The Ministry of Defence (MOD) has published its 2024 Finance and Economics Statistical Bulletin, revealing a total of £37.6 billion in defence expenditure for 2023/24.
This marks an increase of £4.6 billion from the previous year, reflecting a 7.3% rise when adjusted for inflation.
The report also provides detailed insights into the MOD’s procurement processes, major equipment projects, and the department’s spending trends across various sectors.
One of the standout trends in the report is the rise in non-competitive sourcing, which accounted for 44% of all MOD spending in 2023/24. This is up from 39% in the previous year, making it the predominant sourcing method for the second year in a row.
According to the MOD, “non-competitive contracting is now the predominant in-year sourcing method, making up almost half of the total expenditure.” This increase has been partially attributed to the reclassification of contract payments to the NATO Eurofighter and Tornado Management Agency, which contributed nearly £890 million to the total non-competitive spend.
Foreign Military Sales (FMS) with the U.S.
The report also highlights the MOD’s use of Foreign Military Sales (FMS) agreements with the U.S. government as a means of acquiring critical defence equipment. In 2023/24, the MOD spent £614 million through FMS agreements, although this represents a nominal decrease of £119 million from the previous year.
The top two projects under FMS were the Apache helicopter programme (£113 million) and Chinook heavy-lift aircraft (£100 million).
The report underscored the benefits of FMS, noting that it enables the UK to “gain access to technologies that would otherwise not be available, often providing cost savings through economies of scale.” These agreements allow the UK to join existing U.S. procurement orders, which can prove more cost-effective than sourcing similar equipment separately.
Major Equipment Projects and Forecast Costs
The bulletin also covers the MOD’s 14 largest equipment projects, which are forecasted to cost a total of £62.1 billion. The Dreadnought submarine programme remains the most expensive project, with forecast costs rising by £1.7 billion to £23.6 billion in 2023. The Dreadnought programme is part of the UK’s nuclear deterrent and has seen phased budget approvals, with the most recent phase (Delivery Phase 3+) continuing to add to the overall cost.
The Fleet Solid Support (FSS) ships project is another significant investment. Added to the list of major equipment projects in 2023, this programme aims to bolster the Royal Navy’s logistics capabilities.
According to the MOD, “the total current forecast cost of the 14 projects in the MOD’s Project Performance Summary Table (PPST) 2023 is £62.1 billion,” reflecting the scale of these ongoing efforts.
Despite these large investments, some projects saw cost savings. For example, the Skynet 6A satellite communications project had its forecast costs revised downwards by £44 million, contributing to a total anticipated under-spend of £80 million for the project.
Focus on Key Suppliers
The report also highlights the concentration of MOD spending among its top suppliers. In 2023/24, 39% of the MOD’s procurement expenditure was allocated to the top ten suppliers, up from 37% the previous year.
This concentration of spending is primarily due to the scale and complexity of the MOD’s largest defence contracts, particularly those related to aerospace and naval sectors.
The MOD explained that “this increase reflects the importance of long-term relationships with key suppliers in delivering critical defence capabilities,” adding that these major contractors are vital to ensuring the UK’s ongoing defence readiness.
Private Finance Initiative (PFI) Projects
The bulletin also provides details on the MOD’s ongoing Private Finance Initiative (PFI) contracts. PFI projects have been used to fund various defence infrastructure and equipment, and the report offers industry tables outlining these ongoing commitments.
While no new major PFI contracts were highlighted in 2023/24, the existing agreements continue to play a role in the MOD’s long-term infrastructure plans, according to the report.
Findings
With a £37.6 billion budget, the report highlights the MOD’s focus on maintaining its military readiness through large-scale investments in key equipment projects and procurement deals.
The rise in non-competitive sourcing, alongside significant Foreign Military Sales with the U.S., could be argued shows the department’s efforts to secure cost-effective solutions for its defence needs.
The department remains committed to ensuring that these expenditures are, as the MOD notes, “key to ensuring the UK’s defence posture remains strong and future-ready.”
OT. The UK is giving up sovereignty of the Chagos Islands, so, Diego Garcia.
Oh hell, another forward I-P US tenant installation in geopolitical jeopardy, almost by definition. 🤔☹️
Not really. We keep the Diego Garcia base for minimum of 99 years. Your President is pleased and relieved.
I guess the details will be in the small print, having a base and being able to do exactly what we want from it is different.
