Official Statistics

Finance and economics annual statistical bulletin: MOD regional expenditure with UK industry and commerce and supported employment 2018/19

Published 30 January 2020

The Finance & Economics Statistical Bulletin series provides figures on the composition and scope of the Department’s expenditure, information on the impact of defence spending on the wider economy, and compares Ministry of Defence (MOD) spending to that of other departments and countries.

This publication presents MOD expenditure with UK industry and commerce in 2018/19 by UK region and industry group. The number of jobs^{[footnote 1]} supported by this expenditure in the UK is also presented by region and industry group. The statistics include direct MOD expenditure with UK industry and commerce only, and exclude all other MOD spend types.

1. Key Points

£19.2bn	Total MOD expenditure with UK industry and commerce.
	This has remained at a consistent level for the past three years after adjusting for inflation.
£290	MOD expenditure with UK industry for each person living in the UK.
	This figure has remained the same for the third year in a row even with an increasing UK population.
119,000	Number of UK jobs supported from direct MOD expenditure with UK industry.
	This figure is 2.6% higher than in 2017/18 when 116,000r jobs were supported.
1 in 220	Proportion of all jobs in the UK which are supported through direct MOD expenditure with UK industry.
	This remains unchanged from 2017/18.
22%	The rise in jobs supported from MOD expenditure in Wales since 2017/18.
	Increased expenditure on military flight training and AJAX armoured fighting vehicles in Wales helped to boost total jobs supported in the region in 2018/19.

Responsible Statistician: Defence Expenditure Analysis Head of Branch

Telephone: 030 679 84442

Further information/mailing list: DefStrat-Econ-ESES-PQFOI@mod.gov.uk

Background Quality Report: Background Quality Report

Would you like to be added to our contact list, so that we can inform you about updates to these statistics and consult you if we are thinking of making changes? You can subscribe to updates by emailing DefStrat-Stat-Enquiries-Mailbox@mod.gov.uk

Find out about call charges

2. Introduction

This publication provides statistics on direct MOD expenditure with UK industry and commerce. Industry is defined as an economic activity concerned with the procurement and processing of raw materials into finished products. Commerce is defined as a business activity where goods and services are exchanged for value. Hereafter, direct MOD expenditure with UK industry and commerce will be referred to as MOD expenditure. Tables and figures present statistics for the most recent financial year and comparisons will be made in the narrative to previous financial years where appropriate. Detailed statistics can be found in the supporting data tables.

MOD expenditure will be presented in the following ways:

• by NUTS 1 regions (for clarity these will be referred to as regions in text).
• per person by UK region, to provide some context to the expenditure figures. By presenting expenditure per person the population differences between regions are accounted for.
• by industry group.

This publication also presents estimates on the number of full-time equivalent (FTE) jobs supported by MOD expenditure. These will be presented:

• by NUTS 1 regions.
• as the number of FTE jobs supported for every 100,000 people in FTE employment in each region. This measure is similar to the per person expenditure figure as it considers the employment levels of each region and will make these figures more directly comparable.
• by industry group.

These statistics do not cover indirect expenditure or supported jobs further down the supply chain.

Comparisons over time: overall

These statistics are based on MOD contract information and display natural variability. Because of this, we would expect total expenditure to fluctuate year-on-year due to large value contracts starting and ending across different financial years or large one-off payments occurring. MOD Direct Expenditure figures published up until 2009 in UK Defence Statistics showed a similar amount of variation between years to the figures presented in the rest of this bulletin.

It should be noted also that prior to 2017/18, the total expenditure figure included direct MOD payments to Defence Science and Technology Laboratory (Dstl). Dstl ceased to be a Trading Fund in April 2017 and are therefore no longer paid through contracts processed by Defence Business Services (DBS) Finance Systems and are instead funded through the central MOD budget through which it continues to run its own financial activities. This means that substantial payments are excluded from expenditure totals from 2017/18 onwards in comparison to earlier years, when for example, £590 million had been paid to Dstl in 2015/16 and £560 million in 2016/17.

