Accredited official statistics

MOD departmental resources: 2024

Published 28 November 2024

The Finance and Economics Statistical Bulletin series provides figures on the composition and scope of the Department’s expenditure, information on the impact of defence spending on the wider economy, and compares MOD spending to that of other departments and countries.

Departmental Resources sets out Defence spending over time and by type of expenditure, comparing it to other areas of government. This bulletin presents expenditure on equipment, Research and Development (R&D), MOD’s commitment to conflict prevention, value of our non-current assets, external income earned by MOD and expenditure on consultancy. The statistics are consistent with the MOD Annual Report and Accounts, and are produced as part of the transparency and accountability of the MOD to Parliament and the public.

1. Key Points and Trends

£53.9 billion	Defence spending (Resource DEL plus Capital DEL minus Depreciation) in 2023/24.
	This is a nominal increase of £1.1 billion from 2022/23, although when adjusted for inflation represents a 3.8% decrease.
5th	Largest area of government expenditure (Resource DEL plus Capital DEL plus AME).
	The fifth highest spending area of UK government during 2023/24, up from sixth position in 2022/23.
£14.5 billion	Service and civilian personnel costs in 2023/24.
	This is a nominal increase of £0.8 billion from the previous year and represents 27% of defence expenditure, up from 26% in 2022/23.
£25.2 billion	Estimated MOD equipment expenditure in 2023/24.
	This is a nominal increase of £1.2 billion from the previous year, but when adjusted for inflation is a 1.1% decrease.
£2.6 billion	MOD net expenditure on Research and Development in 2023/24.
	This is an increase of £0.6 billion on the previous year, which when adjusted for inflation is a 22% increase.
£2.6 billion	Cost of operations and peacekeeping in 2023/24.
	This is a decrease of £0.3 billion from the previous year.

Responsible statistician: Analysis-Expenditure Head of Branch

Telephone: 030 015 86554

Further information/mailing list: Analysis-Expenditure-PQ-FOI@mod.gov.uk

Background quality report: Background Quality Report

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2. Introduction

This bulletin provides statistics on the composition and scope of the Department’s expenditure. It is produced as part of the transparency and accountability of the Ministry of Defence to Parliament and the public. Detailed statistics and historic time series can be found in the related data tables.

2.1 Context

The information in this bulletin has a wide range of users including the media, politicians, academic researchers and the general public who use the information to:

• set the context for other information on Defence.
• assist in understanding the impact of changes in Defence policy.
• look at trends in Defence expenditure not reported in the MOD Annual Report and Accounts.

2.2 Accredited Official Statistics publication

Accredited Official Statistics are called National Statistics in the Statistics and Registration Service Act 2007.

These Accredited Official Statistics were independently reviewed by the Office for Statistics Regulation in December 2017. They comply with the standards of trustworthiness, quality and value in the Code of Practice for Statistics and should be labelled ‘Accredited Official Statistics’.

Accreditation can be broadly interpreted to mean that the statistics:

• meet identified user needs;
• are well explained and readily accessible;
• are produced according to sound methods; and
• are managed impartially and objectively in the public interest.

Further information on the accreditation process can be found from the Office for Statistics Regulation.

Once statistics have been designated as Accredited Official Statistics it is a statutory requirement that the Code of Practice shall continue to be observed. Further details about how this report has been developed since its confirmation as an Accredited Official Statistic can be found in the Background Quality Report.

Our statistical practice is regulated by the Office for Statistics Regulation (OSR). OSR sets the standards of trustworthiness, quality and value in the Code of Practice for Statistics that all producers of official statistics should adhere to.

You are welcome to contact us directly with any comments about how we meet these standards.

Alternatively, you can contact OSR by emailing [email protected] or via the OSR website.

3. Defence Expenditure Outturn – Defence Spending

Defence Expenditure Limits (DELs) refer to expenditure that is subject to limits set in Spending Reviews, and which it is assumed government departments can control. Separate DELs are set for each government department’s Resource and Capital spending each year.

DELs are made up of Resource DEL (RDEL), money that is spent on day-to-day resources and administration costs, and Capital DEL (CDEL), money that is spent on investment and things that will create growth in the future.

Departmental spending which is not part of DEL is included in the departmental Annually Managed Expenditure (AME), which is typically demand-led items such as social security benefits, certain pension allowances, and tax credits for individuals.

Both resource and capital budgets are divided into DEL and departmental AME.

Figure 1: Breakdown of Management of Defence Finances

Figure 1 shows how Defence Spending (including operations) is made up of Cash Resource DEL, Capital DEL, Operations Cash DEL, and Operations Resource DEL. Annually Managed Expenditure is not included under Defence Spending as it is not planned and budgeted for, instead being voted for annually.

Defence Spending is the total department expenditure through DEL (that is, both resource and capital expenditure), minus losses in asset value (depreciation, impairments, and fixed assets written on/off).

This is consistent with HM Treasury guidance and reflects the resources needed plus net investment, whilst avoiding any double counting of existing capital stock and cash outlay on new assets.

In 2023/24, Defence Spending was £53.9 billion. This is a nominal increase of £1.1 billion on the previous year, but a decrease of 3.8% when adjusted for inflation.

Figure 2: Defence Spending 2023/24 ^{[footnote 1]}

Source: MOD Annual Report and Accounts 2023 to 2024

Figure 2 shows the breakdown of the total £53.9 billion of Defence Spending. Resource DEL excluding depreciation, impairments, and fixed assets/inventory written on/off makes up £34.8 billion and Capital DEL £19.2 billion. Annually Managed Expenditure is -£1.4 billion but is not included in the overall Defence Spending figure.

