Chapter 1 - Finance
                                           
Table 1.1 Defence Expenditure Outturn1
This table shows the changes in Defence expenditure over time, including the period of transition to Stage 1 and 2 of Resource Accounting & Budgeting (RAB). Under Stage 1 RAB, introduced in 2001/02, non-cash costs such as depreciation and cost of capital charge were held under AME, and did not form part of the Resource Departmental Expenditure Limit (DEL). This changed under Stage 2 RAB when non-cash costs moved to the Resource DEL. In order to give a single measure of spending on public services under full resource budgeting, the Defence Spending line is presented as the sum of the resource and capital budgets, net of depreciation and impairments. This reflects the resources required plus the net investment in them, but avoids double counting the writing down of the existing capital stock and the cash outlay on new assets. Control is exercised separately on gross Capital and Resource DEL which replaced Control Totals in 1999/00.

The Net Cash Requirement (NCR) is the actual money that MOD requests from the Government in order to fund its activities. The NCR takes account of movements in working capital levels (debtors, creditors, stock) whilst excluding all non-cash costs.

The data are derived directly from the MOD Annual Report & Accounts.

This table includes expenditure on Conflict Prevention (Request for Resources 2 (RfR2)).
Cash
RAB Stage 1
RAB Stage 2
Inclusive of non-recoverable VAT at Current Prices (£ million)
            Outturn   Outturn     Outturn   Outturn   Outturn   Outturn   Outturn   Outturn
  1997/98 1998/99 1999/00 2000/01   2001/02   2002/03     2003/04   2004/05   2005/06   2006/07   2007/08   2008/09
Defence Spending2 * * * * || *   *   || 30 861   32 515   33 164   34 045   37 387 r 38 579
                                           
Departmental Expenditure Limits * * 22 572 23 552 || 24 456   26 148   || 37 174   38 323   39 751   40 654   43 634 r 45 473
                                           
Resource DEL3 * * * .. || 18 905   19 944   || 31 266   31 798   32 911   33 457   35 689 r 36 715
  of which:                                          
     Depreciation/Impairments * * * * || *   *   || 6 313   5 808   6 587   6 609   6 247   6 894
     Cost of Capital Charge * * * * || *   *   || 2 770   3 026   3 106   3 242   3 371   3 626
                                           
Capital DEL4 * * * .. || 5 551   6 204   || 5 908   6 525   6 840   7 197   7 945   8 758
                                           
Annually Managed Expenditure5 * * * .. || 14 962   19 293   || 1 011   908   890   582   510   214
                                           
Cash 20 945 22 482 22 572 23 552 || *   *   || *   *   *   *   *   *
Net Cash Requirement6 * * * .. || 24 874   26 991   || 29 338   29 524   30 603   31 454   33 486 r 36 431
 
Defence Spending2 at Constant 2008/09 Prices7 * * * * || *   *   || 34 938   35 815   35 861   35 756   38 205   38 579
Source: MOD Directorate of Defence Resources
1. The table includes both programme and operational expenditure on conflict prevention.
2. Also referred to as Total DEL, Defence Spending in 2003/04 to 2008/09 is the sum of the Resource DEL, less depreciation and impairments, and Capital DEL.     This is consistent with HM Treasury guidance.
3. Resource DEL includes operating cost items such as pay, equipment support costs, fuel and administrative expenditure. From 2003/04 it also includes non-    cash items such as depreciation and the cost of capital charge on the Department's net assets plus stock and fixed asset write offs.
4. Capital DEL includes expenditure on the purchase of fixed assets (ships, tanks, planes, buildings etc).
5. From 2003/04 Annually Managed Expenditure includes only demand led items such as war pensions.
6. Restated for the effect of a machinery of Government change (See Notes 35, page 263 of the MOD Annual Report & Accounts)
7. Conversion to constant 2008/09 prices uses the latest available forecast GDP deflator series produced by HM Treasury dated 30 June 2009.