UK defence issues and the odd container or two

MoD Finances – Did You Know?

Been having a browse through the ever useful Defence Statistics & Analysis web site over the last few days.

Did you know…

What a DEL is?

This is the official description, taken directly from the DSA website.

Departments are accountable to the Treasury (through the budgets that are set in Spending Reviews and updated by Estimates) for their spending against Resource and Capital Departmental Expenditure Limits (DELs).

A DEL is therefore a pre-agreed fiscal limit set by the Spending Review for discretionary spending, this being the majority in the MoD’s case.

There are two DEL’s, Resource and Capital

Spending against the Resource DEL includes the current consumption of resources. Capital DEL, whilst included in the Treasury’s Total DEL, reflects for the most part investment spending on assets that appear on the Department’s Statement of Financial Position (SoFP) and are consumed over a number of years.

The definitions are;

Resource DEL (RDEL)

Day to day spending;

Current expenditure such as pay, allowances, and running costs. It also includes the indirect costs of ownership of assets such as depreciation. This is split into Direct and Indirect RDEL:

Direct Resource DEL (DRDEL) – essentially near cash running costs – for example: pay and allowances, and accruals.

Indirect Resource DEL (IRDEL) – non-cash expenditure such as depreciation and the creation of non nuclear provisions.

Capital DEL (CDEL)

Investments in new equipment and infrastructure expenditure that has a life over more than one financial year e.g. ships, buildings and aircraft, again, split into two elements; Fiscal CDEL and Single Use Military Equipment (SUME) CDEL

Fiscal CDEL is expenditure on equipment that may have other civilian uses e.g. a building or IT equipment.

SUME CDEL is expenditure on equipment which only has a military role, e.g. a warship (Dual Use  military equipment counts as Fiscal CDEL).  (This division enables reporting as per the System of National Accounts requirements where single use military equipment is included in current expenditure.)

Total DEL

This is the the Treasury’s preferred measure of Government spending and is is calculated by  adding Resource DEL and Capital DEL, then subtracting Depreciation, Impairments and Fixed Assets Written On /  Off (indirect costs) (i.e. Near cash plus IRDEL) to arrive at the final figure.

Non Discretionary Spending or AME

The MoD (and other government departments are also responsible for something called Annually Managed Expenditure (AME). AME is variable demand led (for example, payment of War Pensions), sometimes called non discretionary spending.

Because it is demand led and cannot be controlled by the actions of the MoD AME does not form part of the DELs and the Spending Review Settlement.

No, I didn’t understand much of that either but interesting that pensions do not form part of the Spending Review Settlement.

How Current MoD Spending Compares?

We have had this conversation many times and it was the subject of one of the very first posts on Think Defence but this is the 1977/1978 to 2011/2012 numbers

uk defence expenditure 1977 78 to 2011 12 600x371 MoD Finances   Did You Know?

In line with previous years the MoD is the fourth largest spender of Government expenditure, behind Work and Pensions, Health and Education.

In 2011/12, Defence Spending (Resource DEL plus Capital DEL minus Depreciation and Impairments) totalled£37.2 billion.

Compared to NATO (according to SIPRI)

nato defence spending 600x366 MoD Finances   Did You Know?

NATO Defence Spending 2011 as a percentage of GDP

sipri defence spending 600x577 MoD Finances   Did You Know?

SIPRI Defence Spending

SIPRI definitions are often questioned and these sometimes differ from the NATO definitions but they are a reasonable indicator.

There are also a couple of other interesting comparisons worth looking at.

defence spending comparisons with allies 600x346 MoD Finances   Did You Know?

Defence Spending Comparisons with Allies as a Percentage of GDP

In 2011 the UK spent 2.6% of its national income on defence, France spent 1.9% and Germany spent only 1.4%. The drop in the GDP % for France in 2009 is due to the transfer of responsibilities for the Gendarmerie from the Ministry of Defence to the Ministry of the Interior. It is factors like this that has often made direct comparisons with other nations difficult.

Levels of spending as a proportion of GDP in all countries fell between 1985 and 2000.

Since then it has risen slightly for the UK, whilst levels in France and Germany have remained fairly static.

USA defence spending rose steadily from 2000 to 2010, when it reached 5.4%  of national income, however the figure dropped back to 4.8% in 2011 as spending on defence fell.

defence spending per capita 600x389 MoD Finances   Did You Know?

