – Organisation and Environments 29 2.2 Transforming Defence – People 33 2.3 Delivering Defence 49 Accountability Chapter 3 Directors’ Report 71 Chapter 4 Remuneration Report 75 Chapter 5 Governance Statement 87 Annual Accounts Chapter 6 Certificate of the Comptroller and Auditor General 103 Chapter 7 Report of the Comptroller and Auditor General 107 Chapter 8 Financial Statements 111 Chapter 9 Notes to the Accounts 123 Supplementary Information Annex A Defence in the Public Eye 183 Annex B Accountability to Parliament 187 Annex C Trading Funds Performance 190 Annex D Fraud 192 Annex E Sustainability 195 Annex F Statement of Approved Maximum Armed Forces Numbers 196 3 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 2014-15 reflect the Defence Vision. They were: ● 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. Defence Responsibilities ● defending the UK and its overseas territories ● providing strategic intelligence ● providing nuclear deterrence ● supporting civil emergency organisations in times of crisis ● defending our interests by projecting power strategically and through expeditionary interventions ● providing a defence contribution to UK influence ● providing security for stabilisation This report is structured in line with the above responsibilities and priorities. Strategic Report: Chapter 1 Operations and Other Major Responsibilities – details our work on operations in Afghanistan, and on wider operational commitments. It explains how we fulfil our Standing Commitments, including strategic intelligence, nuclear deterrent, defence against direct threats to the UK and its overseas territories, counter-terrorism, and military aid to the civil authorities. It captures 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 contribution to UK exports through our work with the Department of Business, Innovation and Skills (BIS), by defending UK interests through projecting power strategically and through expeditionary operations, by providing security for stabilisation, and providing a defence contribution in support of other government departments. 4 Annual Report and Accounts 2014-2015 Chapter 2 Transforming and Delivering Defence – details our work in restructuring the Armed Forces including implementing the Armed Forces Covenant, progression of the new employment model for Armed Forces personnel, transforming the role of Reserves and further progress towards the Future Force 2020 structure. It captures our progress in implementing the Defence Operating Model and in delivering Defence in the most effective, efficient, and sustainable way by meeting benchmarking, efficiency, and Government sustainability development targets. Accountability: Chapter 3 Directors’ Report – includes the Departmental Accounting Boundary, Directorships, and Significant Interests. Chapter 4 Remuneration Report – includes Remuneration Policy; Performance and Reward; Senior Managers’ Contracts and Management; Ministerial and Defence Board Salaries, Taxable Benefits and Pension Benefits; and Armed Forces and Civil Service Pensions. Chapter 5 Governance Statement – includes Statement of Accounting Officers Responsibilities and Departmental Governance Statement. Annual Accounts: Chapter 6 Certificate of the Comptroller and Auditor General – includes Scope and Audit Opinion. Chapter 7 Report of the Comptroller and Auditor General – a detailed report on Audit findings. Chapter 8 Financial Statements – financial tables summarising income and expenditure and asset movement. Chapter 9 Notes to the Accounts – supports the financial statements and provides detail on financial risk, investments, and Departmental Group break-down including losses and special payments. Supplementary Information: Annex A Defence in the Public Eye Annex B Accountability to Parliament Annex C Trading Funds Performance Annex D Fraud Annex E Sustainability Annex F 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 top priority is ensuring the success of our Armed Forces on operations and our readiness to respond in an increasingly dangerous world. The actions of ISIL pose a direct threat to the safety of the British people and it is in our national interest that the UK is playing a full part in the global coalition to dismantle and destroy this terrorist organisation using all the resources at our disposal. The House of Commons last year gave its overwhelming backing to our Armed Forces helping the Government of Iraq to protect civilians and restore its territorial integrity, including the use of UK air strikes against ISIL in Iraq. This strong support for specific and specialist UK military help to the Iraqi Government, as part of a wider international strategy, marked a clear contrast with the decision taken in 2013 in relation to Syria. That widespread backing underpins the excellent work of our Armed Forces in helping Iraqis in the fight against ISIL. Beyond Iraq, Britain has been able to play an active role across the world because we have a £34 billion a year defence budget. That means we can respond quickly and at scale to events: sending our flagship, HMS Bulwark, to the Mediterranean, where it has rescued more than two thousand people in operations off Italy; having RAF Typhoon aircraft patrol over the Baltic against Russian provocation; and providing disaster relief to Nepal, using RAF aircraft to transport humanitarian aid and deploying British Army Gurkhas in direct support roles on the ground. At the end of 2014, the UK’s involvement in combat operations in Afghanistan came to an end. I pay tribute to the 453 UK Service personnel who lost their lives and to those who have suffered serious injury throughout this campaign. The sacrifice of our servicemen and women has helped to prevent terrorist attacks in the UK and has brought greater stability to Afghanistan. The UK is continuing to support the people of Afghanistan through institutional development, including helping train the leaders of tomorrow via our role in the Afghan National Army Academy. In meeting the needs of Future Force 2020, we are continuing to invest in the best equipment for our forces; the equipment plan will continue to grow by 1% above inflation every year. HMS Queen Elizabeth, the first of our two new aircraft carriers, was launched last summer and last autumn we placed the biggest contract for the Army in 30 years for 589 Scout armoured vehicles, which will provide a step-change in capability for the Army. In December, Typhoon tranche 3 was