Comparisons over time: by region and industry group

Throughout the bulletin we will compare data across different financial years. With a short time series these conclusions could be due to the inherent variability of contract data and not indicative of a long-term trend. Therefore, these comparisons should be used with caution.

Comparisons over time: accounting for inflation

In simple terms, inflation measures how the cost of goods/services change over time. Inflation of 2% would mean that something that you could purchase for £1 last year would cost you £1.02 this year. Because of this, inflation can mask effects when comparing expenditure across different years. To account for inflation, expenditure is calculated in constant prices. This adjusts expenditure in one year so that it is in another year’s prices. Constant 2018/19 prices are used when comparing across different financial years.

Comparisons over time: to previously published statistics

Please note that these statistics are broadly similar to the Direct Expenditure with UK industry statistics published until 2009 in UK Defence Statistics, but should not be directly compared due to methodological differences.

Several assumptions have been made during analysis of this data. For further information on these, and for more detailed explanations of the applications and limitations of this data, please refer to the Background Quality Report.

To access all of the data in both current and constant prices please see the supplementary data tables.

3. MOD Expenditure with UK Industry

MOD expenditure has remained at a consistent level for the past three years.

Total MOD expenditure in 2018/19 was £19.2 billion. This is an increase of 2.0% against last year’s reported expenditure, which had also seen a similar year-on-year rise from 2016/17 to 2017/18. Although in nominal terms this increase has taken total MOD expenditure to its highest level over the period from 2013/14 to 2018/19, after adjusting for inflation it has remained relatively unchanged since 2016/17.

Figure 1: Total MOD Expenditure by Financial Year

Wales sees largest percentage increase in MOD expenditure of all UK regions.

Wales saw an 11% rise in expenditure from 2017/18 to 2018/19, which was the highest percentage increase of all regions over this period. The increase was partly driven by an additional £70 million in payments towards the UK Military Flying Training Service with Ascent Flight Training (Management) Ltd out of RAF Valley.

MOD expenditure in Scotland increased by 4.6% between 2017/18 and 2018/19. The region is the only one in the UK to have seen year-on-year rises in total expenditure from 2013/14 to 2018/19, averaging a yearly increase of around 4%. This is despite a fall of £79 million between 2017/18 and 2018/19 in the Shipbuilding sector, which is Scotland’s highest receiving industry in terms of MOD expenditure. This was largely in part to a decrease in payments to BAE Systems Surface Ships Ltd relating to the manufacture of the Queen Elizabeth Aircraft Carriers after HMS Queen Elizabeth had been commissioned in December 2017. Scotland’s fall in Shipbuilding expenditure was offset by increased regional spending on Aircraft, Construction and Weapons among other areas.

The North West observed the largest reduction in total expenditure in absolute terms from 2017/18 to 2018/19 where it fell by £156 million. This was predominantly due to a reduction in payments to NETMA and BAE Systems (Operations) Ltd for the availability, maintenance and support of the RAF fleet of Tornado aircraft which were approaching retirement from service in early 2019. The effect of this drop in Aircraft spending on the regional total was however lessoned by a 5% rise in expenditure on Shipbuilding in the North West. Shipbuilding in the North West now accounts for 60% of all the region’s MOD expenditure, up from 53% in 2017/18.

Figure 2: MOD Expenditure by Region 2018/19

Due to a high proportion of the MOD’s biggest suppliers being based in the South East and South West of England it is not surprising that these are the dominant recipient regions of MOD expenditure. In 2018/19 they accounted for 51% of total expenditure and whilst this proportion of total MOD expenditure has remained consistent over the past six years, the split between these two particular regions has varied each year due to fluctuations of contract payments over time. The South East did close the gap on the South West in 2018/19 owing to it seeing the greatest nominal increase in MOD expenditure out of all regions from that in 2017/18, while at the same time expenditure in the South West fell over this period.

The largest single in-year contract payment in 2018/19 was in the South West with MBDA at £453 million for a through life enabling contract for complex weapons. This single sum itself was more than what was spent in entirety in each of Yorkshire and The Humber, Northern Ireland and the North East. The disparity between regions is such that for every £1 of MOD expenditure in 2018/19, 27 pence effectively went to the South West whilst less than 1 pence went to each of Northern Ireland and the North East.

