03 August 2007
The Ministry of Defence will be allocated an additional £7.7bn for the forthcoming Comprehensive Spending Review – but must also cut 5% of its overheads each year.
Defence Secretary Des Browne announced his department's CSR settlement last week. He will receive an annual budget of £34bn in 2008/09, £35.3bn in 2009/10 and £36.9bn in 2010/11. The rise equates to a real-terms increase of 1.5% per year.
Browne said the settlement represented the 'longest period of sustained real growth in planned defence spending since the 1980s'.
With the certainty over his department's funding confirmed, Browne immediately commissioned the purchase of two new aircraft carriers. The deal, which had been delayed for two years, will support around 10,000 jobs in British shipyards and ancillary industries, experts said.
But Browne must make 5% savings to the MoD's annual administration budget throughout the CSR period. He must also cut staff at the department's Whitehall headquarters by a quarter.
All departments expect to have to save more when the full CSR is announced by Chancellor Alistair Darling this autumn.
The MoD's CSR resources settlement excludes the costs of its operations in Iraq and Afghanistan above that of the department's previous CSR baseline.
Additional defence costs will be covered by the Treasury, which has already contributed £6.6bn to frontline military activities since 2001.
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