Total Defence Spending increased by £1.1 billion on 2022/23. This was solely a result of increased Resource DEL expenditure which rose by £2.9 billion in 2023/24, with just over a quarter of that coming from resource spend on service and civilian personnel. Capital DEL spend fell by £1.2 billion over the same period principally due to a reduction in Other Capital (Fiscal) expenditure on property and equipment expenditure.

4. Defence Expenditure Outturn Over Time

This section outlines changes in Defence expenditure over time. The chart below presents the MOD cash figures from 1981/82 until 2000/01 and then, from 2001/02 onwards, the Net Cash Requirement (NCR).

The NCR is the actual money that MOD requests from the government in order to fund its activities and takes account of movements in working capital levels (for example, debtors, creditors and stock) whilst excluding all non-cash costs (such as depreciation).

The NCR is the closest comparable figure to the cash totals previously estimated, enabling presentation of a longer time series, but is not directly comparable to the Defence Spending estimate presented in the previous section. Estimates are presented in both current prices and at constant 2023/24 prices.

Defence spending, when using NCR, was £54.1 billion in 2023/24. This is a nominal increase of £5.5 billion on the year before, or up 5.0% when adjusted for inflation.

Figure 3: UK Defence Expenditure 1981/82 to 2023/24 ^{[footnote 2] [footnote 3] [footnote 4] [footnote 5]}

Source: MOD Annual Report and Accounts and HM Treasury GDP Deflators (30 September 2024)

Figure 3 presents a time series for UK Defence expenditure since 1981/82 in current and constant prices. There is a break in series in 2001/02 to indicate a change from using MOD cash figures to NCR.

There were real term increases in cash totals up to the mid-1980s to reflect NATO’s commitments in the Cold War. This was followed by a fall due to the ‘Peace Dividend’, with the Gulf War in 1991 causing a temporary rise.

Between 2000 and 2010, defence expenditure increased quite sharply due to the conflicts in Iraq and Afghanistan. The rise in NCR peaked in 2009/10 at £53.1 billion when adjusted for inflation. NCR then decreased year-on-year up until 2015/16.

More recently, between 2017/18 and 2019/20, small annual increases were made to Defence expenditure in both real and actual terms when using NCR. This rise in spending continued into 2023/24 in nominal terms but figures have fluctuated more when expenditure is adjusted for inflation. This is partly due to inflation being particularly high in 2020/21 followed by a deflation rate of 0.6% in 2021/22, when using the GDP deflator.

In 2023/24 Defence expenditure increased in both real and actual terms when using NCR. When adjusted for inflation NCR is now at its highest level since 1985/86. The latest rise in inflation adjusted NCR may be surprising after the previous section noted a reduction in total Defence Spending in 2023/24. Annually Managed Expenditure (AME) increased from -£13.9 billion last year to -£1.4 billion in 2023/24 due to an £11.7 billion rise in Resource AME Provisions Costs. This is included within NCR figures but omitted under the definition of Defence Spending.

5. Public Expenditure by Departmental Grouping

This section examines expenditure on defence within the wider public expenditure framework. It presents total expenditure, comprised of RDEL, CDEL, and AME by Departmental Grouping.

Defence expenditure as presented in the HM Treasury Public Expenditure Statistical Analyses (PESA) cannot be directly compared to the Defence Spending estimates presented in the previous section as they use different definitions. The difference can be attributed in part to HMT’s inclusion of depreciation, impairments and fixed assets written on/off, and the Armed Forces Pension Scheme (AFPS).

Under HMT accounting, Defence spending in 2023/24 was £65.6 billion, accounting for 6.1% of total government spending.

Figure 4: Public Expenditure by Departmental Grouping 2023/24

Source: HM Treasury Public Expenditure Statistical Analyses 2024

Figure 4 depicts a bubble chart showing public expenditure by government department under HM Treasury accounting. Work and Pensions was the highest spending department with £275.7 billion in 2023/24. Defence ranks fifth.

There are a couple of changes to the structure of government departments in 2024 following the outcome of the General Election. The Department for Levelling Up, Housing and Communities (DLUHC) is now called the Ministry of Housing, Communities and Local Government (MHCLG). Figure 4 presents MHCLG separately as Housing and Communities, and Local Government to align with reporting methods used in PESA 2024.

The negative value shown for the Department for Energy Security and Net Zero (DESNZ) includes highly volatile year-to-year Resource AME expenditure. In 2023/24, DESNZ Resource AME was -£20.2 billion.

6. Public Expenditure for Top Six Departmental Groups

This section compares the top six spending areas of UK government in 2023/24 by the component parts of their expenditure; RDEL, CDEL, and AME.

Defence has moved up the rankings of largest spending government departments from sixth place in 2022/23 to fifth in 2023/24, recently overtaking the total spend of Scotland. Only Work and Pensions, Health and Social Care, Education, and HM Treasury placed above.

Figure 5: Public Expenditure for Top Six Departmental Groups in 2023/24

Source: HM Treasury Public Expenditure Statistical Analyses 2024

Figure 5 presents a horizontal bar chart showing the breakdown of Resource DEL, Capital DEL and AME for the top six government departments in 2023/24. These are the same six departments as last year although the order has changed.

The top two spending departments remain the same but Education and HM Treasury have now switched positions. Defence spending surpassed that of Scotland in 2023/24 owing mainly to a £9.1 billion increase in Resource AME expenditure. Defence occupies fifth position with roughly two thirds of expenditure going on Resource DEL.

Education saw the second greatest percentage increase in spending across all government departments in 2023/24, only behind Environment, Food and Rural Affairs which had a much lower base to begin with. A 44% increase to Education spending saw the department’s expenditure rise to £134.8 billion in 2023/24 owed largely to an uplift in Resource DEL through student loans.

