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Ministry of Defence: Winter Supplementary Estimate

Volume 705: debated on Tuesday 25 November 2008

My right honourable friend the Secretary of State for Defence (John Hutton) has made the following Written Ministerial Statement.

Subject to parliamentary approval of the necessary supplementary estimate, the Ministry of Defence departmental expenditure limits (DEL) will be increased by £3,434,312,000 (voted and non-voted) from £34,075,771,000 to £37,510,083,000. The administration cost budget will be increased by £64,108,000 from £2,294,141,000 to £2,358,249,000.  Within the DEL change, the impact on resources and capital are as set out in the following table:

ChangeNew DEL

Voted

Non-Voted

Voted

Non-voted

Total

Resource

3,560,019

90,158

37,127,302

146,196

37,273,498

Of which:

Administration Budget

-45

64,153

2,294,096

64,153

2,358,249

Near-cash in RDEL

3,210,019

90,158

25, 836, 849

376,710

26, 213, 559

Capital

113,000

-

7,983,045

851

7,983,896

Depreciation*

-328,865

-

-7,737,825

-9,486

-7,747,311

Total

3,344,154

90,158

37,372,522

137,561

37,510,083

*Depreciation, which forms part of Resource DEL, is excluded from the total DEL since capital DEL includes capital spending and to include depreciation of those assets would lead to double counting.

The changes to the resource and capital elements of the DEL arise from:

a net increase in the RfR2 of £2,302,000,000 Direct Resource DEL, £1,063,000,000 Capital DEL, and Indirect Resource DEL of £350,000,000 to reflect the forecast costs of peacekeeping operations in Iraq, Afghanistan and Balkans;

transfers in from the Foreign and Commonwealth Office of £2,400,000 for Balkans funding (RfR2) and £2,800,000 for helicopter pilot training for counternarcotics operations (RfR1); a transfer in from the Cabinet Office of £209,000 in respect of future funding arrangements for the expansion of the parliamentary Counsel Office (RfR1);

transfers out to the Department of Business, Enterprise and Regulatory Reform (BERR) of £4,000,000 being the MOD's contribution to BERR's chemical and nuclear weapons disposal pool (RfR1); transfers out to the FCO of £16,000,000 and the Department for International Development of £1,970,000 being the MOD's contribution to the Stabilisation Aid Fund (RfR2); a transfer out to the Cabinet Office of £40,000 being the MOD contribution to the Government Secure Zone Fund (RfRI); and a resource administration budget transfer of £45,000 to the Centre of Expertise for Sustainable Procurement (RfR1);

a transfer within RFR1 of £1,000,000,000 Capital DEL to Direct Resource within RfR1 relating to Single Use Military Equipment (SUME) flexibility with no overall impact on DEL;

to reflect the estimated indirect resource impact of the first stage of the International Financial Reporting Standards on derivatives and impairments of £215,000,000, with no overall impact on DEL;

to revise sub-head provisions to reflect Resource and Capital revisions in allocations between Top Level Budget Holders to match required defence outputs, with no overall impact on DEL;

additional fiscal Capital DEL provision of £50,000,000;

to increase non-operating Appropriations-in-Aid to reflect a QinetiQ receipt of £200,000,000 and a receipt for the Defence Aviation Repairs Agency of £60,000, 000, with a corresponding and offsetting, increase in Capital Expenditure (no overall impact on Capital DEL);

to re-allocate Royal Hospital Chelsea (RHC) costs of £9,232,000 from other current voted expenditure to non-voted expenditure;

to re-allocate DEL Grants in Aid from DEL to Non Budget Grants in Aid (non-voted) to reflect a classification changes for the Council of Reserve Forces & Cadets Association of £55,522,000; £8,631,000 for the Marine Society & Sea Cadets; and a re-classification of cost of capital for Public Corporations from Voted other current costs to grants of £21,396,000 with no impact on Resource DEL;

to increase Grants in Aid funding for the Royal Naval Museum of £75,000; Royal Hospital Chelsea of £1,000,000; the RAF Museum of £400,000; and the National Army Museum of £395,000 by reducing Resource DEL current costs and increasing Non Budget Grants in Aid with no overall impact on resource;

to increase Grants in Aid funding for the Armed Forces Memorial of £80,000 by reducing Resource DEL current costs and increasing Non Budget Grants in Aid (outside DEL); and

to reflect the re-classification of non-departmental public bodies (NDPBs) museums from voted to non-voted DEL of £14,903,000.

The changes to Resource DEL and Capital DEL will lead to an increased net cash requirement of £3,389,122,000.