4. MOD Expenditure per Person with UK Industry

MOD expenditure per person remains at the same level for third year in a row.

Expenditure per Person Calculated by dividing the total MOD expenditure by the population of an area. This shows how much money is spent for each person living in that area.

MOD average expenditure per person for the UK was £290 in 2018/19. This has remained unchanged since 2016/17 but is approximately 10% lower than the high of £320 seen in both 2013/14 and 2014/15. The expenditure per person decrease is larger than that of total expenditure, where MOD spending only decreased by 6% over the same period, with the effect being amplified by a growing UK population.

With regional population figures taken into account, the South West is still placed as the top ranked region for receiving MOD spending. Due to denser population numbers in the South East, expenditure per person in the South West is almost double that of the South East in second place. It is also almost 25 times that spent per person in the North East.

Figure 3: MOD Expenditure per Person with UK Industry by Region 2018/19

London falls to 8th place in Figure 4 from 5th in Figure 2 (which displays total expenditure) due to its high population density. In contrast, Wales rises to 3rd from 7th when expenditure is adjusted by population, with only the North East and Northern Ireland having a smaller population than Wales.

Wales had the largest increase in expenditure per person between 2017/18 and 2018/19, rising from £310 per person to £350 per person. This was not enough to alter its ranking position though it did close the gap slightly on the South East. An additional £160 per person would have been needed to have been spent in Wales in order to take over in 2nd place.

Figure 4: MOD Expenditure per Person, Ranked from Highest (1) to Lowest (12) by Region

The only change in expenditure per person rankings in 2018/19 was the East Midlands jumping up one place. While MOD spending in the region has remained consistent at £190 per person since 2016/17, expenditure in the East of England fell to £180 per person in 2018/19. This was mainly down to a reduction in payments on high value contracts for ongoing construction work at RAF Marham in Norfolk.

Whilst Yorkshire and the Humber, Northern Ireland and the North East have historically fluctuated between the 10th, 11th and 12th ranking positions, due to smaller levels of expenditure than the highest-ranking regions, this variation was most likely caused by the inherent variability of contract payments over time. Yorkshire and the Humber had per person spend of £60 in 2018/19 and the next highest ranked region, the West Midlands, had per person spend of £100 showing there is a considerable gap between the bottom three and the remaining regions.

5. MOD Expenditure with UK Industry by Industry Group

Expenditure on Shipbuilding now more than double that spent on Aircraft.

Standard Industrial Classification (SIC) codes These codes are collected on the MOD contract system and classify which specific industry a contract relates to. These SIC codes are grouped together into industry groups.

Please note that only one SIC code is assigned to each contract, even though many contracts will involve multiple different industries. On some of the higher value contracts we have sought more detailed industry information, however for many contracts only a single code is available.

In 2014/15, Shipbuilding and Repairing overtook expenditure in the Aircraft and Spacecraft industry group. Expenditure on Aircraft has fallen by an average of 9.5% each year from 2013/14 to 2018/19. The gap between these two industry groups is at its widest point over this period at £1.7 billion, with MOD expenditure on Shipbuilding now more than double that of on Aircraft.

A £211 million decrease in expenditure on Aircraft in the North West of England since 2017/18 was the prime contributing factor for MOD spending in the sector falling by almost 8% as a whole. As discussed earlier, this was a result of reduced payments towards the RAF’s retiring Tornado jets. Meanwhile, thanks to increased contract payments in the North West for the Dreadnought class submarine, MOD expenditure on Shipbuilding continued its increase from 2016/17, rising by more than 2% from 2017/18 to 2018/19.

Technical, Financial Services and Other Business Services has occupied the top spot for largest recipient of MOD expenditure each year from 2013/14 to 2018/19. MOD spending in the sector marginally increased in 2018/19 after having previously seen a decline in spending in each successive year since 2014/15. A rise of 8% of expenditure in the South East sees the region account for almost a third of spend in this industry group.