HM Treasury spending fell by 41% in 2023/24 to £80.7 billion. This follows an increase of 180% the year before due to financial sector interventions affecting transactions. This now places HM Treasury in fourth position, above Defence by £15.1 billion.

97% of Work and Pensions expenditure is AME which includes social security benefits, certain pension allowances, and tax credits for individuals. In the case of Health and Social Care, the majority of spending is Resource DEL. This is expenditure associated with running costs such as staffing, infrastructure, and inventory consumption.

Resource DEL also makes up the majority of Defence expenditure, accounting for £42.7 billion of the total £65.6 billion in 2023/24. Despite the vast majority of Defence spending on Resource DEL, the Department still has one of the highest capital expenditures across government.

7. Defence Expenditure by Commodity Block

This section presents a breakdown of Defence Spending by major cost categories known as Commodity Blocks. This provides a more meaningful description of the Department’s expenditure by grouping related spend.

The overall rise in Defence expenditure in 2023/24 was driven through increased Resource DEL spending, which rose from £39.8 billion in 2022/23 to £42.7 billion. Resource DEL spending on Service Personnel increased by over £500 million.

Figure 6: Defence Expenditure by Commodity Block in 2023/24 ^{[footnote 6] [footnote 7]}

Source: MOD Annual Report and Accounts 2023 to 2024

Figure 6 depicts a pie chart showing defence expenditure by Commodity Block in 2023/24. Service Personnel costs account for the largest proportion of overall expenditure at 22.2% followed by Specialist Military Equipment at 18.1%.

In 2023/24, the largest proportion of MOD expenditure was on personnel costs (27%). Compared to the previous year, spending on Civilian and Service Personnel increased by 12.1% (£280 million) and 4.4% (£505 million), respectively.

There was significant expenditure on MOD capital projects covering procurement of Specialist Military Equipment, meaning equipment which can only be used for military purposes. Spending against this Commodity Block rose by 6.1% (£562 million) when compared to the previous year.

In absolute terms however it is Other Costs that has increased the most year-on-year of any Commodity Block. Expenditure against this category increased by £773 million (34%) in 2023/24, principally due to an £838 million rise in Resource DEL recorded against Other Costs and Services.

Capital DEL had historically seen increases in expenditure each year between 2015/16 and 2022/23, however this has fallen by £1.2 billion (5.7%) in 2023/24. A decrease in Property and Other Equipment spend was the main contributor to this fall in 2023/24 with spending down by £2.3 billion compared to the previous year.

8. Estimated MOD Equipment Expenditure

This section presents estimates of MOD equipment expenditure broken down by the main categories of spending.

Total MOD equipment expenditure includes costs for the acquisition, maintenance, repair, and update of items such as plant, machinery, IT, vehicles, and fighting equipment. It also includes R&D expenditure associated with these items.

It is therefore a wider definition to that used in the Defence Equipment Plan, and covers both military and non-military equipment (including that for dual-use) used by MOD service and civilian personnel.

In 2023/24, estimated MOD expenditure on equipment was £25.2 billion. This is a nominal increase of £1.2 billion on the previous year which was nearly all through increased R&D expenditure.

Figure 7: Estimated MOD Equipment Expenditure 2003/04 to 2023/24 ^{[footnote 2] [footnote 8] [footnote 9]}

Source: MOD Annual Report and Accounts and HM Treasury GDP Deflators (30 September 2024)

Figure 7 presents a time series for MOD equipment spend in both current and constant prices. Current price spending is presented as stacked bars to highlight the breakdown of equipment spend by Capital Expenditure, Equipment Support, and Research and Development (R&D).

Between 2005/06 and 2008/09 there were steady increases in real term MOD expenditure on equipment. This then remained fairly stable, other than a couple of peaks and troughs, at around £20 billion until 2018/19. Expenditure began to rise again from 2020/21 until a high of £25.4 billion in 2022/23. Despite the nominal increase in equipment spending in 2023/24 this equated to a 1.1% decrease after taking inflation into account.

9. MOD Research and Development Expenditure

This section details MOD annual expenditure on R&D activity. Expenditure is broken down into intramural (R&D activity undertaken within the Department) and extramural (R&D activity undertaken outside the Department).

Statistics on R&D expenditure provide an important guide to the levels of investment in the economy, provide a key indicator of future growth and competitiveness, and allow for international comparisons to be undertaken. Details of how Defence expenditure contributes to wider government expenditure on R&D is published by the Office for National Statistics (ONS).

The data included in this section are derived from an annual survey of MOD R&D expenditure conducted by MOD and using information from MOD accounting systems. The survey seeks to classify R&D activity within the Organisation for Economic Co-operation and Development’s (OECD) Frascati Guidelines (meaning R&D considered to be new, novel or innovative), which align to National Accounts definitions. Definitions of what constitute Research or Development under these guidelines can be found in the Background Quality Report.

In 2023/24, MOD net expenditure on R&D activity, identified as meeting the Frascati definition, totalled £2.6 billion. This is a nominal increase of £595 million on the previous year, and up 22% after accounting for inflation.

Figure 8: MOD Research and Development Expenditure 2019/20 to 2023/24 ^{[footnote 2]}

Source: Analysis Directorate (Analysis-Expenditure Team) and HM Treasury GDP Deflators (30 September 2024)

Figure 8 presents a time series for MOD R&D spend since 2019/20 in both current and constant prices. Current price spending is presented as stacked bars to highlight expenditure as either Research or Development.

