Chapter 12

Ministry of Defence

This Government is delivering a modern, flexible and battle-winning defence capability able to meet today's challenges and to promote international peace and security by:

providing the first real terms budgeted increase in defence spending for more than a decade, enabling the Ministry of Defence to implement the Strategic Defence Review (SDR) to provide balanced, better focused and flexible Armed Forces, ready for today's operational priorities in a modern world;
making an effective contribution to conflict prevention;
continuing to invest in new equipment for the Armed Forces;
bringing the Royal Navy and Royal Air Force up to full manning, and placing the Army well on the way to that goal;
tackling overstretch in the Armed Forces, as the 'Policy for People' is implemented; and
redirecting resources for new investment in defence priorities by continuing the high level of disposals from the defence estate, spares, stocks and other assets, through rationalisation and improved asset use.

12.1 The 1998 Strategic Defence Review (SDR) set out a radical modernisation programme of the UK's Armed Forces. The objective was to provide more capable, more flexible and better equipped forces to fulfil the Government's commitment to strong defence and to support foreign policy objectives. The Government is already well underway in implementing the Review, restructuring the Armed Forces so they can respond to the wide range of crises and theatres of action they will face in the modern world, providing substantial fighting forces if necessary.

12.2 The SDR's conclusions have been reinforced by the successful operations in Kosovo, East Timor and Sierra Leone. In line with the outcome of the SDR, which focused on rapid deployment and sustainability, work has begun to procure new roll-on, roll-off container ferries and transport aircraft, to improve our forces' ability to move quickly by sea and air. Further lessons have been learned from those operations, particularly in Kosovo, and improvements to the Armed Forces are now in hand to plug the gaps.

12.3 The 2000 Spending Review provides real growth in the defence budget for the first time in over a decade, rising by an average 0.3 per cent a year in real terms over the next three years. The Ministry of Defence will be funded to continue to play a leading role in managing international crises, and in NATO and European defence initiatives. The Government will continue to implement the SDR, bringing the Armed Forces towards full manning; continuing with the acquisition of equipment; and creating new joint military units to provide the balance of capabilities we now require.

Investing in defence for the 21st Century

Box 12.1: Key PSA targets - Ministry of Defence

Recruit, retain and motivate the personnel needed to meet the manning requirement of the Armed Forces, so that by March 2004, the Royal Navy and the Royal Air Force achieve full manning and the Army meets 97 per cent of its manning requirement.
Work with partners so that the European Union can, by 2003, deploy forces of up to Corps level (50-60,000 personnel) within 60 days, capable of undertaking the full range of Petersberg tasks in and around Europe.
Improve effectiveness of the UK contribution to conflict prevention and management as demonstrated by a reduction in the number of people whose lives are affected by violent conflict and by a reduction in potential sources of future conflict, where the UK can make a significant contribution (joint target with the Foreign and Commonwealth Office and Department for International Development).
Ensure that by 2005 a minimum of 90 per cent of rapidly available military units are at required states of readiness.

Improving flexibility and mobility

12.4 The spending plans set out in Table 12.1 enable the MOD to continue its modernisation programme, so that the Armed Forces can deploy quickly and effectively around the world in support of UK interests. The MOD is working with the FCO and DFID to introduce new arrangements designed to improve the effectiveness of the UK's contribution to conflict prevention. Developments in this area are set out in Chapters 6 and 36.

12.5 The programme to provide better, more balanced Armed Forces includes:

taking forward the modernisation of the Armed Forces, providing them with the equipment (including air and sea heavy lift) and training they require to deploy and perform effectively;
tackling overstretch in the Armed Forces ; and
continuing with the defence estate rationalisation to make best use of existing assets and maximise the potential for disposal receipts.

Getting better value from defence spending

12.6 The Ministry of Defence continues to look at ways of making defence spending more cost-effective. Procurement techniques have been dramatically overhauled and levels of efficiency achievement have been very good. Resources freed up have been reinvested in further modernisation and reform. The Defence Logistics Organisation (DLO), which replaced the three single service logistics organisations after the SDR, is bedding down and improving support to the front line. Together the Defence Procurement Agency and the DLO will take forward Smart Procurement, to provide equipment on time, to budget and to meet capability requirements far more effectively than in the past.

Defence spending plans

12.7 The new spending plans provide the first real teams budgeted increase for defence for over a decade. The defence budget will rise by £2 billion between 2000-01 and 2003-04, an average real terms increase of 0.3 per cent a year over the next three years.

Table 12.1: Key figures

£ million
	2000-01	2001-02	2002-03	2003-04
Total Defence*	22975	23570	24198	24978
of which: Resource Budget	17750	18076	18485	18731
Capital Budget**	5225	5494	5713	6247