For the sixth successive year, the Ministry of Defence Accounts were qualified. The Qualifications covered non-compliance with international reporting standards on the treatment of some contracts; lack of audit evidence on the valuation of inventory (worth some £3 billion) and of capital spares (worth some £7 billion); and on the regularity of the Accounts because of the failure to obtain approval for the remuneration package of the Chief of Defence Materiel. The MoD was also five months late in submitting its audited accounts to Parliament. The National Audit Office had found errors in its sample examination of accruals and so the MoD decided to resolve these problems before submitting the accounts. The MoD said they did not have the necessary expertise to manage the financial complexity that featured in the implementation of the Strategic Defence and Security Review so sought assistance. The MoD should ensure its people have the right skills to deal with all financial problems so that they do not need to bring in expensive external accountants. There is also concern about the MoD's reluctance to estimate the full costs of its operations in Afghanistan, Iraq and Libya. The NAO did not consider that the MoD has adequate information, especially with respect to recording the cost of its activities and outputs, to run its business effectively. The MoD should set out its commitment to improving its management information. It is also vital that defence spending remains at more than 2 per cent of GDP in line with the UK's NATO commitment.

The MoD is requesting net resources of some £39.8 billion and capital expenditure of some £10 billion for 2012-13. Within the total requested the MoD has asked from some £3.6 billion to cover the costs of operations, some 18 percent less than 1011-12. Resource expenditure is also planned to fall in line with the Spending Review 2010. The Committee recommends, along with other requests and general recommendations, that the Main Estimate for the MoD is approved by Parliament and have indentified no issues which require a debate before it does so

The Committee of Public Accounts scrutinises the reasons behind individual departments exceeding their allocated resources, and reports to the House of Commons on whether it has any objection to the amounts needed to rectify the reported excesses. In 2012-13 two bodies breached their expenditure limits: the Department for Communities and Local Government and the Food Standards Agency. The Ministry of Defence also required a token increase because of a Defence Votes A excess. On the basis of the examination of the reasons why these bodies exceeded their voted, the Committee has no objection to Parliament providing the necessary amounts by means of an Excess Vote. Nevertheless, it expects the Department for Communities and Local Government to set out what actions it has taken to improve their financial management and avoid exceeding their allocated resources in the future. And, as recommended last year, HM Treasury, as the UK's Ministry of Finance, should ensure departments are fully aware of the need to operate within their voted provisions. HM Treasury should continue to regularly monitor the progress departments are making against their Estimates during the year and, where possible, take appropriate action to prevent departments exceeding their provision.

On cover and title page: House, committees of the whole House, general committees and select committees. On title page: Returns to orders of the House of Commons dated 14 May 2013 (the Chairman of Ways and Means)

This book explores the process by which defence policy is made in contemporary Britain and the institutions, actors and conflicting interests which interact in its inception and continuous reformulation. Rather than dealing with the substance of defence policy, this study focuses upon the institutional actors involved in this process. This is a subject which has commanded far more interest from public, Parliament, government and the armed forces since the protracted, bloody and ultimately unsuccessful British military involvement in Iraq and Afghanistan. The work begins with a discussion of two contextual factors shaping policy. The first relates to the impact of Britain’s ‘special relationship’ with the United States over defence and intelligence matters, while the second considers the impact of Britain’s relatively disappointing economic performance upon the funding of British defence since 1945. It then goes on to explore the role and impact of all the key policy actors, from the Prime Minister, Cabinet and core executive, to the Ministry of Defence and its relations with the broader ‘Whitehall village’, and the Foreign Office and Treasury in particular. The work concludes by examining the increasing influence of external policy actors and forces, such as Parliament, the courts, political parties, pressure groups and public opinion. This book will be of much interest to students of British defence policy, security studies, and contemporary military history.

The Department's work to address the affordability gap around the equipment budget and costs appears to have had a positive effect. However, there remain risks to affordability, most significantly around the half of the budget relating to equipment support costs which were not subjected these to the same level of detailed scrutiny as the procurement costs. The Department also does not understand the implications of its £1.2 billion underspend on the Equipment Plan in 2012-13. With the exception of the Queen Elizabeth Class aircraft carriers, there have been no significant cost increases and only minimal in-year delays. In the last year, there was a net increase in costs of £708 million in respect of the 11 projects in the review. The main contribution to this was a £754 million increase in the cost of carriers. Three of the projects the report examined experienced delays during the year, together amounting to 17 months. A third of projects this year reported delays compared to over half of the projects in last year's report. However, the NAO is unable to report on timings for two of the 11 projects - Lightning II and Specialist Vehicles -because the Department has not yet given final approval. This report also includes an examination of the MOD's Complex Weapons Programme, which aims to achieve net financial benefits of £1.2 billion over ten years. Noting that these benefits have already been 'banked', if there are delays or cancellations some of these benefits may be lost