Defence Spending Per Capita 1980 to 2011

Since 2001, there have been significant increases in spending from the USA, and the UK partly associated with the operations in Iraq and Afghanistan, although the USA figure has dropped back a little in 2011.

In terms of  defence expenditure per capita, in 2011 the UK spent around $1,000 per person.

France spent slightly less per capita  than the UK (c.$850) whilst Germany spent substantially less (c.$590).

The USA still spent over double that of the UK  (circa $2,350)

I think defence spending per capita is a useful comparison but spending per serviceman even more interesting

defence spending per serviceman 600x395 MoD Finances   Did You Know?

Real Defence Spending per Serviceman

The number of active military personnel has been falling in both the USA and UK.

As real Defence spending has remained reasonably level, spending per Serviceman has been rising.

The most dramatic increases in defence spending per Serviceman have been since 2000.

The USA has increased spending by 97% between 2000 and 2011 whilst UK  spending increased by 44% over the same period. In 2011 the USA spent $513,000 per Serviceman whilst the UK spent  $341,000.

Spending per Serviceman for Germany has been increasing gradually since 2000 with a large increase coming in 2011, which was as a result of conscription ending and the subsequent sudden drop in service personnel numbers. Following  the removal of the Gendarmerie from French expenditure since 2009 it would be misleading to compare changes in  France and Germany Defence spending per Serviceman over time.

Of the three European nations listed the UK spends the most per Serviceman, followed by France and Germany who both spend $235,000 per Serviceman

There is a significant difference between the UK, at $341,000 per serviceman, and Germany and France, both at $235,000 per serviceman.

We might reflect on this as the UK is continually compared unfavourably with France, France will face the same upward pressure on personnel costs that the UK has had and this will impact them across the whole spending theme.

Where the MoD Spends the Loot?

Personnel cash out turns in 2011/12 were £12.846 Billion, of which £10.101 Billion was for the Armed Forces and £2.745 Billion for civilians.

Or put another way, civilians account for roughly 21% of the MoD’s personnel costs.

These exclude the cost of contractors, specialist support and personnel contained within PFI’s

Equipment support saw a sharp rise in 2011/12, increasing from 34% to 41% of total equipment spending, with research falling to a 7 year low of 15%

support capital and research spending 600x306 MoD Finances   Did You Know?

Support, Capital and Research Spending

The 2011 resource DEL split between the three services is;

  • Navy Command, £2.294 Billion or 18.7%
  • Land Forces, £7.189 Billion or 58.4%
  • Air Command, £2.826 Billion or 22.9%

Obviously, this is reflected in the relative sizes of the three services

  • Navy Command, 37,660 personnel or £61k each
  • Land Forces,106,240 personnel or £68k each
  • Air Command, 42,460 personnel or £67k each

The MoD Earns Money?

The MoD has a considerable income but this has remained relatively steady in the last 7 years, the 2011/12 figure being £1.46 Billion.

Income categories are;

  • Rental income – property
  • Receipts – personnel
  • Receipts – sale of fuel
  • Donated Assets
  • Receipts – supplies and services
  • Receipts – NATO/UN/US Forces/Foreign Governments
  • Reverse Tasking
  • Dividends and income from investment property
  • Other

The top three largest earners are Receipts (personnel) at £344 million, Receipts – NATO/UN/US Forces/Foreign Govts at £325 million and Receipts – supplies and services at £317 million.

mod external revenue 600x301 MoD Finances   Did You Know?

MoD External Revenue 2011/12

Capital incomes fell to a 7 year low, indicating there is not much left of the family silver to sell off.

Don’t We Buy Everything From BAE?

In 2010/11, the MOD spent just over £20.4 billion with UK Industry, this represents a small nominal decrease of £160 million from the 2009/10 figure.

Expenditure in the Weapons & Ammunition and Aircraft & Spacecraft industry sectors fell in 2010/11 and was caused mainly by a fall in equipment support and other projects costs associated with Single Use Military Equipment. Expenditure increases in the Shipbuilding & Repairing sector were primarily driven by increases related to the Future Aircraft Carrier (CVF) contracts.

When compared to 2005/06 the Industry Groups with the largest % increases were Wholesale, Retail and Repair of Motor Vehicles and Shipbuilding &  Repairing. The largest % drop is in Electronics.

changes in spending 600x402 MoD Finances   Did You Know?