The R&D spending increase in 2021/22 followed commitments in the Spending Review 2020 to provide an additional £6.6 billion of Defence R&D funding over four years. There was also a shift in the breakdown of R&D expenditure between intramural and extramural in the same year, with £131 million of R&D expenditure with AWE PLC being classified as intramural owing to the company becoming an Executive Non-Departmental Public Body during 2021/22.

In 2023/24, MOD expenditure on research nominally increased by £889 million on the year before. This was predominantly through extramural research, spending on which increased by 119% to £1.5 billion. At the same time, spending on development fell by £294 million owing to a 39% reduction in extramural development. As a result, MOD spending on research equated to 71% of total R&D expenditure in 2023/24.

An extended time series for MOD R&D spending since 2003/04 can be found in Table 5 of the supporting data tables. It should be noted however that this longer timeframe does contain a significant break in series and data from 2019/20 onwards is not comparable to earlier years.

10. MOD Operations and Peacekeeping Costs

This section presents a breakdown of the total costs in recent years for MOD operations in Afghanistan, Iraq and the Middle East (including Counter Daesh), the Wider Gulf, and in other areas such as Libya, Mali and the Balkans. Figures also include expenditure from the Integrated Security Fund (ISF), the Deployed Military Activity Pool (DMAP), and MOD’s support to Ukraine in relation to their ongoing conflict with Russia.

These costs cover the net additional costs (both direct and indirect) incurred by the Department as a result of major military operations, meaning the costs over and above those that the Department would have incurred had the operation not been undertaken. For example, expenditure on pay or savings from cancelled training exercises are deducted from the total cost of the operation.

In 2023/24, a total of £2.6 billion was spent on operations. This is a decrease of £0.3 billion from 2022/23.

Figure 9: Annual Audited Cost of Operations 2004/05 to 2023/24 ^{[footnote 10]}

Source: MOD Annual Report and Accounts and Strategic Finance Team

Figure 9 depicts a stacked bar chart showing the split of MOD expenditure by operation since 2004/05. The operations of Afghanistan, Iraq and Middle East, Israel Conflict, Support to Ukraine, and Wider Gulf are shown separately, with those remaining grouped as ‘All Other Operations’.

Between 2004/05 and 2023/24, expenditure on operations peaked at a high of £4.2 billion in 2009/10. This was due to operations in Afghanistan, which accounted for £3.8 billion (91%) of the total expenditure. In the period between 2015/16 and 2021/22 it was operations in Iraq and the Middle East that had the single largest contribution to MOD’s operational cost, although overall costs were substantially lower than earlier years.

Operational costs considerably increased in 2022/23 following UK military support provided to the Armed Forces of Ukraine in relation to their ongoing conflict with Russia. Support to Ukraine has totalled over £2 billion in each of the last two years.

In 2023/24, Defence worked with international partners during the Israel Conflict to collectively deliver humanitarian aid, with operational costs totalling £29 million.

Further information on these costs can be found under the Performance Report section of MOD’s Annual Report and Accounts 2023 to 2024.

11. MOD Non-Current Assets

This section presents a detailed breakdown of the net book value of MOD’s non-current assets by category. Non-current assets (formerly known as “fixed assets”) are assets acquired for continued and long-term use by the MOD. They include tangible (meaning physical) assets such as land, buildings and equipment, and intangible (non-physical) assets such as development costs.

The MOD is one of the largest owners of non-current assets in the United Kingdom. The stewardship and efficient management of the Department’s assets are the responsibility of Top Level Budget (TLB) holders. MOD non-current assets are formally revalued on a five-yearly basis but are uplifted annually using indexation.

This valuation method complies with financial reporting standards with values being on an existing use basis rather than market value at disposal. Overseas estates for which the Crown holds no legal title, but which are used for garrison and training purposes by British Forces, are included in the MOD non-current assets register. UK bases occupied by visiting forces are also included.

As at 31 March 2024, the value of MOD non-current assets stood at £184 billion, which is an increase of £9.1 billion compared to the figure for the previous year. The majority of this increase was due to Assets Under Construction which collectively totalled an additional £5.5 billion.

Figure 10: MOD Non-Current Assets at 31 March 2024

Source: MOD Annual Report and Accounts 2023 to 2024

Figure 10 depicts a horizontal bar chart showing the value of MOD non-current assets in descending order as at 31 March 2024. The largest value non-current assets were Single Use Military Equipment at £46.5 billion followed by Intangible Assets worth £35.8 billion. The smallest values were Financial Assets at £251 million and Retirement Benefit Scheme Assets at £17 million.

The only change to the order on last year is that Assets Under Construction (AUC) Other is now placed above Right-of-use Assets. While the value of AUC Other increased by £3.4 billion, Right-of-use Assets decreased by £209 million. The only other non-current asset to drop in value was Transport which reduced by £429 million.

12. External income earned by MOD

The MOD provides a range of services to external organisations where the Department has spare capacity. This section presents the revenue earned from this support split by income category.

The majority of these services are in the form of military support to foreign governments or other government departments. Where appropriate, costs are recovered in accordance with Managing Public Money guidance set out by HMT.

On a smaller scale, the Department provides services to support charities, local community initiatives, as well as commercial companies, where there is a defence interest.

In 2023/24 MOD earned £1.9 billion from external sources. This is a nominal increase of £142 million compared to 2022/23, but relatively unchanged after accounting for inflation.

Figure 11: MOD Total Income Earned 2005/06 to 2023/24 ^{[footnote 2]}

Source: MOD Annual Report and Accounts and HM Treasury GDP Deflators (30 September 2024)

Figure 11 presents a time series for MOD external income earned since 2005/06 in both current and constant prices. From 2011/12, the notional cost of a donated asset is treated as income and not a credit to the reserves. Income from invoiced goods and services supplied to UKHO and QinetiQ are not included in totals after 2017/18.

