WE WILL NOW PLACE
see below
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SECRETARY OF STATE FOR DEFENCE STATEMENT TO THE HOUSE – 25 JULY 2007:
Mr Speaker,
I am pleased to inform the House that the Ministry of Defence has agreed with HM Treasury a
Comprehensive Spending Review settlement for the next three years
The Total Departmental Expenditure Limit for Defence over the CSR period will be £34 billion
in 2008/9, £35.3 billion in 2009/10 and £36.9 billion in 2010/11. This is an additional £7.7
billion for Defence by 2011. This is a 1.5% average annual real terms increase against our
CSR baseline, excluding the costs of operations met from the Reserve and the time-limited
Defence Modernisation Fund. In addition, Treasury will continue to fund from the Reserve the
additional cost of operations over and above the Defence Budget, having already funded from
the Reserve some £6.6 billion in supporting the front line since 2001.
This settlement continues the longest period of sustained real growth in planned defence
spending since the 1980s, evidence of the Government’s commitment to defence and to the
men and women who serve with the utmost bravery in our Armed Forces.
The result of Labour’s consistent funding for Defence is that the defence budget will be
significantly higher in real terms than the budget we in inherited in 1997. On average, a billion
pounds more for defence every year, for ten years. Compare this with the last 5 years of the
Tory government, when the defence budget was being cut by around £½ billion a year.
Our priority remains success on current operations. This settlement gives the MOD the
financial certainty required to continue delivering that success. Over the last year I have been
able to announce to this House important enhancements in protected vehicles, helicopters,
and surveillance. This settlement will enable us to do more in all these areas and others. It also
allows for additional investment in the support our Service personnel deserve – building on
recent improvements in pay, in the new tax free operational bonus, in medical care for our
wounded personnel, and in accommodation.
Mr Speaker, at the same time as ensuring success on current operations, and support for our
people, this settlement also enables us to invest in those capabilities we will need for the
future.
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I am pleased to be able to confirm today that we will now place orders for two 65,000 tonne
aircraft carriers to provide our front-line forces with the modern, world class capabilities they
will need over the coming decades. These will be named HMS Queen Elizabeth and HMS
Prince of Wales.
This delivers on the Government’s promise in the 1998 Strategic Defence Review. The carriers
represent a step change in our capability, enabling us to deliver increased strategic effect and
influence around the world at a time and place of our choosing. They will be a key component
of the improved expeditionary capabilities we need to confront the diverse range of threats in
today’s security environment. They are evidence of our commitment to ensuring that our
armed forces are modern, versatile, and equipped for the future.
In parallel, we will continue to work closely with France. Our cooperation has already yielded
real benefits. We have shared the costs of developing the common baseline design to which
we are committing today and we have capitalised on our huge collective technical and military
experience. Our industries are now exploring further opportunities for mutual benefit, including
joint procurements of equipment for the carriers, and shared support arrangements. We look
forward to making a joint announcement on further co-operation in the next few months.
The carrier programme will sustain and create some 10,000 jobs across the UK, but we have
always been clear that the carriers cannot be built without change in the maritime sector. As
we set out in the Defence Industrial Strategy, we need further improvements in efficiency, to
ensure the taxpayer is getting value for money. And we need to ensure that the UK maritime
industry is the right size and shape, so that it is sustainable in the longer term. So I am
pleased that VT Group and BAE Systems intend to form a joint venture in naval shipbuilding
and support.
Mr Speaker, the creation of such a joint venture will enable the Royal Navy to work with
industry to deliver the infrastructure the Navy will need to support the fleet in the future while
retaining all three of our existing naval bases at Portsmouth, Devonport and Faslane. This will
be good news for the three communities and the Service, civilian and contractor personnel
employed at the bases. Nonetheless some reductions in the 17,600 personnel currently
employed will be necessary and will be taken forward in consultation with Trades Unions in the
usual way. .We aim to rationalise infrastructure and spare capacity, streamline processes and
build on partnering and other commercial arrangements. For example, today we are also
announcing a £1 billion partnering arrangement with Rolls Royce for the in-service support of
the Nuclear Steam Raising Plant that powers the Royal Navy’s submarines over the next
decade.
I am also determined to ensure more of our money is spent where it is really needed, reducing
overheads to put more into the front line and into supporting our people. To enhance the
spending power which this settlement gives us, we will make savings against the Department’s
overheads, including a 5% year-on-year saving in our administrative overhead over the next
three years and a 25% reduction in our Head Office. These are additional to the £2.8 billion
efficiencies delivered over the Spending Review 2004 period.
A priority through the CSR period will be the continued investment in improving
accommodation for our people and their families. We expect to spend some £550M on this
over the three year period, including plans to upgrade over 18,000 barrack-type bed spaces.
This builds upon the achievements of recent years in providing upgrades to our Service
families’ and our plans to spend £5 billion over the next ten years on upgrading and
maintaining accommodation. We also intend to explore with Treasury and the Department for
Communities and Local Government how best we can support the wishes of many Service
men and women to own their own homes.
Full details of the CSR settlement for Defence will be announced in the autumn, alongside the
outcome for all Government Departments. Today, however, I am providing a summary for the
Library of the House.
Mr Speaker, our Armed Forces are admired and respected worldwide. I am conscious that with
operations in both Iraq and Afghanistan we are currently asking our armed forces to do a lot. In
return we must ensure that the government does all it can to support them and their families.
This significant additional investment shows this Government is determined to do just that -
and to ensure they maintain their well earned and must deserved reputation for being the best
armed forces in the world in the years ahead.