Budget 2010: MOD commits to £700m of efficiency savings

The MOD has a strong record in recent years of generating efficiencies, ensuring more resources can be devoted to the front line.  At the PBR, the Government announced that £11 billion further efficiency savings are being made across Government to ensure key services are protected, and the MOD would identify £700 million of efficiency savings.  The savings form part of the Operational Efficiency Programme (OEP) and Putting the Frontline First: Smarter Government.

The MOD is fully committed to the recommendations of the OEP and to the rest of the package of Smarter Government efficiencies.  In December, the Secretary of State for Defence announced plans to reprioritise the budget to free up an additional £900 million on capabilities important to Afghanistan and also to future capability – including 22 new Chinook helicopters.

Current plans to deliver the £700m of efficiency savings include:
• £550 million to be saved across the Department, including up to £120m from greater use of collaborative procurement on construction, food and IT as well as better management of the Defence estate, savings through greater efficiency in equipment support, and further prioritisation in the Strategic Defence Review;
•  £130 million of savings within the MOD through replacement of legacy IT systems;
• £30 million to be saved by further reducing the use of external consultants and expenditure on marketing and communications, including significantly reducing the number of MOD publications. The MOD has already cut consultancy spending by 75 percent since 2002.
• The results of an independent review of Defence civil servant numbers, led by Gerry Grimstone, which is looking at the distribution of tasks between military and civilian personnel and the scope for further efficiencies.  This is on top of the 40,000 reductions since 1997.  Savings may be significant.  Findings from the report are expected in May 2010.

The scale of the savings to be made within the MOD should be seen within the context of an upcoming Strategic Defence Review.

The MOD is committed to delivering significant savings necessary and is making real progress through ambitious efficiency savings and value for money plans.