Figure 12: MOD Income Earned in 2023/24 (Including Non-Recoverable VAT) ^{[footnote 11]}

Source: MOD Annual Report and Accounts 2023 to 2024

Figure 12 depicts a horizontal bar chart showing the breakdown of MOD external income earned in 2023/24. Income categories appear in descending order with the exception of ‘Other Income’ which is shown underneath.

In 2023/24, Revenue from Contracts with Customers and receipts from the Sale of Fuel have been combined with the single Supplies and Services grouping. This follows a restructuring of the Operating Income table within MOD’s Annual Report and Accounts 2023 to 2024. This makes Supplies and Services the largest income category for 2023/24 accounting for 26% of MOD external income, compared to only 14% the year before.

Receipts through NATO, UN, US Forces, and foreign governments had been the largest income category for the previous three consecutive years. The category’s receipts increased by £37 million on figures for 2022/23 and it now represents the second largest grouping.

There was also a considerable rise in the proceeds from the sale of PPE (Property, Plant and Equipment) and Intangible Assets which increased by £192 million on 2022/23.

13. MOD Expenditure on Consultancy

Consultancy is the term used by the MOD to cover a range of contracted support provided by non-MOD personnel. It extends beyond traditional management consultancy to include other specialised services such as legal, accountancy, IT and estates specialist advice, and civilian/military training.

Over the past few years, to help achieve the level of transformation necessary, MOD has needed, for the short term, to bring in external specialist skills which cannot be found among the permanent workforce of the Department or elsewhere within Central Government.

MOD spent £86 million on consultancy in 2023/24, a decrease of £63 million compared to the previous year.

Figure 13: MOD Expenditure on Consultancy 2009/10 to 2023/24 ^{[footnote 12] [footnote 13]}

Source: MOD Annual Report and Accounts and Operational Finance Team

Figure 13 depicts a bar chart showing MOD expenditure on consultancy since 2009/10. 2022/23 saw the highest level of spend.

Increased spending levels on consultancy in 2013/14 and 2014/15 mainly reflected the implementation of the Levene Reforms.

A significant break in series occurred following a review of consultancy expenditure in 2019/20 which brought MOD figures in line with that of Cabinet Office definitions. Analysis was backdated to assess figures from 2018/19 and this resulted in additional expenditure being categorised as consultancy compared to that of earlier years. In terms of the scale of changes, overall consultancy spend for 2018/19 went from £65 million to £117 million.

MOD’s spending on consultancy rose steadily between 2019/20 and 2022/23. It then fell sharply by 42% in 2023/24 as a result of the conclusion of a substantive change programme within the Atomic Weapons Establishment (AWE) and a continued focus by the Department on its reliance on external assistance.

Programme and Project Management remains the largest category for consultancy expenditure for the second consecutive year at £23 million. This is despite a £20 million decrease in spend against this category when compared to last year.

14. Methodology

This short section on methodology sets out processes and methods used in the compilation of some of the tables and charts presented in this bulletin. More detailed explanations of the data sources and methodologies used can be found in the related data tables and in the Background Quality Report.

14.1 Resource Accounting and Budgeting

Although most of the terminology used in this bulletin appears in the glossary, it is thought that a summary of the terminology used in relation to MOD expenditure would be useful:

What is the DEL?

Departmental Expenditure Limits (DEL):

These are fiscal limits, set during the Government Spending Review process, for discretionary spending within the Department – effectively the majority of MOD’s budget. They are made up of Resource DEL and Capital DEL, and are both planned, budgeted, and accounted for on an accruals basis in accordance with International Financial Reporting Standards (IFRS).

Resource DEL (RDEL):

This is split into two categories:

• Cash Resource DEL: Current expenditure and receipts. These include personnel, equipment support, inventory, infrastructure, and other cash costs. These items have an effect on the Net Cash Requirement of the Department.
• Non Cash Resource DEL: Depreciation and impairment of property, plant, equipment, and intangibles. The budgets for these are referred to as ringfenced by HMT, and requests to switch expenditure away to other budget areas will not be approved.

Capital DEL (CDEL):

Non-current expenditure and receipts, both intangible and tangible. There are two broad subcategories:

• Fiscal CDEL: Expenditure on equipment that may have other civilian uses, for example a building or IT equipment.
• Single Use Military Equipment (SUME): Expenditure on equipment which only has a military role, for example a warship. Dual Use Military Equipment is included in Fiscal CDEL.

With the adoption of the ESA 10 Framework, in September 2014, SUME has now become Capital both for MOD accounts purposes and National Accounts produced by the ONS. Previously, under ESA 95, it had been Capital for the purposes of MOD budgets and accounts and was reported as current expenditure in the National Accounts.

Total DEL:

Total DEL is the sum of RDEL and CDEL, minus Depreciation and Impairments. This is almost the same as the MOD term ‘Near Cash’. See glossary for full definitions.

Only the MOD element of Defence under the HMT framework is presented in this bulletin. It does not include the significant Armed Forces Pension and Compensation Scheme costs. Nor is it based on wider definitions of Defence used across Central Government in other frameworks such as the Spend on Services or Classification of the Functions of Government (COFOG) which are presented in the HMT Public Expenditure Statistical Analyses (PESA) document. These frameworks have strong and objective governance by organisations such as HMT, ONS, Organisation for Economic Co-operation and Development (OECD), and United Nations, not directed by MOD.

There are also several other international statistical frameworks of Defence spending outside the formal HMT Budgetary Framework and National Accounts. In view of the differences between this and national definitions, the figures shown may appear to diverge considerably from those which are quoted by national authorities or given in national budgets at both total or commodity breakout level. Furthermore, the reporting cycle may have timelines different to the UK budgetary and financial cycle so there may be considerable timing differences.