The Committee's report focuses on the planned withdrawal of combat troops at the end of 2014 and the transfer of responsibility for security to the Afghan National Security Forces. It also examines the progress towards a secure and stable Afghanistan within the wider region, including Pakistan, and the plans by the UK, NATO and other allies for a smooth transition of responsibility for security to the Afghan Government and the ANSF. Securing the future of Afghanistan requires the concerted efforts of all the Afghan people; regional neighbours, in particular Pakistan; the USA; NATO and other coalition partners. In the process of establishing a peaceful and functioning Afghanistan, the Committee calls for evidence of: (i) At least the start of an Afghan-led peace settlement with the insurgency; (ii) Open and free elections; (iii) An appropriately trained and equipped ANSF with continuing financial support; (iii) A strong judicial system which protects the human rights of all Afghans; (iv) Economic development aid to continue in support of the well being and safety of all sections of society; (v) Effective measures to tackle corruption, drug production and the drug trade. The MoD needs to work with international partners and the ANSF to identify ways of meeting significant gaps in necessary capabilities such as helicopters and close air support and medical care from 2015. The Defence Committee concludes that at the end of UK operations the best the UK will be able to do is to withdraw in good order and engage with external partners to improve Afghanistan's future prospects.

The MoD sought, in the Estimate, a net increase in Capital and Resource Expenditure (Departmental Expenditure Limits-DELs) of £2,804 million which generated an additional cash requirement of £644 million. It also sought a reduction in Annually Managed Expenditure of some £1,063 million. The Committee welcomes the MoD's efforts to improve the management of assets and stock. They recognise that such exercises and the implementation of the Strategic Defence Security Review are likely to result in significant write-offs, but we would expect the MoD to have a greater understanding of the financial implications of these write-offs and, therefore, greater certainty of the non-cash costs by the time the Main Estimates and the Supplementary Estimates for 2012-13 are prepared. They recommend that, if the way expenditure is classified is changed in future, the MoD should provide a comparison of expenditure on a like-for-like basis between years within its memorandum on the Supplementary Estimates and should also provide full details of the items and amounts affected and the reasons for the changes. In general, while the Committee has no argument with the content of the MoD's Supplementary Estimate, it is unreasonable to expect Committees and Parliament to scrutinise the Supplementary Estimates in less than three weeks. More time is needed to consider the Supplementary Estimate, the associated memorandum and the MoD's responses to questions on the Estimate.

UK military personnel as individuals are properly subject to UK and international law wherever they serve and there are processes to ensure scrutiny of their individual behaviour and legal compliance but, in the last ten years, legal judgments in the UK and elsewhere against the MoD have raised a number of legal, ethical and practical questions for the Armed Forces and their conduct of operations. The growing number of such challenges is leading to a feeling of disquiet amongst military personnel and informed commentators about the extent and scale of judicial involvement in military matters.There are two aspects of the use of human rights law in military operations that most concern the Committee: The extraterritorial application of the European Convention on Human Rights has allowed claims in the UK courts from foreign nationals. However, the requirement for full and detailed investigations of every death resulting from an armed conflict is putting a significant burden on the MoD and the Armed Forces. Secondly, there has been a failure of the accepted principle of combat immunity, most recently evidenced in the Supreme Court majority judgment in June 2013 allowing families and military personnel to bring negligence cases against the MoD for injury or death. This seems to us to risk the judicialisation of war and to be incompatible with the accepted contract entered into by Service personnel and the nature of soldiering.

The MoD's financial settlement in the next Comprehensive Spending Review must be made in the light of the need to retain a credible deterrent capacity in the country's Armed Forces. The Committee welcomes the emphasis that the Government places on the importance of cyber defence and the commitment of resources to a new cyber strike capability. But the difficulty in identifying actors in a cyber attack makes the ability to deter that much harder. Similar questions arise in deterrence against the asymmetrical threat of terrorism as it is difficult to identify interests and groups against which a response can be legitimately targeted. The Committee is calling on the MoD to set out how it can make clear that both cyber and terrorist attack will elicit an appropriate and determined response. Looking at the nuclear deterrent, the Committee points out that the UK's ability to effect a nuclear response is not credible in dealing with all threats, and so strong conventional deterrence is also required. And given the importance of communication to the concept of deterrence, investment in diplomatic and intelligence assets must be integral to the UK's security apparatus. The Committee concludes that it would be naive to assume that a decision not to invest in the nuclear deterrent would release substantial funds for investment in other forms of security. The Committee believes that the decision on the retention of the nuclear deterrent, should be made on its own merits.