The MoD’s Spending

In the NAO report on defence transformation there is a good graphic that shows where the MoD spends its budget, thought it worthwhile sharing;

MoD Spending

Notes

  1. Total personnel is made up of military personnel costs of £9.9 billion and civilian personnel costs of £2.7 billion.
  2. Other costs is made up of general administration costs such as purchasing consumables, professional fees, medical and legal costs and rentals under operating leases.
  3. Inventory is made up of the cost of buying raw material and consumable inventory items. The cost of buying other inventory items such as engines or missiles falls under equipment procurement and other equipment support.

As pointed out by one of our sharp eyed readers, on page 22

Think Defence

Ha ha, now that would be really funny :)

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Sir_Humphrey
October 7, 2012 9:55 pm

Perhaps this slide could be produced every time someone suggests culling thousands of civil servants and replacing them with military staff to save money :-)

jed
jed
October 7, 2012 10:01 pm

LOL – you should invoice them for consultancy……:-)

All Politicians are the Same
All Politicians are the Same
October 8, 2012 5:40 am

Whar are the relevant numbers though?

I belive these figures are based on approximately 50k civil servants and 175k Military giving very close figures of around 17.5k personnel per Billion pounds.
So Sir H is right we may not save money but we would not spend any more and we would shift focus.
Simplistic I know but we must look beyond simple figures.
There is a balance to be struck, where it lies, someone must know.

Sir_Humphrey
October 8, 2012 7:16 am

All – I did some work a couple of years ago to break down the salary differences. I worked out that in broad terms, 60% of the MOD CS earn under £25K per year (more than half is Grade E-D), while 60% of the Armed Forces earn over £26K per year (anyone at Cpl level or above).

The average really does not work in this case, as the military, with the exception of privates, earn vastly more than their civil service peers.

martin
Editor
October 8, 2012 7:18 am

I am guessing that things like the RFA will come under the civil service pot.

I would love to see a full break down of these pots by service for personnel cost’s and by project for procurement.

All Politicians are the Same
All Politicians are the Same
October 8, 2012 7:30 am

Sir Humphrey,

Yet the average number of personnel per Billion pound remains very similar? How much are the senior civil servants earning to balance it?

LouisB
LouisB
October 8, 2012 9:43 am

I would suppose that further division and sub-division of the chart would lead to an accounting Mandelbrot set?

SteveD
SteveD
October 8, 2012 11:31 am

£34.08bn? I could have sworn the UK’s defence spending was a few billion more then that…

HarbingeR
HarbingeR
October 8, 2012 11:44 am

Don’t forget that the military personnel also have extra hidden costs to the state that don’t show up in the pure salary figures when compared with civilian staff, including higher pensions, higher social service costs (partner/family housing), and state funding for children’s private education.

Basically when looking at cold hard numbers, when someone suggests firing a civilian support staffer and having a military employee do the same role, you should fire the military employee and keep the civilian.

All Politicians are the Same
All Politicians are the Same
October 8, 2012 12:27 pm

Steve D Some foreign aid is included in the top line defence budget.

Harbringer, yet the number of people per billion pounds remains quite similar and at the end of the day the service person is prepared to put his/her life on the line for their country.

martin
Editor
October 8, 2012 1:19 pm

@ Simon D – I think if you add on MI5, MI6 and GCHQ you get up close to the top defence budget number. This appears to be just the MOD.

All Politicians are the Same
All Politicians are the Same
October 8, 2012 1:42 pm

The link here http://www.ukpublicspending.co.uk/uk_defence_spending_30.html

Shows that although the 2013 UK Defence spend will be 46.3 Bn that includes 7 Bn of Foreign economic aid and 3 Bn of Foreign Military aid.

jim30
jim30
October 8, 2012 1:57 pm

For the CS numbers, you need to do a bit of work. Firstly, go to the DASA website, and build a spreadsheet showing numbers of personnel in grades. You can then ascribe pay in the salary bands to the numbers and you get close to the salary figures. Be very cautious when looking at the top end figures in each pay band – due to the considerable changes to the pay structure, the vast majority of CS are on the bottom of each pay band, with very, very few anywhere near the top. It is a very safe assumption to use the bottom figure as average grade salary.

As of last year (and before the loss of 16,000 Civil servants), the structure was

Roughly 30,000 Band E2-E1-D grade, all of whom earn under £27K per year.

Roughly 10,000 Band C2 – earning £29k – £33K.