IMPORTANT NOTE: Please refer to the Resource Accounting and Budgeting section of UK Defence Statistics 2012 to view information relating to the introduction of the International Financial Reporting Standards (IFRS), the implementation of the Clear Line of Sight (CLoS) alignment project, and accounting changes in 2011/12 which have led to presentational changes to the reporting of MOD accounts.

There have been no significant changes to the way the 2023/24 accounts have been produced.

14.2 Research and Development (R&D)

The Analysis-Expenditure Team runs an annual survey of MOD expenditure on R&D to identify R&D expenditure that meet the international definition of R&D called Frascati. The survey response is sent to the ONS who use the data to produce cross government statistics on R&D, and the UK estimates are used in international comparisons of R&D expenditure. See the ONS R&D webpage for details of the publications this data supports.

In short, Frascati seeks to identify expenditure on R&D that is new, novel or innovative, and this definition aligns with the definition used to identify Capital R&D in the MOD Annual Report and Accounts. The survey seeks to identify the new, novel or innovative work from the total R&D expenditure reported in the Annual Report and Accounts, as well as provide additional details in order to support ONS reporting requirements.

14.3 MOD Equipment Expenditure

Estimates of MOD equipment expenditure have been calculated to indicate expenditure on acquisition, maintenance, repair, and update of items such as plant, machinery, vehicles and fighting equipment plus associated R&D (using the wider definition of R&D used in the MOD Annual Report and Accounts) and administrative computers. This is a wider definition than that used in either MOD’s Equipment Procurement Plan or Equipment Support Plan.

The overall equipment expenditure total is made up of three figures. The first two (equipment support and R&D) are numbers reported in the MOD Annual Report and Accounts while some aggregating of data is used to compile the capital expenditure on equipment. This number is taken from the following categories of in-year expenditure reported in the MOD Annual Report and Accounts which are all pan-MOD totals: Assets Under Construction Single Use Military Equipment (AUC SUME), plant and machinery, SUME Fighting Equipment, transport, IT and communications. In addition, the equipment element of ‘AUC – Other’ is also incorporated into the total after identified expenditure on non-equipment elements such as dwellings and infrastructure have been removed.

Since 2018/19, it has not been possible to identify DE&S expenditure by category within ‘AUC - Other’, and consequently the calculation now includes an element of spend on non-equipment items. This has therefore resulted in a break in series.

15. Glossary

Arm’s Length Bodies are Executive Agencies or Non-Departmental Public Bodies of MOD, details of which are published annually in the MOD accounting officer system statement.

Assets can be financial or non-financial. Financial assets include monetary gold, bank deposits, IMF special drawing rights, loans granted bonds, shares, accounts receivable, and the value of the government’s stake in public corporations. Non-financial assets consist of fixed capital (such as buildings and vehicles), stock, land, and valuables.

Classification of the Functions of Government (COFOG) classifies government expenditure data from the System of National Accounts by the purpose for which the funds are used.

Clear Line of Sight, the method for reporting and controlling defence spending changed in 2010/11 (for Budgets) and in 2011/12 (for Estimates and Accounts (Outturns)) following HM Treasury plans to simplify the control framework. The Clear Line of Sight (CLoS) Alignment Project aims to ensure consistency in presentation as well as promoting better value for money. See Resource Accounting & Budgeting Section in Chapter 1 of UK Defence Statistics 2012 for further information.

Commodity Blocks are the main MOD categories of expenditure presented under Clear Line of Sight. These provide a more meaningful description of the Department’s planned and actual spend, and include categories such as personnel costs, equipment support costs, and infrastructure costs.

Constant Prices indicate a value from which the effects of inflation have been removed. They will refer to a year as the basis for the calculation, for example, “constant 2023/24 prices”.

Core Department refers to entities within the MOD Departmental Boundary but excluding the Trading Fund UKHO.

Defence Budget is the amount of money under Cash Accounting that is planned to be spent during the financial year. Under Resource Accounting and Budgeting (RAB), the sum of resources planned to be consumed during a financial year is the defence budget. This excludes the additional expenditure on current operations that are funded from year-to-year by HM Treasury. See Resource Budgeting.

Defence Equipment and Support Bespoke Trading Entity (DE&S BTE) became an arm’s-length body of the MOD on 1 April 2014. DE&S BTE has a distinct operating cost cap as a financial control and reporting mechanism. This is to reflect its Arm’s Length management from the MOD Head Office and exclusion from the MOD’s Administration targets. The DE&S BTE is an Executive Agency in terms of classification by the ONS but will still be part of the MOD Vote and will publish separate plans and annual accounts at the end of each financial year.

Departmental Annually Managed Expenditure (AME) is spending that is outside Departmental Expenditure Limits but included in departmental budgets. AME is not planned and budgeted for, but instead voted for annually. It includes the provision for Armed Forces Pensions and non-cash items such as depreciation and cost of capital charges.

Departmental Expenditure Limit (DEL) is a firm plan for three years for a specific part of a department’s expenditure. In general, the DEL will cover all running costs and all programme expenditure except, in certain cases, where spending is included in departmental AME because it cannot reasonably be subject to close control over a three-year period. DELs are divided into current resource and capital budgets.

Departmental Grouping from 2011/12 the MOD accounting boundary now includes not just the Core Department but also the Departments’ Arm’s Length Bodies. See Arm’s Length Bodies.

Deployed Military Activity Pool (DMAP) is a joint HM Treasury and MOD initiative to make resources available to fund the initial and short-term costs of any unforeseen military activities, as authorised by the National Security Council.