Is it? We can do exactly what we want at and from the Cyprus SBAs.
So is it they same ?and are Cyprus in the pocket of the Chinese, where pressure may be put on them?
Thanks, as am I. 😥
Joe Biden thought that Diego Garcia was a Mexican footballer!
Donald Trump is glad to be rid of him!!!
Whereas Donald Trump knows that Diego Garcia is a Mexican footballer who is an illegal immigrant who eats family pets for fun …. That’s an alternative fact for you
Keeping the base at Diego Garcia for another 99 years, so I read. Giving the rest of the islands to Mauritius, together with a big fat cheque (no idea why). Tugendhat is very opposed to all this. Biden is very pleased.
Heard about this when our new masters came to power. Truly daft decision but not unexpected.
To be fair mate, Cleverley started the negotiations. The Tories are not as whiter than white as they will make out now.
We haven’t had a decent leader in over thrity years in my opinion.
I’m not so sure about that we certainly haven’t had anyone who was outstanding. But I’d argue Theresa May was a thoroughly decent, honest and able PM who did the best she could. Unfortunately she just couldn’t overcome the conflict in her own party. But 10/10 for effort.🤔
Agree wholeheartedly and if she hadn’t called her snap election and lost a chunk of her majority we would be in a much better position now.
Mays husband’s hedge fund investments in BAE made them richer when she bombed Syria. Her Brexit deal was half ass hearted !
To be honest I’m not sure but I do think she was as you described. The Tory party has certainly been shooting itself in the foot regularly in recent years.
Neo-liberalism from Ronald Reagan and thatcher replaced service with greed and inequality.
You mean service such as nigh on 30 per cent inflation, 12 to 15 per cent interest rates, mass unemployment and union thuggery, the dead stacked in refrigerated vans on industrial estates, rats in the streets because of overflowing rubbish not collected, riots and looting in Birmingham and Bristol…. I see what you mean. You do make a point. Just completely the wrong one.😠
This issue has been rumbling on for years with UN siding with Mauritius claims to the islands. International court decisions, based on nonsense, went against the UK and we decided to give up sovereignty. Whether any of the islanders expelled in 1965 will be able to return isn’t clear. But since most of them lived on Diego Garcia, it seems unlikely. The US keeps its base for which we got a big discount on Polaris missiles. i can’t see any reason why the UK would waste any more time and money on 12 sq miles of largely uninhabitable atolls. With… Read more »
Exterminating the protected marine area for starters.
Interesting that parts of a convo between me and NDG have been lifted….
And…they’re back.
Polaris …. Showing your age old chap
Showing my knowledge of history 😄
The ‘Chagossians’ also never owned a square foot of the island…they were employees of Copra plantations there.
Where exactly are they planning to move back to….without civilian access to DG none of it works…and that isn’t going to happen.
Indeed. This settlement does nothing to address the claimed injustice of the forced removal of the Chagossians almost all from Diego Garcia.
Exactly, like st kilda and Pitcairn, not areas fit for sustaining large populations.
Their ancestors didn’t start as ’employees’… and no one country really owned the islands, the Mauritians just have the best pre-imperial claim owing to the heritage of the people that worked the plantations and the geography of the area. The UN have declared that the Chaggossians were migratory. They lived, not just on DG, but across the archipelago. Regardless of where they built their infrastructure. Similar to the Plains Indians that have complaints lobbied against the USA. Home was wherever the Bison were heading, for the Chagossians, it was where the seasonal fishing was and where the palms were producing.… Read more »
On pure defence grounds handing it back to government which is heavily indebted to China and still has outstanding questions against it election victory is probably not a strong decision. Given the party who govern are called the Miltant Socialist Movement, that would perhaps raise a few eyebrows.
Yes the base is secured as part of the agreement but how long before locals perhaps sponsor by China or a government party with ‘militant’ in its title are swarming around the perimeter in protest to the bases existence.
Month??
The MOU between the UK and USA has the whole island dedicated as a military establishment. This is why it has been so difficult for the journos to get there in recent years to check on the migrant status (BBC did a particularly disappointing piece of unbalanced journalism about their success in visiting last week). DG also lies a good 100 miles SE of the next nearest island in the archipelago so should be fairly safe unless the Chinese coastguard start playing games as they have in the Philippines. What is very interesting is that there is zero infrastructure outside… Read more »
This is why a started my comment that on defence grounds only. The reality is previous as a UK territory we could have have EEZ water extending out over 200 miles. Mauritius is responsible for everything but the base Chinese/Russian spy ships disguised as fishing vessels could very easily get with just miles of the base and there’s no way to challenge them legally.
