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Apr 7, 2022 · Defence R&D expenditure was £1.1 billion in 2020 compared with £1.0 billion (in current prices) in 2019; a 4.8% increase. UK contributions to EU R&D expenditure decreased to £1.3 billion in...
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The UK government's net expenditure on research and...
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In constant prices (adjusted for inflation), civil net...
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- 1. Key Points and Trends
- 2. Introduction
- 3. Defence Expenditure Outturn – Defence Spending
- 4. Defence Expenditure Outturn Over Time
- 5. Public Expenditure by Departmental Grouping
- 6. Public Expenditure for Top Five Departmental Groups
- 7. Defence Expenditure by Commodity Block
- 8. Estimated MOD Equipment Expenditure
- 9. MOD Research and Development Expenditure
Revision - Consultancy spend for 2019/20 has been revised.
Responsible Statistician: Analysis-Expenditure Head of Branch
Telephone: 030 679 84442
Further information/mailing list: Analysis-Expenditure-PQ-FOI@mod.gov.uk
Background Quality Report: Background Quality Report
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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 & Account
2.2 A National Statistics publication
The United Kingdom Statistics Authority has designated these statistics as National Statistics, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Practice for Official Statistics. The continued designation of these statistics as National Statistics was confirmed in December 2017 following a compliance check by the Office for Statistics Regulation. The statistics last underwent a full assessment against the Code of Practice in 2012 when it was part of the UK Defence Statistics Compendium publication. Designation 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 are managed impartially and objectively in the public interest Once statistics have been designated as National Statistics it is a statutory requirement that the Code of Practice shall continue to be observed.
Defence Expenditure Limits (DELs) are expenditure which 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
Defence Spending is presented as the sum of resource and capital expenditure, minus depreciation and impairments and fixed assets written on/off. This definition is consistent with HM Treasury guidance (section 1.111-113), reflecting the resources required plus the net investment, but avoids double counting the writing down of the existing capital stock and cash outlay on new assets.
Defence spending calculations are set out below and in 2019/20 totalled £39.8-billion, which is an increase of £1.8-billion when compared to 2018/19.
Figure 2: Defence Spending 2019/20
This section outlines changes in Defence expenditure over time. The chart below presents the MOD cash figures from 1980/81 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 (e.g. debtors, creditors, stock) whilst excluding all non-cash costs (e.g. 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 current prices and at constant 2019/20 prices.
There were real term increases 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. More recently, between 2000 and 2010, defence expenditure increased quite sharply due to the conflicts in Iraq and Afghanistan. From 2011 defence expenditure began to decrease again.
Since 2016/17 small annual increases have been made to Defence expenditure in both real and actual terms when using NCR.
Figure 3: UK Defence Expenditure 1981/82 to 2019/201,2,3
Source: Departmental Resource Accounts
Notes:
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 HMT Public Spending Statistical Analyses 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 inclusion of depreciation, impairments and fixed assets written on/off and the Armed Forces Pension Scheme (AFPS).
Under HMT accounting, Defence spending in 2019/20 was £54.5-billion, making it the fourth highest spending area of UK Government in 2019/20 and accounting for 6.5% of total government spending.
The top five highest spending areas of UK Government in 2019/20 are unchanged from 2018/19.
Figure 4: Public Expenditure by Departmental Grouping 2019/20
Source: HMT Public Spending Statistics July 2020
This section compares the top five spending areas of UK Government in 2019/20 by the component parts of their expenditure: RDEL, CDEL, and AME.
97% of Work and Pensions expenditure is AME which includes social security benefits, certain pension allowances, and tax credits for individuals. The only other department with a high proportion of AME spend is HMRC with 89% of its expenditure categorised in this area.
In the case of Health and Social Care and Education, 78% and 61% respectively of their expenditure is Resource DEL associated with running costs such as staffing, infrastructure and inventory consumption. Resource DEL also accounts for the majority of Defence expenditure at 67%.
Defence has the third largest Capital DEL expenditure across government, behind only Transport and Business, Energy and Industrial Strategy, despite only accounting for 19% of Defence expenditure.