Figure 5: MOD Expenditure by Industry Group 2018/19

Note:

‘Technical, Financial Services & Other Business Services’ includes Financial Services, Business Services, Education, Health and other Service Activities.

‘Other Manufacturing’ excludes Weapons and Ammunition, Electronics, Precision Instruments, Shipbuilding and Repairing, and Aircraft and Spacecraft.

6. Jobs Supported by MOD Expenditure with UK Industry

Jobs supported by MOD expenditure rises by 3,000 in 2018/19.

Full-Time Equivalent (FTE) employment FTE employment is a figure that allows part-time workers’ hours to be put into the same units as full-time workers. This publication often uses the term jobs to mean full-time equivalent employment.

UK turnover per Full-Time Equivalent employment This shows how much money an industry takes for each person in FTE employment. It therefore allows us to estimate the number of jobs supported by MOD expenditure by dividing expenditure with UK industry by turnover per FTE employment for that industry.

It is estimated that MOD expenditure supported 119,000 full-time equivalent jobs in the UK in 2018/19 which is equivalent to 1 in every 220 jobs. This figure is derived from direct MOD expenditure and therefore does not reflect employment supported by indirect expenditure further down the supply chain. This figure is 2.6% more than in 2017/18 when 116,000^r jobs were supported.

Overall MOD expenditure with UK industry was only slightly higher in 2018/19 than it was in 2017/18, which may make the larger jobs increase a little surprising. It stems from a decrease in ONS total UK turnover figures in three key sectors where MOD expenditure is high; Shipbuilding and Repairing, Aircraft and Spacecraft, and Weapons and Ammunition. The ONS reported increased UK wide employment levels in both the Shipbuilding and Weapons industry groups for 2018/19. Total MOD expenditure in these two sectors also saw an increase from 2017/18. It follows therefore that if the total UK reported turnover went down then the increased MOD expenditure would represent a higher proportion of the entire industry spend and also of the number of jobs supported.

In the case of Aircraft there was a drop of almost 8% in total MOD expenditure from 2017/18 to 2018/19. A decrease in spending within this sector as a whole was also witnessed across the UK although to a greater extent. At the same time the ONS reported that the number of jobs supported had increased. Again, MOD expenditure represented a larger proportion of total UK Aircraft and Spacecraft expenditure in 2018/19 and so also the jobs supported alongside.

Figure 6: Total Jobs Supported by MOD Expenditure by Financial Year

The figure of 119,000 jobs only includes jobs supported through MOD expenditure and does not include civilian personnel employed by the MOD or those serving in the armed forces. Figures published by Defence Statistics show that in April 2018 the MOD employed 57,000 civilian personnel and 147,000 UK regular forces. Therefore, through both expenditure with UK industry and direct employment, the MOD supported over 322,000 jobs in 2018/19, almost 306,000 of which were based in the UK.

In much the same way as we expect fluctuations in the year-on-year total contract expenditure, the total jobs figures also experience inherent variability and are particularly sensitive to changes in the turnover and employment figures provided by the ONS. For this reason, year-on-year comparisons should be used with caution.

Jobs supported by MOD expenditure in Wales increase by 22%.

The total number of jobs supported by MOD expenditure has increased by 3,000. This increase was mostly spread across three regions; Wales, London and the North West. The number of jobs supported in the North West increased by 960 despite an overall drop in expenditure, mostly owing to the region’s high expenditure on Shipbuilding.

Coupled with seeing the largest percentage increase in its regional expenditure, Wales also saw the largest rise in jobs supported between 2017/18 and 2018/19 where it rose by 22%. Jobs supported were boosted by a 79% increase in training related jobs thanks to the increased payments to the UK Military Flying Training Service out of RAF Valley previously mentioned. An additional 400 Welsh jobs were also supported in the Weapons and Ammunition industry for General Dynamic UK Ltd’s work on the AJAX vehicle, which had seen an increase of £86 million in regional payments from 2017/18. These increases helped Wales to move up to 6th place in 2018/19 for total jobs supported.