Roughly 6,000 Band C1 earning £35-£44k

Roughly 1900 Band B earning £47-57K

Roughly 300 Band B1 earning £56-69K

In reality, the very large majority earn the bottom figure due to frozen progression and changes to the pay scale. These numbers have shrunk by 15,000 and will drop another 18,000 in the next three years, further reducing the pay.

Put in contrast, in the Armed Forces, everyone above Cpl will earn £26k per year or more.

All Politicians are the Same
All Politicians are the Same
October 8, 2012 2:14 pm

Jim30

Why then do the figures work out that 2.7 BN for your 48,200 Civil servants work out at 17,851 personnel per Billion and 9.9 Billion for 175,000 military personnel works out at 17, 676 personnel per billion.

You have to remember that their are 2 pay tiers within the forces and Corporal and equivelants do not top 27K until 1 years seniority if they are on lower pay scale. Nobody in teh training pipeline earns anywhere near 27K.
Army officers do not reach that until promotion to 1Lt.

jedibeeftrix
jedibeeftrix
October 8, 2012 2:40 pm

@ SteveD – “£34.08bn? I could have sworn the UK’s defence spending was a few billion more then that…”

Core Defence Budget vs [reported] Defence spending which would include supplemental allocations from the Treasury for ongoing operations?

jim30
jim30
October 8, 2012 3:18 pm

All –

The problem is you are ignoring FACT and confusing that with averages. As I said, look at the DASA website, look at the number of civil servants in grade, and you can tell straight away exactly how many CS earn how much. You can then do the same for the Military.

Go to this link on the DASA webpage- http://www.dasa.mod.uk/applications/newWeb/www/apps/publications/pubViewFile.php?content=90.11&date=2010-06-10&type=html&PublishTime=09:30:00

its about 18 months old, but shows that in 2010, there were 191,600 personnel in the Military as a whole. In the 2010 payscales, everyone at OR2 (Leading Hand / CPL) and above earned an absolute minimum salary, before allowances of £27,592 / £26,404 for the higher / lower pay band. This means that there were roughly 122,000 personnel in the Forces in 2010 earning more than £26,400, and in reality it was probably more than this as the higher payband for Lvl5 and above OR1 was £26K per year (in other words a high pay band private with 5 years seniority in grade is earning more than over half the MOD civil service). As for Officers, a Sub Lieutenant JOINs the Royal Navy on £29k per year – most civil servants never earn this much per year in their entire career.

By contrast, the MOD personnel breakdown is here – http://www.dasa.mod.uk/applications/newWeb/www/apps/publications/pubViewFile.php?content=450.11&date=2011-05-13&type=html&PublishTime=09:30:00

This is a year later for 2011, but shows the two types of CS – the industrial and non industrials. Industrial pay is roughly analagous to E grade salary, and is lower than a non industrial. In 2011, there were 50,000 non industrial civil servants, of whom 31,000 earned under £26K per year, and a further 10,500 industrials in the same position.

Its slightly more complex as this 83,000 figure also includes RFA (some 2500) and 10,500 locally employed civilians, such as in Afghanistan or Germany. Again these will usually earn less than £26k per year as they mainly fulfill admin roles.

Subtract the 13,000 odd ones out, and put the 10,000 in trading funds to one side as there are no accurate grades and I think they are funded separately. You’re left with 70,000 civil servants, of whom roughly 42,000 earned under £26,000 per year, and only 9,000 earn over £35,000, and only 2600 earn over £47,000.

By contrast in the military there are roughly 16000 staff earning over £47,000 per year (some 8 times as many), and this is before you consider allowances. Add those in and this number soars significantly.

The end result is that your figure of average cost of 17,000 is utterly meaningless – why not go with the facts?

All Politicians are the Same
All Politicians are the Same
October 8, 2012 3:38 pm

Jim30 I am not having a go. Cannot get your links to work.
I am genuinely curious as to how many civil servants the 2.7 Billion pound pays for. I was told it was about 48,000 but you are now telling me it is 83,000?. That is fair enough. 83,000 civilians supporting 175k military. 2.1 in uniform for every 1 not.

P.S. An Oficer joins the RN as an Officer Cadet on 15k.

jim30
jim30
October 8, 2012 4:07 pm

The civvy figure of 83,000 covers all personnel, both CS, local and industrial plus RFA. This is already down to 70,000, and will fall further to 55,000ish by 2015. This is everything from high paid policy wonks through to canteen assistants in nepal.