Changes in Spending 2005 to 2011

Spending on PFI’s continues to be a significant percentage of total spending,

The PFI project list includes

  • “C” Vehicles
  • Allenby/Connaught
  • Army Foundation College (AFC)
  • ASTUTE Class Training Service (ACTS)
  • Attack Helicopter Training – Apache Simulator Training
  • Bristol, Bath and Portsmouth Family Quarters
  • Central Scotland Family Quarters (HQ)
  • Colchester
  • Corsham
  • Defence Fixed Telecommunications Service (DFTS)
  • Defence Housing Executive – Information Systems (DOMIS)
  • Defence Sixth Form College (DSFC)
  • Devonport Support Services – ARMADA
  • Field Electrical Power Supplies (FEPS)
  • Future Strategic Tanker Aircraft (FSTA)
  • Hawk Simulator
  • Heavy Equipment Transporters (HET)
  • Joint Services Command and Staff College
  • Lynx Aircrew Training
  • Main Building Refurbishment
  • Marine Support to Range and Aircrew Services
  • Material Handling Equipment (MHE) – (Follow on)
  • Medium Support Helicopter Aircrew Training Facility (MSHATF)
  • MOD-Wide Water and Wastewater (Project Aquatrine) – Package A
  • MOD-Wide Water and Wastewater (Project Aquatrine) – Package B
  • MOD-Wide Water and Wastewater (Project Aquatrine) – Package C
  • Naval Communications
  • Northwood Headquarters
  • NRTA Fire Fighting Training Units (FFTU)
  • Portsmouth Housing 2
  • Provision of Marine Services (PMS)
  • RAF Cosford and Shawbury Family Quarters
  • RAF Fylingdales (Power)
  • RAF Lossiemouth Family Quarters
  • RAF Lyneham Sewerage
  • RAF Sentry E3D Aircrew Training
  • Skynet 5
  • Strategic Sealift (Ro-Ro Ferries)
  • Tidworth Water & Sewerage (Thames Water)
  • Tornado GR4 Simulator
  • Training Administration and Financial Management Information Systems (TAFMIS)
  • Tri Service Materials Handling Service
  • Tri-Service White Fleet
  • UKMFTS – Advanced Jet Trainer Ground Based Training Service (GBTE)2
  • Wattisham Married Quarters
  • Yeovilton Family Quarters

In 2011/12 just over 40% of total MOD procurement expenditure was with 10 suppliers. The largest  of these suppliers was BAE Systems although spending with BAE still only accounted for about 14% of the total spend.

mod top 10 suppliers 600x283 MoD Finances   Did You Know?

MoD Top 10 Suppliers 2011

Spending with BAE decreased by 1.2% with the greatest increase being seen by Babcock, at a 2.9% increase.

The next graphic shows dependence on the the MoD

mod supplier dependency 600x276 MoD Finances   Did You Know?

MoD Supplier Dependency

Clearly, Babcock are heavily dependant on the MoD

This shows the revenue received by the MOD’s top 10 suppliers from competitive contracts as a proportion of their overall sales to the  MOD.

The Charts present data for the last three years. The analysis below shows that service based companies such as Serco and Hewlett-Packard tender a higher proportion of their work from  competitively let contracts, in comparison to ‘traditional’ defence firms.

The proportion of payments that MOD’s top 10 suppliers receive from competitive contracts has fluctuated over time depending on the particular set of contracts held by a supplier during a particular year. Over the period though there is no evidence to suggest that the proportion  of payments received from competitive contracts has increased/decreased to any great degree.

competition MoD Finances   Did You Know?

Competition

It is surprising (or not when you consider things) that only 3% of the spend with Finmeccanica (including Agusta Westland) has been through open competition.

In the past six years the proportion of MOD spending with the current top 10 suppliers has increased  by over 4 percentage points.

For seven of the MOD’s top ten suppliers, MOD sales account for less than 10% of their global
revenue.

63% of new contracts are placed without competition, not significantly different since 2007 which was 64%, despite continued defence reform and a desire for ‘competition’.

What are the MoD Input Indicators?

Key information about Defence is provided by a series of ‘input’ and ‘impact’ indicators.