The West Midlands observed the largest drop in jobs supported from 2017/18 having fallen by 14%. A decrease of 950 jobs in education and training related jobs came after expenditure in this area had reduced from £54 million in 2017/18 to £5 million in 2018/19. This was as a contract with F B Heliservices Ltd for interim rotary wing training and support services operating in part out of RAF Shawbury drew to a close in mid-2018. Jobs supported in the region are now at their lowest levels over the period from 2013/14 to 2018/19.

Figure 7: Jobs Supported Through MOD Expenditure by Region 2018/19

Despite a decrease in MOD expenditure in the South West, the region saw an increase of nearly 500 jobs supported from 2017/18 to 2018/19. It continues to support more jobs than any other region with MOD expenditure supporting 1 in every 60 jobs.

After MOD expenditure in the North East supported 1,700 jobs in both 2013/14 and 2014/15, the number of jobs supported in the region has fallen by almost two thirds in the period following to 600 jobs in 2018/19. It now occupies the bottom spot for the number of jobs supported, supporting 1 in every 1,570 jobs in the region.

7. Jobs Supported by MOD Expenditure with UK Industry per 100,000 FTE Employment

MOD expenditure supports an increased number of jobs per 100,000 in Shipbuilding as total UK turnover in sector falls.

Jobs per 100,000 FTE Employment To compare the number of jobs supported by MOD expenditure across regions we have calculated jobs supported per 100,000 people in full-time equivalent (FTE) employment in each region. This adjusts the figures for the population and employment levels of the regions.

MOD expenditure in 2018/19 supported 460 jobs per 100,000 FTE employment in the UK which is up from 450 jobs per 100,000 in 2017/18. In Figure 7 we saw that MOD expenditure supported a similar number of jobs in the South East and South West of England yet when this is adjusted for overall levels of employment in each region we see in Figure 8 that MOD supported employment per 100,000 jobs is dominated by the South West.

The North West and South West account for 54% of MOD expenditure in the Shipbuilding and Repairing industry. This sector saw a rise in total UK employment in 2018/19, which contributed to the number of jobs supported in the regions increasing. The number of jobs supported per 100,000 was influenced by a combination of a higher UK employment in 2018 along with the MOD expenditure having a marginally greater proportion of all Shipbuilding turnover in the UK.

Figure 8: The Number of Jobs Supported Through MOD Expenditure for Every 100,000 People in FTE Employment by Region 2018/19

Notably between 2017 and 2018 the ONS reported that the North East and the West Midlands saw decreases in the number of employees as a whole in the two regions. With total employment down across the board there, it is not unexpected to see this translate to a reduction in the number of jobs supported by MOD expenditure. Since 2017/18, jobs supported in the North East have fallen from 70 per 100,000 in FTE employment to 60 per 100,000 in 2018/19, whilst the West Midlands has dropped from 230 per 100,000 to 200 per 100,000 over this time.

Jobs supported rankings remain unchanged from 2017/18 for all regions.

Even with varying expenditure and employment levels amongst UK regions between 2017/18 and 2018/19, all regions maintained their ranking positions in terms of jobs supported per 100,000 people in FTE employment.

Wales made up the most ground on the region above it by reason of its increased expenditure as discussed earlier and now supports a further 110 jobs per 100,000 in FTE employment in 2018/19 compared to the year before. MOD expenditure now supports 1 in every 140 jobs in the region which is up from 1 in every 170 jobs in 2017/18.

Figure 9: The Number of Jobs Supported Through MOD Expenditure for Every 100,000 People in FTE Employment, Ranked from Highest (1) to Lowest (12) by Region

The North West saw a 7.4% decrease in total expenditure between 2017/18 and 2018/19 but still had a 6.7% increase in the number of jobs supported per 100,000 in FTE employment in the same period. This shows that a change in total expenditure does not always translate to the same change in jobs supported per 100,000. It can depend on the composition of expenditure in the region as some industries support more jobs for the same turnover than other industries.

8. Jobs Supported by MOD Expenditure with UK Industry by Industry Group

Technical and Financial Services continue to dominate jobs supported.

Using SIC codes we can estimate how many jobs are supported in each industry group by dividing MOD expenditure in each group by turnover per FTE employment.