Depreciation is also termed capital consumption. Total Managed Expenditure (TME) includes public sector expenditure gross of the depreciation of capital assets used to produce non-market services. Public sector net investment deducts an aggregate charge for all depreciation (market and non-market) from gross capital spending.

Donated Asset the notional cost of a donated asset is now treated as income and not a credit to the reserves. This better reflects the receipt of an asset that is essentially free to the Department.

Frascati Manual is an internationally recognised methodology for collecting and using R&D statistics. It includes definitions of basic concepts, guidelines for collecting data and the classifications to be used in compiling statistics. Its use allows for international comparisons to be made. See also SSAP 13.

Gross Domestic Product Deflator is an implicit price deflator for the Gross Domestic Product and is derived by dividing the estimate of GDP at current prices by the estimate of GDP at constant prices. The GDP deflator is commonly used as a measure of inflation in the economy for the country to which it refers.

Intangible Assets most if not all of MOD’s intangible assets are development costs. Under Statement of Standard Accounting Practice 13 (SSAP 13), pure research costs, and applied research costs which are not immediately linkable to a product cannot be put in the Balance Sheet as assets. Only development costs which lead to the introduction into service of new products or systems can be put on the Balance Sheet. SSAP 13 defines “development” as “use of scientific or technical knowledge in order to produce new or substantially improved materials, devices, products or services, to install new processes or systems prior to the commencement of commercial production or commercial applications, or to improve substantially those already produced or installed”. See also Tangible Assets.

Integrated Security Fund (ISF) is the government’s mechanism for funding conflict prevention, stabilisation, security, and peacekeeping activities, under the strategic direction of the National Security Council. Prior to 2023/24, the ISF was known as the Conflict, Stability and Security Fund (CSSF).

International Financial Reporting Standards (IFRS) are a set of international accounting standards stating how particular types of transactions and other events should be reported in financial statements. See Resource Accounting & Budgeting Section in Chapter 1 of UK Defence Statistics 2012 for further information.

Ministry of Defence (MOD) is the United Kingdom government department responsible for implementation of government defence policy. It is the headquarters of the British Armed Forces. The principal objective of the MOD is to defend the United Kingdom and its interests. The MOD manages day to day running of the armed forces, contingency planning and defence procurement.

MOD Annual Report and Accounts the Department is required to prepare resource accounts for each financial year detailing the resources acquired, held, or disposed of, during the year, and the way it has used them during the year.

Near Cash describes departmental resource budgets less non-cash charges. The main non-cash charges currently included in budgets are depreciation and impairments, cost of capital, stock write-off, national audit fees, bad debts, profit and loss on disposal of fixed assets, and movement in provisions. The term near cash is used rather than cash because it remains on an accruals basis and does not reflect the timing of actual cash payments.

Net Cash Requirement (NCR) is the amount of actual money that MOD requires from the government in order to fund its activities. It takes account of the movements in working capital levels (debtors, creditors and stocks) but not non-cash costs.

Non-Cash Items in Annually Managed Expenditure (AME) include various notional transactions such as depreciation and cost of capital, that appear in the operating cost statement under RAB, and are recorded in AME for the period of the Spending Review, rather than in DEL.

Non-Current Assets, previously called Fixed Assets, is the term used to describe the assets owned by MOD, with the assets being valued on an annual basis and updated each year using indexation.

Office for National Statistics (ONS) is responsible for the production of a wide range of independent economic and social statistics. The statistics are there to improve understanding of the United Kingdom’s economy and society, and for planning the proper allocation of resources, policy-making and decision-making. It is the executive office of the UK Statistics Authority, a non-ministerial department which reports directly to Parliament. ONS is the UK government’s single largest statistical producer.

Operating Cost Statement is the public sector’s equivalent of a commercial organisation’s Profit and Loss Account. It provides detail of the cost of the operations of a Management Grouping in the period, net of receipt income, and identifies the net resource outturn.

Outturn and Estimated Outturn, outturn describes expenditure actually incurred, whereas estimated outturn describes estimated expenditure on the basis of actual expenditure to date.

Outturn Prices, also described as Current Prices, are the prices of the period when the expenditure actually occurred.

Public Expenditure Statistical Analyses (PESA) is a compendium by HM Treasury that gathers recent outturn data, estimated outturns for the latest year, and spending plans over the entire range of UK public expenditure.

Real Defence Spending, also referred to as Constant Prices, are estimates adjusted for the effect of general price inflation relative to a base year, as measured by the GDP deflator.

Resource Accounting (RAB) is the accounting system that has been used since 2001/02 and comprises a set of accruals accounting techniques for reporting on central government expenditure and a framework for analysing expenditure by organisational aims and objectives, relating these to outputs where possible.

Resource Budget is the sum of a department’s resource Departmental Expenditure Limit and resource Annually Managed Expenditure. It is the budget for current expenditure on an accruals basis.

Resource Budgeting is the budgeting regime adopted for the spending plans set in the 2000 Spending Review. It is derived from resource accounting rules, but there are several differences in treatment between resource accounts and resource budgets. See Introduction to Chapter 1 of UK Defence Statistics 2012.

Single Use Military Equipment (SUME) are MOD held assets which are only suitable for military purposes (such as warships), as opposed to dual-use equipment (such as non-combat helicopters) which can also be used for non-military purposes.

Statement of Standard Accounting Practices No.13 (SSAP 13) gives guidance on the accounting policies to be followed in respect of Research and Development expenditure. This guidance aligns to the OECD Frascati definitions for measuring Research and Experimental Development. See also Frascati Manual.

Tangible Assets are physical assets such as land, vehicles or equipment. See also Intangible Assets.