I think the USAF perimeter security guards will be robust, with British blessing of course.
An what of the waters around the base? Previous as British terroritory we could have had a 200 mile EEZ now a spy ship disguised as trawler can come within miles if the Mauritius government allows. From a defence perspective, it’s a very poor decision. Of course we’ve secured some outstanding moral high ground in some peoples eyes and I’m waiting for the Chinese to forego their claims on islands outside their territory in the South China seas so they can be as moral as the UK government.
Yes, fair point. But although a Chinese spy ship could listen in to electronic transmissions from the DG base, I doubt they could hamper its operations.
Another point I expect the agreement also means the base can’t be expanded so as China builds it’s presence in the region we will not be allowed to expand the foot print of the base to add capacity. We may find that China expansive presence literally overwhelms what capacity the base has, meaning it is no longer viable as it would be overrun too quickly. With no means to expand it, this could happen within a decade or so.
Interestingly Cleverly had set this up already while he was in power, and the Chagos peoples’ group said that they are surprised as they were not informed and dismayed as they wanted it to be a Bristish Protectorate. When previously given compensation by the British Gov, Chagos people who relocated to Mauritius and Seychelles did not receive a penny as the Mauritius Gov swiped all the money, and they were then treated as second class citizens on both islands.
A plague on both Lammy and Cleverly.
…and check out the reports on Guido Fawkes,
Free gear Keir probably agreed giving it back in return for a nice stay in one of those above the water Mauritian villas
Another example of Starmer ‘resetting relations’, by eliminating distractions to our journey into the sunlit uplands. His next target is ‘assisted dying’ – sounds like a good reason to go with privatr health care.
Well, if it means he leaves defence alone I’ll support it!
It’s a contentious issue to be fair.
Well, Starmer made a promise to Ester Rantzen. Good to know who is governing the country.
Did he? Ok. We treat animals better at end of life in my opinion, after seeing how hospital treated my Dad.
So it’s not some thing I’m against personally.
My late Dad never understood why we let terminal sufferers carry on when it’s their wish not to, and he didn’t die from terminal illness.
J will be the man for insight into this though.
Indeed. My late wife suffered with MND. It’s a cruel disease but she coped with grace and dignity. It was a difficult time. The NHS care was excellent. I wouldn’t want that approach to change.
🙁
To the applause of China.
Against the will of the Chagos islanders, they wanted to go home be indpendent and be a British Protectorate. After Mauritius took their compensation this is the final insult !
OK it is time for another ignorant question, since the general topic was broached in the article: What is the current status of the FSS Programme? Presumably, someone w/in the MoD should be crafting Plan Bravo. Any thoughts re the path forward? Discuss, please.
Rumour’s are the government will hand the entire project to the Spanish yard after failing to convince them to buy Harland and Wolff (although that may still happen or another bidder, not a done deal yet). Ticks boxes on EU reset and they can blame the Tories so win win. Unless you work for H&W that is. 🙁. They will argue rerunning the competition will take too long and delay the ships but really they know a new competition will give a price that would have made the 200m to bail out H&W look like chicken feed, so they would… Read more »
Would that mean that the shipbuilding companies held by H&W Holdings ( Infrastrata) could be bought by Babcock or BAE?
Yes. Unions are pushing for someone to take the yards. But Babcock closed Appledore once already, not sure why they would want ut again. I’m hoping the government’s idea not to cancel the FSS contract and run another competition is ploy to get BAe or Babcock to bid for H&W, but that would mean the government has some idea what it’s doing😀. The yards could still get nationalised. But then we’d have mix of nationalised and private yards. Government would have guarantee work for its nationalised yard which would threaten the competitive environment that’s forced BAe and Babcock to invest… Read more »
Thx. So problem could = opportunity: build FSS in Spain – free up shipbuilding capacity in the UK for MRSS and/or more or faster frigate build.