  • Additional cost of operations in Afghanistan, per Service person deployed, £364,000
  • Additional cost of of new equipment (urgent operational requirements) for operations in Afghanistan, per Service Person Deployed, £60,000
  • Average percentage by which the cost of the MOD equipment programme varies compared to forecasts in year, 1.41%
  • Cost of Major force elements: Ship, £34 million
  • Cost of Major force elements: Brigade, £661 million
  • Cost of Major force elements: Aircraft (Fast Jets), £8.05 million
  • Cost of Major force elements: Helicopter, £3.41 million
  • Cost:Benefit ratio of the major change and efficiency programmes being undertaken by Defence, 1:1.85
  • Direct personnel costs, per Service person, £52,000
  • Direct personnel costs, per MOD civilian, £36,000
  • Defence spending as a percentage of Gross Domestic Product (published NATO definition), 2.7%

Where Do we Sell Defence Equipment To?

Not so much where, but what sector

This table provides data on identified export orders of defence equipment and services. These are taken from the annual survey of known defence  contractors conducted by the Defence and Security Organisation within UK Trade & Industry (UKTI).

exports by sector 600x389 MoD Finances   Did You Know?

Exports by Sector 2011

The Air Sector exports significantly more than Land or Sea

Operations – How F***ing Much

Expensive business

Audited cost of Operations in Wider Gulf, Afghanistan and Libya; 2002/03 to 2011/12

  • Wider Gulf; £8.326 Billion
  • Afghanistan; £16.544 Billion

And counting

  • Libya; £234 million

 

 

 

About The Author

Think Defence hopes to start sensible conversations about UK defence issues, no agenda or no campaign but there might be one or two posts on containers, bridges and mexeflotes!

46 Comments

  1. jedibeeftrix

    brilliant article Admin, my thanks. two points:
    1. agreed, spend per military head is a very useful metric.
    2. interesting that france has now removed gendarme funding, as it makes comparisons more useful.

  2. Sir Humphrey

    Brilliant brilliant breakdown!

    Can you sticky this somewhere please, its a great resource and one I’d definitely like to hyperlink to in future.

  3. Jeremy M H

    @Jedi

    It is an interesting comparison to look at the funding per head and what it says about what various armed forces are doing. I also think looking at the number of soldiers per capita is useful. The UK has about 1 out of every 243 citizens in the Army, regular reserve, Royal Marines or Territorials. The US runs this number up towards 1 in every 236 citizens if you count the Marines and Army. But if you just look at the active forces the US number is 1 out of every 428 and the UK is 1 out of every 547. The manning numbers are pretty similar honestly and both are looking to shrink their ground forces by around 10-20% in terms of people over the next several years.

    The French Army on the other hand, even if you include reserves, only takes up 1 of every 432 citizens even if you include the reserves. The German military in total, including its reserves, only sees one of every 246 people serving. The German Army only sees 1 active soldier out of 1,293 citizens.

    I think things work out that way for fairly specific reasons. France is spending less now to be sure but also pays a very heavy price trying to provide an independent nuclear force as well as other national projects. Germany just appears to flat out not care. The US and UK maintain broad spectrum capability and somewhat significant depth to their land force capability in the form of reserves.

    I also think that a huge amount of the cost per serving military member comes from actually looking to deploy them. It is cheaper for Germany because they clearly have no intention of conducting any major operations. They don’t build the support structures to operate away from home and they don’t equip their forces accordingly.

  4. martin

    Very interesting TD. Figures on % of GDP spent seem to also include the contingency and operation funds spent on Afghanistan etc which is why the UK is shown as 2.6% although only around 2.2% of this is the core budget.

    Also in terms of % of GDP its interesting to not that post 2008 the UK’s GDP dropped so much that even with cuts defence appears to hold steady as a % of GDP.

    Also interesting to note just how much larger Land forces spending is than the other two services. These figures don’t include pensions either which are proportionally higher for Land forces that the other two.

    In terms of world ranking it was only recently that I realised it was Russia and not Japan that knocked the UK down to 4th place. I wonder how long the Russians can sustain defence spending at that level.

  5. Think Defence

    Yep, the spending figures include the cost of operations and UOR equipment etc so given the time and scale that the UK and US have been involved with Iraq and Afghanistan it should come as no surprise how we outstrip those of Germany and France, who, don’t forget, have much higher personnel numbers so the spend per person will be skewed by that as well

    All interesting stuff though

  6. Jeremy M H

    @Martin

    RE: Russia

    Energy prices seem to be what allows them to move forward. I don’t get the impression they fixed the rest of their economy at all. Prices in the US have been moving steadily down this past half-year or so. I would think that impacts Russia negatively at some point.

