5.2.4. Equipment spending in context of overall defence resources

Since 2001/02, MoD funding has increased by 1.2% p.a. in real terms15. Moreover, the proportion of funding devoted by the MoD itself to capital spending (which is largely associated with procurement of equipment) has remained relatively constant at c.24%. This is shown in Table 5-1.

2001 /02a

2002 /03a

2003 /04a

2004 /05a

2005 /06a

2006 /07a

2007 /08a

2008 /09e

CAGR
(01/02a

-

08/09e)

Near-Cash DEL for Defence (real terms, 2008 £bn)

28.0

27.6

27.9

28.6

29.2

29.2

29.4

30.4

1.2%

CDEL for Defence (real terms, 2008 £bn)

6.6

6.5

6.2

6.9

7.0

7.0

7.1

7.2

1.1%

CDEL as percentage of total Near-Cash DEL for Defence

23.8%

23.7%

22.4%

23.9%

23.9%

24.0%

24.1%

23.6%

n/a

Source: Defence Resources

Table 5-1: MoD Budget & CDEL spending (adjusted for inflation)

In spite of the dynamic environment of defence threats, the policy guidance to the UK military resulting from comprehensive reviews, and which directly informs investment requirements, has been largely static. This guidance underpins the current EPP (PR09) which is shown in Figure 5-2.

PR09* Equipment Procurement Plan spend by Capability Manager

C DEL + Direct R DEL (Billions of pounds 'Near Cash' , nominal)

Total spend** (£bn)

Note: Includes the cost of the future deterrent, which is subject to separate funding arrangements with the Treasury on the basis (announced in the

2006 White Paper) that the cost of the deterrent will not be at the expense of the conventional capabilities required by the Armed Forces .Segmentation

presented on basis of pre-April 09 organisational structure;

*PR09 is after options and manual adjustments (as at 28th of May), but is not the final EPP; ** Including years 31 plus

Source: CapEP; Review team analysis

Figure 5-2: 10 Year planned procurement spend

It should be noted that the EPP resulting from PR09 (shown in Figure 5-2) over the next ten years implies spending substantially ahead of historical rates, a subject the Review will examine in detail later.




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15 Does not include spend for support operations (RfR2)