I think we have capacity for more frigates as I think Babcock could build faster. But MRSS yes. But remember Camel Liard could build blocks. Bae building elsewhere wouldn’t make sense they’re all in on the new facilities in Glasgow. With hind sight the FSS should have gone to Korea would have been cheaper in the end. But political class used it as a football calling each other out for not building in the UK and now it looks like it won’t be but a price probably 30% more expensive. Quite frankly Tories and Labour should be ashamed of themselves… Read more »
Possible to still reap savings from a Korean bid during an open recompete? Labour government would then face an interesting dilemma. 🤔
Contract already signed with Navantia. They always intended to build in Spain, H&W was a political gimmick for the Tories.
Erm nope. If you want to make it political the sole and only reason why the ships will need to be built in Spain in entirety is because the Labour government didn’t give the loan guarantee, thats fact. It’s more complex than that but unless you’re willing to actually have a unbiased view on it, there’s little point me going into it.
So why don’t Jeremy Hunt give it to them before the election?
You’ll need to ask him. Still does change the fact Tories didn’t come to decision and Labour pulled the plug once they took power. Sorry if the facts are irritating for you due to your political preference, I can’t help you with that other than advising that it’s easier to not align politically then you don’t need to make excuses for political classes incompetence 😀
The Torys didn’t make a decisions you say 🤔
Won’t happen our government’s going through a rekindled EU love fest. So handing nice ship building contract to Spain buys some nice political capital in the EU. Btw I’m a remainer and if Labour want to have a EU luv fest just have another referendum don’t compromise our armed forces to cosy up to the EU.
? BAES has the existing capability to build FSS at Gladcow facilities? Wouldn’t either Babcock or BAES utilize H&W facilities for FSS production, and thereby additionally acquire the inside track for MRSS follow-on production? (Could reasonably envision BAES becoming the T. Rex of the Anglo-American MIC in future decades.)
These ships are too big for BAE or Babcock existing facilities. Rosyth could build but it would have to use the same drydock we need for the aircraft carriers. Both have good prospects for building more frigates so will focus on that rather than large auxiliaries which have zero export potential.
No BAe can’t build FSS they joined with Babcock to bid as one entity. Navantia and H&W were the rival team. But our 2 main ship builders should have never been able to form such a cartel. They with unions tried to play politics that they were the only UK option but the price was much higher. They hoped that media would hype up their case so they would win naking a non UK bid from Navantia and H&W politically untenable. Babcock have a sizable dry dock where BAe and Babcock would have assembled FSS from blocks built at both… Read more »
Wasn’t the original idea that choosing Navantia would enable skills transfer to rebuild industrial capacity in Belfast?
That always seemed fanciful, an easy lie for the Spanish and Tory’s to sell.
Perish the the thought 😉
Thing is Jim if you actually did some research you know up skilling was happening, a reason why H&W debt increased was the recruitment drive and upgrade of facilities employee from H&W have been on train courses in Spain. Even the unions agree that H&W was working towards been a capable ship builder. But let’s not let the facts get in the way of good opportunity to have a political pop. 😀
Yeah if it got a £200 million unsecured loan that the Tory’s then refused to provide. It was a gimmick, an expensive one for us.
It was a loan guarantee not a loan completely different, so unless H&W failed it wouldn’t cost the UK tax payer a penny. Tories didn’t refuse it. It was still in discussion, they may have not given it if they had remained in power but their not. Had Tories refused it before the election, it wouldn’t have been a decision Labour needed to take. Labour pulled the plug, that’s the fact.
Yes but H&W was in debt up to its eye balls, giving a 100% unsecured loan guarantee to a company on the verge of default is much worse than giving a loan.
Again do some proper research. H&W had to invest heavily to build up its workforce and prepare facilities to be able to build the ships. Any company that starts a shipbuilding business from zero would be in the same predicament. They were promised government support which was not forthcoming but still kept investing as they had secured a large % of 1.6b order. You do understand that ship contracts are milestone based so H&W were always going to operate in debt until they complete % of work to reach a payment milestone. I wouldn’t be surprised if the incompetence from… Read more »
Yep. Tories and Labour both knew H&W needed a loan to do this though. That’s why it’s so ridiculous. H&W were given the verbal nod on a loan guarantee would be given 4 years ago. It’s never been a secret.
The loan was pretty small, about £200m?
It was even the UK government giving the loan it was only a loan guarantee. So it may not even cost the government anything.
Thanks mate for the correction.
Which begs the question, has labour govt. decided it sees a different solution to ‘the H&W problem’? Could Navantia in Northern Ireland be part of Starmer’s ‘reset’ of EU relations?