The highest number of jobs supported through MOD expenditure in 2018/19 was in the Technical, Financial Services and Other Business Services sector. While the number of jobs it supports has remained relatively unchanged from 2017/18 to 2018/19, it still supports nearly twice the amount of jobs than the next ranked industry group, Shipbuilding and Repairing. Weapons and Ammunition now completes the top three highest sectors in terms of jobs supported having moved up from 6th place in 2017/18. However, outside of the top two ranking positions the job figures are much closer with the Weapons (3rd) and Aircraft (10th) industry groups only being separated by 1,400 jobs in 2018/19.

Hotels, Catering and Restaurants was ranked 12th when summarised by total expenditure in Figure 5 yet when viewed in terms of jobs supported it climbs to 7th. This is due to a much lower turnover per FTE employment than other industries. Conversely, Aircraft and Spacecraft is ranked 3rd in order of expenditure but only reaches 10th place in number of jobs supported. This is influenced by a high turnover per FTE employment owing to the specialist nature of work in the sector.

Figure 10: The Number of Jobs Supported Through MOD Expenditure by Industry Group 2018/19

Note:

‘Technical, Financial Services & Other Business Services’ includes Financial Services, Business Services, Education, Health and other Service Activities.

‘Other Manufacturing’ excludes Weapons and Ammunition, Electronics, Precision Instruments, Shipbuilding and Repairing, and Aircraft and Spacecraft.

9. Methodology

This short section on methodology sets out the processes and methods used to create the tables and charts in this bulletin. More detailed explanations of data sources and methodologies used in this publication can be found in the supplementary data tables and Background Quality Report. Any specialist terminology or acronyms used below (and throughout the publication) are defined in the Glossary.

Regional Expenditure Figures

Location of Work (LOW) codes associated with HQ contracts were used to allocate expenditure to specific regions and calculate expenditure with UK industry. This expenditure was added to the Miscellaneous contracts that had a UK postcode as the billing address. Expenditure with Other Government Departments (OGDs) and Trading Funds (TFs) was removed from the HQ and Miscellaneous contracts and added back in with improved location and SIC information. This included expenditure with AWE, DIO, DSG/DECA, HRMS, JPA, NETMA, OCCAR and UKHO. Any electronic Procurement Card (ePC) expenditure has been distributed based on the location of MOD Personnel. Once these were combined we had a total figure for MOD expenditure by region. This information is also presented as expenditure per person which was calculated using ONS mid-year population data. This is presented on choropleth maps to show expenditure in each region of the UK.

Industry Group Expenditure Figures

HQ contracts have SIC code information associated with them, this was used to calculate expenditure by industry group for these contracts. Miscellaneous contracts have no SIC code assigned so the distribution of SIC codes from the HQ contracts was applied here. Expenditure against OGD or TF contracts that did not have a SIC code was distributed following discussion with project teams. Once this expenditure was combined we had a total figure for MOD expenditure by SIC group. These SIC groups were aggregated into industry groups.

Calculating Jobs Supported by MOD Expenditure

Turnover per full-time equivalent (FTE) employment for the UK was calculated by dividing turnover figures obtained from the ABS, by employment figures obtained from the BRES. We were then able to divide MOD expenditure, for each region and industry group, by the turnover per FTE employment figure. This gave us an estimate of how many jobs are supported by MOD expenditure in each region and each industry group. This information is also presented as the number of jobs supported for every 100,000 people in FTE employment in the area, which was calculated using employment figures from the BRES.

Assumptions Made During Analyses

Various assumptions have had to be made throughout the process when concrete or reliable information was not available. These assumptions are listed in the Background Quality Report.

10. Glossary

Annual Business Survey (ABS) is the main business survey carried out by the ONS. It is used to collect financial information on a large proportion of the UK economy and includes figures such as turnover, employment costs and capital expenditure.

Atomic Weapons Establishment (AWE) works under contract to the MOD and is responsible for national nuclear security and supporting the Continuous At Sea Deterrence (CASD) programme.

Business Register and Employment Survey (BRES) is a survey carried out by the ONS that provides information on employee and employment estimates by location and industry.