  7. Derek

    Very useful but there are a few things to remember.

    1) Defence has different costs in different countries (Purchasing Power Parity), so China or Russia for instance will get more for its money than the UK will (lower wages and food costs etc).

    2) Be careful with recent % GDP calculations. Whilst the exact amount spent on defence will be known pretty firmly GDP figures will be revised for years. Also, a sudden drop or rise in spending as a % GDP may reflect shifts in GDP rather than in defence spending as martin alludes too.

    3) The external reality. Maintaining defence spending as a % of GDP or in real terms in a slow economy will still result in cuts if defence inflation (cost of material and operations) is being driven by comparisons from faster growing economies. This is what has happened in the UK where the US, and more recently China has pushed up the cost of defence by continually pushing up the cost of new equivalent equipment.

    4) Finally, the mass of money spent on Afghanistan and Iraq has actually bought very little of long term utility, with the exception of soldier equipment. The treasury will be the one getting the peace dividend, not the MoD. If you remove the Iraq and Afghanistan costs the UK is probably, in real terms, below the level it was in the mid-80s in terms of defence spending despite all the economic growth that has occurred since then- coming up for three decades

  8. Mike W

    @ Think Defence

    A fascinating post, TD. Extremely well researched. However, I am intrigued by one of your statements:

    “In line with previous years the MoD is the fourth largest spender of Government expenditure, behind Work and Pensions, Health and Education.”

    Now I know little or nothing of these matters but I have always been under the impression that Defence came a very poor fifth in terms of Government expenditure. I’ll give you an example. A source called UK Public Spending, which is based on HM Treasury data, gives the following figures for planned Departmental Spending in 2014.

    Pensions £144.1 billion 20% (ofGDP)
    Health £129.7 billion 18%
    Welfare £112.5 billion 16%
    Education £88.6 billion 12%
    Defence £46.6 billion 6.48%

    Now Welfare seems to be missing from your listing of the highest spenders. Do you happen to know, TD, whether Welfare is actually included in the Pensions figure (sometimes this is called Pensions and Work)? It is important because if you add the percentages spent on Pensions and Welfare together, they come to a whopping 36% of GDP, six times that spent on Defence. These are the kind of figures which add fuel to the arguments of those who maintain that Mr. Osborne simply cannot go on taking away from the budgets of those departments whose expenditure is in single figures, and must, before long, grasp much more firmly the painful nettle of those massive spending departments such as Welfare. Do you or does anyone else know where the truth lies? Thanks for any help you can give.

  9. Think Defence

    Mike, I think it was based on department spend, so the Department of Work and Pensions would be number 1 which includes pensions and welfare spending. Let me go an check though

  10. Derek

    TD is correct, the department of work and pensions contains both pensions and more general “welfare”. Mike W’s numbers are areas of expenditure rather than departments.

  11. The Securocrat

    Welcome to my world. And yes, DEL is as complicated as it reads, when you get into what is or isn’t capital spend, and what counts as a consumable, even if it’s a ‘thing’. And that is before you get such jollies as Spend on Inventory Purchase (SOIP) and the joy of NACMO (Net Additional Cost of Military Operations).

    More seriously, the fact that some of this is easily available makes it even more irritating when you get the usual stupid “Defence wastes x million on y” stories, in spite of the fact they are completely different things from different parts of the budget. So Jaffa Cakes in Main Building are ‘clearly’ stopping ‘Our Boys’ (TM lazy journalism) from getting that new armoured vehicle they’ve apparently been hankering after.

    PS – no, we can’t actually buy Jaffa Cakes in Main Building using taxpayer money….

  12. John Hartley

    The trouble with using 2011 figures, is that UK defence has shrunk since then. It makes it look more rosy than it is.

  13. John Gough

    TD is right DWP includes both welfare and pensions (AME) costs as well as DWP running costs (DEL). Interest payments on UK Govt debt is about £30-40bn also.

  14. Opinion3

    Absolutely brilliant Christmas Cracker TD.

    It is interesting to note the qualifications and various nuances of accounting. A couple more to add

    1. Capital Incomes – Sale of Fixed Assets is likely to fall in the future as PFI contracts often amount to a rental lease.
    2. PFI support contracts have removed ‘heads’ from the ‘headcount’ thereby presumably also increasing the spend per head.