Total Managed Expenditure (TME) is a definition of aggregate public spending derived from notional accounts. It is the consolidated sum of current and capital expenditure of central and local government, and public corporations. TME is the sum of the Departmental Expenditure Limit and Annually Managed Expenditure.

Trading Funds were introduced by the government under the Trading Funds Act 1973 as a “means of financing trading operations of a government department which, hitherto, have been carried out on Vote”. They are self-accounting units that have greater freedom, than other government departments, in managing their own financial and management activities. They are free to negotiate their own terms and conditions with their staff. For this reason, their grading structures do not always match that of the rest of the Ministry. From 2017/18, the UK Hydrographic Office operates as MOD’s only Trading Fund.

UK Statistics Authority (UKSA) is an independent body and is directly accountable to Parliament. It was established on 1 April 2008. The Authority’s overall objective is to promote and safeguard the quality of Official Statistics that serve the public good. It is also required to safeguard the comprehensiveness of Official Statistics and ensure good practice in relation to Official Statistics. The UK Statistics Authority has three main functions: oversight of the Office for National Statistics (ONS) (its executive office), monitoring and reporting on all UK Official Statistics, and independent assessment of Official Statistics.

16. Further Information

16.1 Symbols

Figures marked with ^p are provided as provisional estimates.

Figures marked with ^r are revised from the previous edition.

Data visualisations marked with “//” indicate there is a break in the data series. Surrounding commentary will declare the impact on the figures and whether the break in series arises from a data issue, or a change in methodology or process.

16.2 Rounding

Where rounding has been used, totals and sub-totals have been rounded separately and so may not equal the sums of their rounded parts.

16.3 Revisions

Corrections to the published statistics will be made if errors are found, or if figures change as a result of improvements to methodology or changes to definitions. When making corrections, we will follow the Ministry of Defence Statistics Revisions and Corrections Policy. All corrected figures will be identified by the symbol ^r, and an explanation will be given stating the reason and size of the revision. Corrections which would have a significant impact on the utility of the statistics will be corrected as soon as possible, by reissuing the publication. Minor errors will also be corrected, but for convenience these corrections may be timed to coincide with the next annual release of the publication.

16.4 Contact Us

The Analysis Directorate welcomes feedback on our statistical products. If you have any comments or questions about this publication, or about our statistics in general, you can contact us as follows:

Analysis Directorate (Analysis-Expenditure)

Telephone: 030 015 86554

Email: [email protected]

If you require information which is not available within this or other available publications, you may wish to submit a Request for Information to the Ministry of Defence under the Freedom of Information Act 2000.

If you wish to correspond by mail, our postal address is:

Analysis Directorate (Analysis-Expenditure)

Ministry of Defence

Oak 0 West, #6028

MOD Abbey Wood North

Bristol

BS34 8QW

For general MOD enquiries, please call: 020 7218 9000

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1. Defence Spending excludes AME and is calculated as follows: RDEL plus CDEL minus Depreciation and Impairments, and Fixed Assets/Inventory Written On/Off. ↩

2. Conversion to constant 2023/24 prices uses the latest available forecast GDP deflator series published by HM Treasury dated 30 September 2024. ↩ ↩² ↩³ ↩⁴

3. All historical data are sourced from UK Defence Statistics Chapter 1 or, more recently, from the Departmental Resources Statistical bulletins. ↩

4. This chart includes expenditure on Conflict Prevention. ↩

5. A break in series applies between 2000/01 and 2001/02. Figures are presented as Cash Figures up until 2000/01. From 2001/02 onwards the Net Cash Requirement figure has been used. ↩

6. Other includes travel and subsistence, professional services and fees, training, receipts from various sources, costs recoveries, dividends, interest, release of provisions, Integrated Security Fund (previously called Conflict, Stability and Security Fund), War Pension Benefits, and spend on Arm’s Length Bodies. ↩

7. Expenditure by Commodity Block will not match the breakdown of expenditure as reported in the ‘Where we spent our money’ section of the MOD Annual Report and Accounts due to slight differences in the way some categories are calculated. For instance, ARAc 2023 to 2024 listed separately a grouping for Defence Nuclear Enterprise. Expenditure recorded against DNE has been further split into its constituent Commodity Block parts to preserve a consistent extended time series. ↩

8. The breaks in series highlighted between 2008/09 and 2011/12 were caused by the introduction of the International Financial Reporting Standards (IFRS) and the Clear Line of Sight (CLoS) Alignment project. ↩

9. The break in series highlighted between 2017/18 and 2018/19 has been caused by a change in the methodology used to calculate Capital Expenditure on Equipment. ↩

10. Other includes operations in Libya; Mali; Balkans; Integrated Security Fund; Deployed Military Activity Pool; Enhanced ISR; EU Counter Migrant Smugglers; Europe, EFP and NATO Reassurance; and Relief for Hurricane Irma. ↩

11. Other Income includes income from Arm’s Length Bodies, commercial exploitation levies and sundry sales. ↩

12. Prior to 2015/16 the totals included small levels of expenditure incurred by Dstl, UK Hydrographic Office and Defence Support Group. From 2015/16 onwards, and due to the small levels of expenditure incurred by the Trading Funds on this type of activity, the Trading Funds data has not been included and for consistency the totals shown in this table now match those published in the MOD Annual Report and Accounts. ↩

13. In 2019/20, a review of consultancy expenditure was made in order to bring MOD figures in line with Cabinet Office definitions. This was initially actioned on figures for 2018/19 and 2019/20 and resulted in additional expenditure being categorised as consultancy compared to that of earlier years. A decision was made to not revise figures prior to 2018/19 given the large resource requirements of the review. In terms of the scale of changes, overall consultancy spend for 2018/19 went from £65 million to £117 million. ↩