Could be Navantia buying H&W wouldn’t be a bad thing for the UK. But it would be better for Starmer to hand the entire contract to Spain it would put the Spanish on his side.
It’s probably best just to accept RFA vessels are better built abroad and concentrate on surface combatants and submarines both of which have export potential. Leave H&W and CL doing ship repair.
Yeh. Tend to agree; though I think I did read somewhere that BAE could do fitting out of T26 in Belfast.
Babcock drives down wages and conditions they are not more efficient , reviews on indeed are not joyful !
Fascinating intersection of defence policy w/ political imperatives. Thanks for the tutorial! 😊
Rumour has it that the Channel Islands will be returned to France after refusing leading Labour politician free holidays says a Defence Secretary looking wistfully at what can be done with the Falkland Islands.
Well the FI is currently in an argument with the Government over how it develops its resources. The government are going to have to justify defending the island whilst they extract millions of barrels of oil, when they have blocked new licenses for within our own waters. Really you couldn’t make it up, that’s what happens when ideology trumps common sense.
Neither our Government nor the FI government will be extracting any oil. That will be done by the international oil companies who have been granted licences.
Having been issued with licences by the Britiah Government.
By ‘They’ I mean the Islanders, British citizens who have licenced a britsh company Rockhopper exploration plc to run the operations. Whilst British companies here are denied the same. The government now has to justify spending millions annually on defending a territory that goes against the government’s own net zero policy. Government is running things from an ideological view rather than common sense and logic. Which is why we’re seeing illogical decisions.
our new masters would probably prefer it if the F.I. quietly disappeared then they wouldn’t have to do anything.
The issue with this data set is that it tells us very little about what the MOD is spending £28bn on ‘Defence Digital’ After nuclear it’s the biggest line item in the equipment plan (ships are £22bn, Combat Air £19.4bn). That £28bn is a vast amount on digital spending and we have no view of the projects it’s being spent on and therefore the value it is creating. For all other areas of spend it’s clear what the cash is for.
Well, Defence Digital is part of DE&S
( the old DCSA and before that the 3 service communication commands combined )
But with only a couple of thousand staff and handful of sites that’s too big a spend.
I think in this case it’s a catch all term for C4 modernisation and digitisation so presumably dozens if not hundreds of defence programs in there.
Agree, without a greater breakdown not that useful.
It feels a very large sum for digital which is largely (Admittedly expensive) people, vs. the heavy industry of the other spend areas (Combat Air for example will have a massive digital element, but also has to build jets engines and a plane!). It also feels ‘ring fenced’ in a way that other programmes like NMH, FSS, GCAP aren’t. The spend may be justified or it could be a matter for debate and it would be useful to see it so we could have the same debates we have regarding other areas of MOD expenditure (e.g. what can we live… Read more »
Yes, it does look like govt spending is going to be targeted according to what they deem strategic growth objectives; creation of hi- tech jobs. Starmer, Reeves and Milliband are in Liverpool today announcing £22billion spend on carbon capture; partnerships with the likes of BP, creation of energy sector jobs traditional areas of heavy chemical industries – Runcorn and Teeside – significant commitment to blue hydrogen. IT and AI will be prioritised in all sectors, including defence.
Unfortunately AI is at the peak of the hype curve at the moment and is absolutely chock full of chancers and snake oil salesman and you have to wonder if HMG has the expertise to work out what’s real and what is not……
Cutting cost in several parts of MoD sattellite program spending and uniting security services within Secret Intelligence Organization by the wise direction it’s Chief FELICIA makes me feel better about the readiness of the British Empire army and fleet and security services.Congratulations to all involved in assisting Israeli IDF SHIN BET undercover Mossad operations in the Middle East and Middle Asia and Central Russia. Want to see my darling wife Kate Grace Druzhinin GOLIK ZAGURSKY THOMAS GARCIA in Moscow urgently for talks with our US ambassador Lynne Tracey and possibly with Putin himself if God blessed such initiative.God save our… Read more »
Not sure of the point of this report. Much of the information is in the 10 year equipment plan. All I could glean from it was the real whole project cost of T31, now nearly £500m per ship, and the continued increase in the cost of Dreadnought. Both shown in the list of the 14biggest projects that have passed main gate approval.
We certainly aren’t spending much on combat air.
I recall the guesstimate for T31 was £250m a copy.
I believe that was the starting price.