Figure 5: Public Expenditure for Top 5 Departmental Groups in 2019/20
Source: HMT Public Spending Statistics July 2020
This section presents a breakdown of Resource and Capital DEL by Commodity Block. Under Clear Line of Sight (CLoS), the main MOD expenditure categories are now presented as Commodity Blocks. This provides a more meaningful description of the Department’s planned and actual spend and enables a clearer understanding of the MOD’s plans and expenditure over the Spending Review period.
Please refer to the Resource Accounting & Budgeting section of UK Defence Statistics 2012 to view background information relating to the introduction of the International Financial Reporting Standards (IFRS), the CLoS Alignment project and accounting changes from 2011/12, which led to presentational changes to the reporting of MOD accounts.
Overall increases in Defence Spending were driven through increases in Service personnel and Specialist Military Equipment spending. Respectively accounting for 1.1 and 1.7 percentage points more of total Defence Spending compared to 2018/19.
There was significant expenditure on MOD capital projects, covering procurement of equipment, which can only be used for military purposes (Specialist Military Equipment, 17.2%), and procurement of multi-purpose equipment and property (Property & Other Equipment, 6.2%). Additionally, the support and maintenance costs for all MOD equipment totalled 17.7% of MOD expenditure.
Figure 6: Defence Expenditure by Commodity Block in 2019/202
Source: Departmental Resource Accounts
This section presents estimates of MOD equipment expenditure broken down by the main categories of expenditure. Aggregate MOD equipment expenditure here has been used to indicate expenditure on acquisition, maintenance repair and update of items such as plant, machinery, vehicles and fighting equipment plus associated R&D, and expenditure on administrative computers. It is therefore a wider definition to that used by the MOD Equipment and Equipment Support Plans and covers both military and non-military equipment (including dual-use equipment) used by MOD service and civilian personnel.
From 2011/12 the introduction of Commodity Blocks into the MOD Accounts has meant that the equipment support costs category has been extended to include operating leases and equipment support Private Finance Initiatives (PFI) that had previously been reported separately.
In 2019/20, estimated MOD expenditure on equipment was £19.5-billion, an increase of £2.6-billion on the reported figure for 2018/19. This increase was driven mainly through an increase in Capital Expenditure on Equipment of £2.5-billion.
Figure 7: Estimated MOD Equipment Expenditure 2008/09 to 2019/201,2
Source: Departmental Resource Accounts
Notes:
This section details MOD annual expenditure on R&D activity. Expenditure is broken down into intramural (i.e. R&D activity undertaken within the Department) and extramural (i.e. 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 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 & Development’s (OECD) Frascati Guidelines (i.e. 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.
Since 2000/01, total net expenditure on research has remained relatively stable between £500-million and £650-million (current prices), principally the result of a set budget fully allocated to research. In contrast total net expenditure on development has showed greater variation due to large value projects moving through their development phase, but has been relatively consistent since 2014/15 with an average of £1,064-million (current prices) spent on development each year.
In 2018/19, MOD net expenditure on R&D activity, identified as meeting the Frascati definition, totalled £1.6-billion. When adjusting for inflation R&D net expenditure has decreased by £17m on the previous year and follows a long-term decrease from £2.9-billion in 2004/052.
Figure 8: MOD Research & Development Expenditure 2009/10 to 2018/191,2
Source: MOD (Analysis-Expenditure team)
Defence R&D expenditure was £1.8 billion in 2021, an increase of £768 million (72%) since the 2020 value of £1.1 billion; total civil R&D expenditure decreased by £748 million (5.8%) in...
Civil R&D expenditure rose by £1.3 billion to a total of £13.4 billion in 2022; this is a larger increase than the rise seen in defence R&D of £217 million which rose to a total of £2.1 billion...
May 3, 2024 · In the 2023/24 financial year, the UK spent £54.2 billion on defence. This is expected to rise to £57.1 billion in 2024/25, which is a 4.5% increase in real terms. As a member of NATO, the UK is committed to spending 2% of GDP on defence expenditure that meets NATO’s definition.
In 2020, the government announced the largest defence budget increase since the Cold War, and plans to increase spending by a further £16.5 billion over the next four years. 4
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MOD Annual Report and Accounts 2020–21 3 To keep the UK safe in this changing world, Defence will be more active and globally engaged; working with partners to address the challenges we face and secure the interests we share. To protect our people at home and overseas we will be more proactively and persistently