As for the Officer cadet salary, this in my understanding only applies to those who join direct with no degree (tiny number). This is only paid for a short period, and as soon as they leave BRNC, they chop to mids salary, then SLT after another year. Its a tiny proportion of the naval service – maybe 50-100 people at best. The vast majority on entry go in as SLT, although obviously rank is not held until post BRNC.

The wider point remains that the CS is vastly underpaid compared to the military, and that actually the military are on bloody good wages by todays standards. When you add in allowances and the like, qualified and senior SO2s are on a package easily approaching and exceeding £100K a year.

All Politicians are the Same
All Politicians are the Same
October 8, 2012 4:09 pm

@TD, It does apparently and is broken down well here.
http://www.armedforces.co.uk/mod/listings/l0014.html

SO if used those figures you get 29,310 per billion. So it is aprroximayely 60% more expensive on average to employ a uniformed person.

jim 30. one of the reasons I highlighted the closeness of my original figures was that I thought it unusual that they were so close. I am normally interested in actualy finding out the figures.

Edit

Military pay is reasonable in most cases and more intelligent use of things such as op bonuses directs it well.
I have no comment upon civil service pay, generally people do not join the military for the money. They either (have no other options) or do it for adventure or because they want to serve. pay is rarely grumbled about. Plenty other things to bemoan.
I do not know why people join the Civil Service but it is obviously not for the money.

I cannot think of anywhere that even a level 8 SO2 can add 40k a year in allowances. maybe specialist pay and then allownaces but even a 6 month Op Tour would only bring in about an extra 10-12k on top of the 59 he is on.
A really cush overseas number would see him approaching 80.

jim30
jim30
October 8, 2012 4:38 pm

All

Flying pay, submarine pay, EOD pay, diving pay all add up at high levels of experience. Add the high level of LSSA, LOA and boarding school allowance and £80-£100K is easily possible.

Topman
Topman
October 8, 2012 4:44 pm

I think by package he means all the other allowences such as MQs and the such like rather than pay.

Topman
Topman
October 8, 2012 4:48 pm

It’s possible but I wouldn’t say easily. I’ll bet there’s not that many, but I see the general point CS don’t get a very good deal.

All Politicians are the Same
All Politicians are the Same
October 8, 2012 4:56 pm

Topman,

I have realised he does as well. Boarding school allowance can potentially be worth a lot and I know quite senior people who basically are staying until their kids finish boarding school.

Allowances for over seas posts are being cut to the bone, my current allowance package has been reduced by 33% since I took up my post.

Topman
Topman
October 8, 2012 5:04 pm

@APATS

I know all allowances are. The budget was cut by ~30% and they had to find money for double op allowence and the ‘FOB allowence’ within the reduced budget, HTD got cut at the same time. I think our lot out in Aki had a big cut as well, you anywhere nice?

Simon
October 8, 2012 6:12 pm

I love this kind of stuff:

£12.6b salary/pensions
£13.0b equipment
£8.48b other

Now they have this great way of separating the “other” into little circles so you don’t notice just how much is spent.

To give you an idea (based on 258,000 personnel):

£48837 salary/pensions – not unexpected.
£50387 equipment – not unexpected, this is expensive kit!
£32868 other – !!!

£2739 quid each month to cover pens, paper and a roof overhead?

That kind of money would buy you an 8-bedroom mansion in Oxfordshire and all the “inventory” you could want.

There lies the demonstration of bureaucratic and red-taped inefficiency.

Topman
Topman
October 8, 2012 6:55 pm

@ Simon

Not sure if it includes Training costs as well and quite a few training courses are expensive. I do agree it’s too big an amount for just labeling ‘other’ it does need a little more detail.

jedibeeftrix
jedibeeftrix
October 8, 2012 7:05 pm

If I am reading RUSI right, and if they properly understand the NATO commitment, then the 2.0% threshold does include operational spending (therefore 2.6% GDP for he UK):

“On the basis of the plans announced in the Spending Review, UK defence spending will fall to an estimated 2.2% of GDP in 2014, down from 2.7% in both 2009 and 2010. If all operational spending has ended by 2014, the defence/GDP ratio is projected to fall further, to an estimated 2.0%.4 Given likely fiscal retrenchment in France and Greece, the UK could be the only European state that is still spending more than 2% by that date. In an increasingly demilitarised Europe, the UK should remain relatively less demilitarised than most of its allies.”

