Chapter 1 - Finance

Industry & Employment

This section provides data on the impact of MOD's spending on equipment and services in the UK. Table 1.9 details the estimated amount of money that the MOD spent with UK industry broken down by industrial group. The industrial groupings are based on the UK Standard Industrial Classification (SIC) 1992 and 2003 maintained by the Office for National Statistics (ONS). Table 1.10 provides estimates of UK employment dependent on MOD expenditure and defence exports. Tables 1.11, 1.11a & 1.11b provide estimates of the number of direct full time jobs in the Government Office Regions of England, Scotland, Wales, Northern Ireland and the UK as a whole, supported in industry and commerce by MOD direct expenditure. Table 1.12 details MOD payments on PFI projects during 2008/09 whilst Table 1.12a lists those PFI projects which have planned unitary charge payments of over £25 million in 2009/10.

IMPORTANT NOTE: Cessation of National & Regional Employment Estimates (formerly UKDS 2008 Tables 1.10, 1.11, 1.11a & 1.11b)

Ministers have agreed that after this year (2009) the Ministry of Defence (MOD) will no longer compile national and regional employment estimates because the data do not directly support MOD policy making and operations. The UK defence budget has never been allocated or planned on a regional basis and decisions on where contracts with industry are placed are not taken in order to benefit one local economy or industry sector over another.

This decision was announced on the MOD website on 14 November 2008 and was the subject of a full internal and external review which was explained to internal and external customers at the DASA Consultation meeting on 2nd June 2009.

The final set of estimates of national and regional employment dependent on MOD expenditure and defence exports (for 2007-08) are published in UK Defence Statistics this year. However, assessments of the employment effects of MOD expenditure will continue to be undertaken with regard to individual defence projects and, as part of the regional impact assessments, conducted to inform decisions on MOD base closures. In addition, estimates of the distribution of MOD expenditure in UK industry and commerce (Table 1.9) will continue to be published annually in UKDS.

Main Findings

Expenditure by Industry Group (Table 1.9)

  • In 2007/08, the MOD spent some £16.5 billion with UK Industry. The ‘manufacturing’ industries (section D) attracted nearly 50% of MOD expenditure with UK Industry. The single industry group attracting most MOD expenditure was Aircraft and Spacecraft (around 13% of the total).

Defence Related Employment (Tables 1.10 & 1.11)

  • Estimated employment in UK industry and commerce dependent on MOD expenditure and defence exports has fallen slightly from last year to around 300,000.

  • Regional employment directly dependent on MOD expenditure is concentrated in the South East (37,000 jobs) and the South West (31,000 jobs). Scotland, Wales and Northern Ireland account for 10,000 jobs (8%).

MOD PFI Projects (Table 1.12)

  • The PFI projects against which the highest payments were made in 2008/09 were Allenby/Connaught, Attack Helicopter Training – Apache Simulator Training, Colchester, Defence Fixed Telecommunications Service (DFTS), Future Provision of Marine Services (FPMS), Main Building Refurbishment, Skynet 5 and Tri–Service White Fleet.