    If only the MPs understood what all these figures actually mean.

  15. Derek

    Opinion3

    Correct, the UK’s extreme model of outsourcing makes the calculations of spend per head here completely useless. The UK takes outsourcing to the extremes which means that many of the functions performed by uniformed personnel in other countries are performed by private sector workers, who do not appear on the MoD numbers, in the UK. The efficiency of that is a whole other subject and explains a lot of the Babcock revenue.

    Also,

    John Gough has a good point, interest payments are brutal and will only get worse- interest on UK government debt will start to become a constraint on government expenditure and therefore defence expenditure. Don’t believe the government spin- the UK is still running a massive deficit and still accumulating debt with associated interest payments. Without something approaching an economic miracle there will be further constraints on defence spending.

  16. Derek

    Securocrat,

    I can only half tolerate your point. The way in which the treasury chops up expenditure is a major break on departmental flexibility. Whilst it may be true that within treasury rules jaffa cake purchases do not come from the same pot as the new armoured vehicle it still comes from tax revenue and/or bond sales. One way or another jaffa cake money is still money that could have been spent on something more useful. And it is often the departments who have had a long term role in deciding how each pot in constructed. I have long thought that one of the best reforms that could be undertaken in the UK (aside from actual Roman style decimation of both the civil service and both houses of parliament) is simply giving each department a five year settlement- no strings attached- to use as they see fit.

  17. Martin

    @ Derek, I would agree five year settlements would be great however the treasury often needs to act faster than five years when the s**t hits the fan. That being said given the length of time in defence procurement I think one could certainly argue that defence should have some exemption and be given five year settlements. Many of the ubber defence f**k ups of the past decade have been at least as much the fault of budget changes as the top brass i.e. FRES and scrapping of MRA4.

    It is one of my concerns with Phil’s spreadsheet method. it makes sense to have contingency and un allocated budgets but these budgets only exist if the treasury maintains the assumed budget and I can see this becoming an easy pot of money for the treasury to dip into.

    as has been pointed out once interest rates start to rise repayment on debt interest will eat up a large chunk of the budget and we can expect to see more pressure on defence spending.

    What would be great is for defence spending to be moved from the normal political realm with a SDSR every five years irrespective of the the election cycle and a budget set for the next five years. Perhaps the SDSR’s could be conducted by a cross party committee instead of each individual party but it all sounds a bit grown up and sensible to happen.

    Would be nice to see a pledge on GDP% as with foreign aid gaining cross party support but again never going to happen.

  18. Obsvr

    One point, both GE and FR only ended conscription relatively recently. This means they still have substantial reserves of trained manpower, even if these have no commitment to reserve training (but neither do UK regular army reservists). The same applies to a lot of other countries. Of course formally UK reservists ony have a limited reserve liabiity, but any Govt could extend this with the stroke of a pen (and probably a vote in Parliament). What this all means is that there are full time members, part time members, official reservists with a training commitment, official reservists without a training commitment, and ex-reservists without a training commitment (eg incl ex TA in UK’s case) up to a certain age, all these can really bugger up meaingful comparisons between nations unless clear definitions are used. Never mind the great unwashed who could be conscripted.

    Of course as far as GE and FR go the other question is the extent to which they are still holding stocks of aging equipment, although it does seem that Russia which used to hang on to everything for ever (if my vague memories of the second strategic echelon and the more obscure military districts are right) has ditched quite a lot of kit.

  19. Fluffy Thoughts

    The 2011 resource DEL split between the three services is;

    Navy Command, £2.294 Billion or 18.7%

    OK, this has been bugging me. This is expenditure outwith the Nuclear Deterrent, no…?

    We have all seen “Spreadsheet Phil’s” planned expenditure for 2013-2022: Does not the dark-and-deep have a take of ~£38-billion? Add in T26, P2000 replacement and other sundries surely HM Royal Navy will be consuming more in the future than these [2011] figures suggest?

    Also, why does:

    Pensions £144.1 billion 20% (ofGDP)

    sound hollow…? Surely the esteemed member of TD [The Honourable Mike W December 27, 2013 at 6:48 pm] means Government expenditure? [A GDP of ~£720-billion would put national debt at around 185% of GDP (2011).] And where do these figures of “Defence £46.6 billion” come from (as they are often mentioned and, yet, they do not appear in either the Autumn [sic] statement nor the budget)! *

    Horse, courses, &c.,

    Yours, Annoyed and Confused, Lewisham.

