A.3.  Equipment and Support expenditure in Departmental context

Note: * RfR1 only, which is defined expenditure for operational support and logistics services costs and the costs of providing the equipment capability required by defence policy; ** Including operations, personnel and contribution from NEIP

Figure A-2: MoD outturn by TLB in total (left-hand side) and in near cash terms (right-hand side)

MoD spend by TLB area is shown in Figure A-2.

The TLBs representing the Front Line Commands (Air, Sea, Land) have a high proportion of staff costs, which are essentially fixed for a given force structure and increasing at a rate faster than general inflation, giving the Department limited leeway in flexing costs in places other than the acquisition and support budgets.

In near-cash terms, DE&S accounts for about 50% of total MoD expenditure and the amount spent by the organisation has increased at a rate of 4.4% p.a. in recent years. As indicated in Figure 7-18, the majority of DE&S's near cash spending is attributed to EPP and ESP costs (c.£6bn and c.£6bn respectively). The remaining cash is accounted for by DE&S running costs (£1.6bn, incl. £1.3bn of ACR) and the Non-Equipment Investment Plan ("NEIP" of £800m).