From FDR9.pdf

the worry therefore is that the combination of cuts and the end of herrick will see UK spending sink below 2.0%, whereas we are saying; “it’ll be close but will just about make it”

Chris.B.
Chris.B.
October 8, 2012 7:43 pm

@ Jedi,

It all depends what is included. Those figures in the spider chart above only come to about 1.4% of GDP. I wonder what the specific wording of the NATO requirement is, and how many nations use creative accounting to make up the requirement?

martin
Editor
October 9, 2012 2:46 am

@ Jedi

“Given likely fiscal retrenchment in France and Greece, the UK could be the only European state that is still spending more than 2% by that date.”

It’s easy to forget some times that while we are f**ked most other countries are worse off. Even the USA is going to have to cut its defence expenditure dramatically. IN the broader context its hard to support increased military expenditure when the threat environment is relatively low and the vast majority of world military expenditure is in allied hand’s.

However bumping the UK defence budget back up to 2.5% in today’s context would present us with some distinct advantage’s. ONe way or another we are going to have to renegotiate our position in the EU relatively soon.

As one German politician recently said a European defence with out Britain is like a knife with out a blade. With the French and everyone else cutting our comparative expenditure could become even more important.

The ideal UK-USE settlement for us would be to get an opt out of everything including CAP while maintaining free trade and single market status. However the European’s are not going to offer us this unless we have something to offer them. An increased military and expeditionary capability offered by some one other than the USA may just be the key. An extra £ 5 billion per year of defence would be chump change to achieve such a settlement.

martin
Editor
October 9, 2012 2:48 am

The UK should essentially try to become the core of European NATO. HAve the other members build capabilities to add on to the backbone we can provide.

jedibeeftrix
jedibeeftrix
October 9, 2012 7:25 am

@ Martin & ChrisB – Happy to agree with you both.

Brian Black
Brian Black
October 9, 2012 11:11 am

Page 15 of the MoD’s current business plan gives a more detailed break down of the department’s spending this year.

http://www.mod.uk/NR/rdonlyres/21363C3C-5452-435D-9D6C-7B73069B6E27/0/mod_plan_final_11_06_12_P1.pdf

The Other Chris
The Other Chris
October 9, 2012 3:52 pm

@TD

Differences in stats reported are likely due to the reports counting Outturn. Fund transfers and commits are different and can be accounted differently. Also keep in mind that the UK’s NATO contribution is calculated on the basis of assets supplied, not pure cash expenditure.

@Brian Black

Thanks for the link. I was looking for that.

I’m all for a USMC+ approach. Add in the likes of responsibilities such as the RAF fulfils with their QRA, the Army with their Armoured Brigades, the RN fulfils with the nuclear deterrent, and I think we’re looking at that kind of enhanced capability in the current plans, hence the USMC+ moniker.

As long as we identify the roles that the country needs to fulfil, as long as one or more services fulfil those roles, as long as those roles are funded, as long as capabilities can be rebuilt/expanded when needed, does it matter what the services are called and how much GDP we’re expending?

WiseApe
October 9, 2012 4:21 pm

@TOC – thanks. I must say I feared more opposition to my “joint force” suggestion. I guess it takes a financial crisis and cuts across the board to knock some heads together.

jedibeeftrix
jedibeeftrix
October 9, 2012 6:39 pm

@ TOC – “does it matter what the services are called and how much GDP we’re expending?”

If you believe:

a) that sovereign and strategic power projection inline with our SC responsibilities is a good thing, and;
b) that SDSR10 is the lower limit of what can be termed sovereign and strategic power projection, and;
c) have little faith that short-term’ist politicians won’t let spending further degrade to fund ‘sweeties’, then;

the NATO threshold of 2.0% of GDP becomes remarkably important.

Simon
October 9, 2012 7:52 pm

Using 2012 figures (ish)…

With a GDP of £1560b I make 2% £31.2b.

We spend £33.7b on “military defence” which is more than 2%.

If you include foreign military/economic aid and R&D this jumps to £45.8b which is nearly 3%.

My point is you can “spin” the 2% in many, many ways, so next year I could say that we’re spending the NATO required 2% by spending £31.2b, but I don’t tell you that includes foreign military/economic aid and R&D which means I’m actually spending only £19b on “military defence” – which you’d see as a pittiful 1.2%.

It’s just creative accounting which is what all and sundry do.

The Other Chris
The Other Chris
October 9, 2012 8:04 pm

Indeed.