    * Maybe Sir Humphrey could offer a thesis…?

  20. WiseApe

    “I had no idea Albania was a member of NATO” – So is France now that it suits them. Have you noticed how they’ve gone all expeditionary?

  21. Mike W

    @Fluffy Thoughts

    Yes, sorry Fluffy Thoughts. Of course I meant total Government expenditure. The total for GDP must be roughly twice that (£1,500 billion?), which would make my percentages ridiculous. Sorry for that error and I hope it has not misled you.

    In my case, the figures of “Defence £46.6 billion” come from a source called “uk public spending”, which uses the PESA (Public Expenditure Statistical Analysis) from HM Treasury as its major data source for UK Public Spending.

    Nice to be raised to the level of an “honourable”, although give the reputation of some of our representatives, perhaps not.

  22. DGOS

    Had it in mind that French Fire service (sapeur – pompier / marin-pompier ) is at least part army / navy – with overall military oversight.

    Don’t know this affects numbers and budget for French military.

  23. DanThe Man

    Interesting to note the disparity in value of exports between the 3 services. Would be interesting to see that normalised for the ratio of off-the-shelf equipment spending vs designed from scratch/heavily modified. Feels to me like we should be getting more export bang per buck out of the Navy…

  24. Topman

    @ Dantheman

    The services don’t really export anything it’s the companies that sell to them that do. The services can and do support export drives, as without a strong economy we have little chance of a decent budget and personally speaking many are keenly aware of that. However it’s not really our major role. That’s the sales depts of (as you mention it) shipbuilders.

  25. Dunservin

    @Dan The Man:

    “Interesting to note the disparity in value of exports between the 3 services. Would be interesting to see that normalised for the ratio of off-the-shelf equipment spending vs designed from scratch/heavily modified. Feels to me like we should be getting more export bang per buck out of the Navy.

    – That sort of reasoning about our defence requirements reminds me of someone: http://www.cliffsnotes.com/literature/c/catch22/character-analysis/milo-minderbinder

    – Is it any consolation that defence spending per naval serviceman/woman is at least £6k less than for anyone in either of the two larger services? ;-)

  26. DanThe Man

    It is not the forces job to sell equipment but the cost of development of software is significant and the limited nos in which we buy kit means that an exportable version (or at sub-system level) should be part of the design spec. This is now the case for most in-development complex weapon systems I can think of but I would be interested in some normalised figures (as per previous comment) for exports in 2011.

    If the forces want decent kit then companies must invest in the R&D to improve it as they never get it right first time round. Exports is a critical part of this because the foreign customer pays (or should pay) a much higher unit price compared to HMG (ignoring development costs) .

  27. Chris

    Back in 2004 I looked at this. At the time MOD DEL was £30,900m and the declared Central Gov’t own expenditure was £24,837m within DEL boundaries (Gov’t published figures). This meant by my sums the MOD used just over of 80% of its total budget paying for Central Gov’t committees, politicians, meetings, Whitehall admin etc. I have no idea if this has got worse or better since. Look on the bright side though; MOD was one of the more efficient departments – DfID managed to spend all but 3.8% of its budget on Central Gov’t activities. Maybe the Chancellor’s Autumn Statement should report each line item as ‘funding the gravy train’ or ‘leaving Gov’t control to fund useful work’?

  28. Giovanni

    “SIPRI definitions are often questioned and these sometimes differ from the NATO definitions but they are a reasonable indicator.”

    Sorry, but I disagree.

    According to SIPRI, in 2011 the Italian Defense spending as GDP was 1,6%.
    That’s wrong!
    In 2011, Italy spent 14.360,2 millions € from Ministry of Defence plus 2.306,5 million € from Ministry of Economical Development and 1.554 million € from Ministry of Economy and Finance.
    The money coming from MoD did not consider pensions for the retired military personnel and “Arma dei Carabinieri”; although defined as Armed Force, Carabineri is a police corps (similar to French Gendarmerie).
    In addition, consider that nearly 66% of these funds goes to the Personnel, only 10% to Operations and Maintenance and 24% to Procurement.
    However, Procurement has supplemental money from Ministry of Economical Development while Overseas Operations can count on funds from Ministry of Economy and Finance.

    That is to say that 2011 Italian Defense spending as GDP was 1,1%.
    As you see, a big difference.

