SR2002/MOD
15 July 2002
Gordon Brown announces billions extra for defence
The defence budget is to rise by £3.5 billion a year by 2005-06 compared to this year as the Chancellor, Gordon Brown, announced the biggest planned increase in defence spending for twenty years. The extra money will be used to provide the Armed Forces with modern, battle-winning equipment and enabling our Armed Forces to operate more effectively alongside our allies in the continuing campaign against international terrorism.
In announcing the settlement the Chancellor said:
This is the biggest planned increase in defence spending for twenty years and is a clear sign of the strength of the British economy. This Government's prudent management of the country's finances has meant that we have been able to find billions extra for health and education whilst at the same time finding billions extra to ensure that we continue to have one of best Armed Forces in the world.
The additional money will also be used to modernise business information systems across defence and to modernise the defence logistics organisation and the way in which our front line forces are supported. In return, the MOD has agreed to look even harder at ways of improving efficiency to ensure that the tax-payer gets more value for money from defence spending.
In responding to the settlement the Defence Secretary, Geoff Hoon, said:
This is an excellent settlement for defence. It reflects the Government's commitment to strong defence, and will allow us to invest in the continued modernisation and evolution of the Armed Forces to meet the new security challenges, including the threat from international terrorism. The settlement is also a clear recognition of the contribution made by the Armed Forces, our Service personnel, and the civil servants and others who support them, particularly in recent and continuing operations.
Notes for editors
1. The MOD's SR2002 settlement represents the biggest planned increase in defence spending for twenty years. It provides an additional £3,453 million Total Departmental Expenditure Limit by 2005-06. This increase represents 1.2% average annual real growth over the next three years. This is equivalent to 1.7% average annual real growth on the previous budgeting system.
| £ million | 2002-03 | 2003-04 | 2004-05 | 2005-06 |
| Ministry of Defence | ||||
| Resource Budget | 31,376 | 33,016 | 33,755 | 34,690 |
| Capital Budget | 5,549 | 6,009 | 6,327 | 6,880 |
| Total Departmental Expenditure Limit1 | 29,326 | 30,921 | 31,756 | 32,779 |
| Near-cash spending in MOD DEL2 | 24,196 | 25,579 | 26,479 | 27,389 |
1 Full resource budgeting basis, net of depreciation.
2 Consistent with previous control basis.
2. In 1998 the Ministry of Defence announced the results of its Strategic Defence Review (SDR). This proposed a radical modernisation programme of the UK Armed Forces to provide more capable, more flexible and better-equipped forces to fulfil the Government's commitment to strong defence. The SR2000 funded the SDR in full and its delivery is now well advanced. The SR2002 settlement will enable the MOD to continue with its implementation in full.
3. Following the events of 11 September, the Defence Secretary commissioned work on a "New Chapter" to the SDR to ensure that the UK has the right forces and the right capabilities to meet the additional challenges facing it. This work is now complete and has confirmed that the original conclusions of the SDR (taken together with lessons learned since) are correct, but that further additional funding is necessary to ensure that our Armed Forces have the equipment and capabilities needed to respond to a changed world. SR2002 provides £1 billion of new capital and £0.5 billion of new resources for these new equipments and capabilities.
4. The Ministry of Defence's business information systems are becoming outdated and need to be modernised. The Defence Logistics Organisation also needs modernising to enable it to support front line forces more efficiently. The SR2002 settlement provides an additional £578 million for modernising business information systems across defence and for modernising the way in which the Defence Logistics Organisation operates. In return, the Ministry of Defence has undertaken to look even harder at ways of improving efficiency and is committed to delivering 2.5% output efficiencies each year
5. For further details please contact the Ministry of Defence Press Office on 020 7218 7909 or visit the Ministry of Defence website.