Brian Black
Brian Black
October 9, 2012 11:21 pm

Hi, Jedi. ‘strategic power projection’.
Do we actually have any capability for strategic power projection?
I might define that term as meaning, retaining some military capability at a sufficient mass where simply the existance of that capability has a coercive effect on other countries.
I would struggle to identify any assets that would satisfy the definition I’ve just come up with.
We have power projection capability, but I wouldn’t describe a Reaction Force brigade, for example, as being a strategic asset. We have tactical force projection, but little with which to strategically shape events. What definition are you applying?

jedibeeftrix
jedibeeftrix
October 9, 2012 11:51 pm

more or less:

2.15 The new Defence Planning Assumptions
envisage that the Armed Forces in the future will
be sized and shaped to conduct:
• an enduring stabilisation operation at around
brigade level (up to 6,500 personnel) with
maritime and air support as required, while
also conducting:
• one non-enduring complex intervention (up to
2,000 personnel), and
• one non-enduring simple intervention (up to
1,000 personnel);
or alternatively:
• three non-enduring operations if we were not
already engaged in an enduring operation;
or:
• for a limited time, and with suffjcient warning,
committing all our efgort to a one-ofg
intervention of up to three brigades, with
maritime and air support (around 30,000,
two-thirds of the force deployed to Iraq in 2003).

Observer
Observer
October 10, 2012 7:28 am

@BB

The mere presence of such a tactical raiding force in itself would cause changes in a strategic equation similar to the old “Fleet in Existance” concept, though you are right in saying by itself it retains little strategic military power. Like the American LCSs, they offer little firepower, but their presence implies further problems up the line if ignored, which encourages others to move more cautiously, or aggressively (think Pearl Harbour). Guess you can say it becomes a strategic force by being a wild card.

@jbt

Gee…”enduring stabilisation operation” sounds so much better than “occupation force”.

I know, I know, sometimes it can’t be helped, but historically, occupation forces tend to end up being low intensity meat grinders. Seriously not a situation to end up in by choice.

martin
Editor
October 10, 2012 7:33 am

I think it is important to have a minimum threshold for core miliatry expenditure as a % of GDP. Not sure why DFID get’s added in here as it has nothing to do with the MOD budget.

However as with other countries item’s like trident are included in this 2% figure. The UK could significantly reduce it’s force level’s and stay above the 2% level.

It makes you wonder what other countries like Italy and Germany spend given there sub 2% present figures which I am sure include foreign aid etc and are likely to be cut even further.

When we are compared on military expenditure term’s with France it seems to me that the other bit’s i.e. contigency, trident etc are not included where as I am sure they are inside the French defence budget.

The UK can only maintain it’s place at the top table in the long term as long as we maintain a total spend that keeps us in the top 5. Give the aversion of countries like Germany and Japan to military spending and the rapidly collapsing population of Russia this should be possible for a very long time at least until the 2050’s.

The Other Chris
The Other Chris
October 10, 2012 8:52 am

The DfID work very closely with the Armed Forces, the Royal Navy and RFA in particular [1].

With regards to minimum spend, I do not think this should be artificially pegged against a level of GDP at all. In my own opinion this should be pegged against what is needed to maintain:

1) Personnel and equipment required for current tasking;
2) Training, Manufacturing and Organisation so we can scale up personnel and equipment when required;
3) Manufacturing, Development and Training so we can continually improve and refresh our equipment, organisation and expertise.

This may, or may not, result in spending around the 2% GDP line and I feel this link should be broken. It works as a reasonable indicator or starting point, but attempts to cover many differing economies and situations.

I refer to previous discussions [2] where we discussed “minimum levels” required. Following the total war approach (levée en masse, Clausewitz, et al), defence spending should be viewed in an economically beneficial light. Certainly with regards actual spend but also with regard the likes of spin-off industry as well.

This is something that the South Korean’s seem to be doing quite well and is possibly one of, if not the, reason why they are punching higher above their weight than we are.

[1] Think Defence: The Future of the Royal Navy 09 – (Equipping the Humanitarian Support Group)

[2] Think Defence: Ever decreasing circles

The Other Chris
The Other Chris
October 10, 2012 8:57 am

Testing:

1
2

jedibeeftrix
jedibeeftrix
October 10, 2012 10:58 am

Well, the a b and c above remain justified worries in my opinion, so I for one remain grateful that Britain will feel obliged to meet it lest US confidence in the European arm of nato be fundamentally compromised.

With projected British growth, long term, and a 2.0% spend Britain will remain in the top five for decades to come. Combined with a forgiving geography and benign neighbours it will allow a focus on power projection out-of-area that will be in the top three.

In hmg wishes to continue an active and influential role on the SC then it can do.