    According to the Italian MoD, there is a big difference in Defence Spending per Serviceman too.
    Excluding “Componente Strategica” (Strategic component) for UK and France, in 2011 Italy spent 87.612 € for each serviceman, UK spent 200.998 €, while French spent 121.973 €.
    But most of all, Per Soldier Investing (Operations and Maintenance plus Procurement) for Italy was fixed at 28.553 €, 127.233 € for UK and 70.278 € for France.

    That’s the reason why Italy is going to launch a big review of its military, reducing the number of personnel from (theoretical) 190.000 soldiers to 150.000, trying to use the money saved especially for Operations and Maintenance.

  29. Think Defence

    Welcome to TD Giovani

    Thanks for the corrections, I agree SIPRI definitions often vary, especially with regards to softer costs such as pensions, but for comparisons, they are still reasonable I think. Perhaps we can agree to disagree on the definition of ‘reasonable’

    If you fancy turning your comment into a guest post on the Italian was of spending on defence you are more than welcome, just let me know

    We are always interested in looking at other countries management of defence because I am sure there is much to be learned

  30. El Sid

    BZ TD, great stuff. Couple of things.

    Talk of fixed settlements and more exportiness in MoD designs are very French ideas that Bernard Gray enthused about in his report of 2009. In fact Martin it’s absolutely right that the budget should tie in to the election cycle, and fixed-term parliaments make this a lot easier. Election in May, strategic review (in every department) by November, then the new masters can set budgets for the following financial year, we are sort of moving towards Five Year Plans for 2016-21, 2021-2026 and so on. Makes it a lot more predictable for everyone rather than the limbo whilst waiting for an election to be called. It’s one of the better things that the Coalition has done. Hopefully the greater predictability means we can schedule projects better, so that the prototype gets tested around the time of an election and then the Big Expensive decision of Main Gate can be taken by the incoming government after a fresh SDSR, rather than an outgoing government lumbering the new one with some multi£bn pet projects.

    It’s interesting seeing our budget split of 19:58:23 for Navy:Army:RAF compared to the US’ near-sacrosanct 33:33:33 split – and there’s pressure for them to break that at last in favour of the USN. It does explain a bit why the USMC gets so many expensive toys, but there is perhaps a debate to be had there about a radical re-balancing in favour of our mobile forces.

  31. Chris Werb

    My understanding (which seems to be shared by many US servicemen I have spoken with) is that the USMC has historically tended to “suck hind tit” when it comes to new equipment. Their AAAV has just been cancelled and the AAVs are in some cases at least truly ancient. The LAVs are about 30 years old too and have been worked hard. The LCACs can’t be much younger with no replacement in sight. Most of their fighters are AV-8s which they are keeping flying using our fleet for spares reclamation. Things are a bit better on the helicopter front, but some of their CH-46 (which I believe are meant to be phased out of the front line) are almost as old as I am and the UH-s, although much upgraded aren’t that much younger. I think their situation with softskinned ground vehicles isn’t that much better.

  32. Not a Boffin

    Chris W there is some truth in that, but suggest you look up the following :

    LCAC SLEP
    MV22
    F35B
    CH53K
    UH1Y
    AH1Z

    The AAAV cancellation is more to do with asking for the moon on a stick technically, than being starved of money. Their vehicle fleet has historically lagged behind the Army, but Striker aside they’re broadly comparable.

  33. Giovanni

    Thanks TD.

    We are still waiting for Italian budget Defense final data in 2014 and its details; when I’ll know them, maybe I could contact you.
    Only consider that my English is not so “brilliant” and writing something more than the few lines of these comments could be a dramatic experience for me and for the people who are going to read them.

    P.S. I’m not so sure that there is much to be learned from the Italian management of defence; the only that you can do is consider the incredible amount of mistakes plus the big cuts at the Defense budget without any strategic vision on Defense/Security and then just decide in the opposite way.

  34. CTC

    You may be interested to know that the latest statistics (covering up to 2012/13 for many of the series) are available in two new statistical bulletins:

    http://www.dasa.mod.uk/index.php/publications/finance-and-economics/departmental-resources/2013
    http://www.dasa.mod.uk/index.php/publications/finance-and-economics/industry-trade-and-contracts/2013

    Also, by the end of February the MOD expects to have migrated all of the statistics currently presented on http://www.dasa.mod.uk to Gov.uk.

Comments are closed.

↓