Constant Prices indicate a value from which the effects of inflation have been removed. A constant price refers to a year as the basis for the calculation, e.g. “constant 2018/19 prices”. This would mean that historic expenditure figures have been adjusted so that they are in 2018/19 prices and take account of the effects of inflation.

Current Prices are when expenditure is presented without removing the effects of inflation. This can cause difficulties when comparing expenditure across different years as inflation affects the value of a currency.

Defence Electronics and Components Agency (DECA) is a government organisation dedicated to maintenance, repair, overhaul, upgrade and procurement in defence avionics, electronics and components.

Defence Infrastructure Organisation (DIO) is responsible for the day-to-day estates activity at the MOD including maintenance, construction and sustainability of rural and built MOD estates.

Defence Science and Technology Laboratory (Dstl) was a former Trading Fund of MOD, created in July 2001. It supplies impartial scientific and technical research and advice to MOD and other government departments. In April 2017 it ceased to be a Trading Fund and became an On-Vote Defence Agency of MOD.

Defence Support Group (DSG) was a former Trading Fund of the MOD created following the merger of Army Base Repair Organisation (ABRO) and Defence Aviation Repair Agency (DARA) on 1 April 2008. On 1 April 2015 the land repair and maintenance business was sold to Babcock. The remaining part of the business, the Air division and Electronics and Components division, stayed under MOD ownership as DECA.

DEFFORM 57 Completion of this form is mandatory for all contracts where the Defence Business Services (DBS) is the payment authority. It is used to set up a contract with DBS for payment purposes and is an important source of capturing data on contract activity within the Ministry of Defence. This form is now primarily completed electronically.

electronic Procurement Card (ePC) is the first choice purchasing tool for goods and services, which are not covered by contractual arrangements and allows individual units to process mainly small value purchases. The cards are issued and monitored by the responsible Finance team.

HQ Contracts are formal contracts set up by MOD Core Department which require a DEFFORM 57 to be raised.

Human Resources Management System (HRMS) is a personnel administration system for civilians working at the MOD.

Industry Groups are 22 groups based on the Standard Industrial Classification (SIC) 2007 guidelines maintained by the Office for National Statistics (ONS). Industry groups combine SIC codes that are related to similar types of activity. A breakdown of which SIC codes belong in each industry group can be found in the accompanying data tables to this publication.

Joint Personnel Administration (JPA) is a personnel administration system used by the British Armed Forces.

Location of Work (LOW) Codes are entered into the DEFFORM 57 and indicate where work for a contract is being carried out. There are many codes for different areas of the UK and these have been amalgamated to identify the regions being reported on.

Miscellaneous Contracts are the payment method employed by DBS Finance (the MOD’s primary bill paying authority) for running service items such as the provision of utilities. These items are covered by “miscellaneous” transactions, where no MOD HQ Contract exists. These agreements for goods or services will have been set up locally between the MOD Branch and the supplier and are legally binding.

NATO Eurofighter and Tornado Management Agency (NETMA) is the prime contractor for the Eurofighter Weapon System. The arrangements for the management of the Eurofighter programme were set out in the NATO Charter dated 18 December 1995, in which the international management agencies of the Tornado and Eurofighter programmes were integrated into a single agency, NETMA. This NATO agency is essentially a multi-nation HQ project office for these two collaborative projects, involving the UK, Germany, Italy and Spain. In the UK, Eurofighter is now called ‘Typhoon’.

Nomenclature of Territorial Units for Statistics (NUTS) Level 1 Regions are 12 UK regions used in the production of statistics.

Office for National Statistics (ONS) is responsible for the production of a wide range of independent economic and social statistics. The statistics are there to improve understanding of the United Kingdom’s economy and society, and for planning the proper allocation of resources, policy-making and decision-making. It is the executive office of the UK Statistics Authority, a non-ministerial department which reports directly to Parliament. ONS is the UK Government’s single largest statistical producer.

Organisation Conjointe de Coopération en Matière d’Armement – the Organisation for Joint Armaments Co-operation (OCCAR) was originally set up in November 1996 by France, Italy, Germany and the UK with the aim of improving the efficiency and lowering the cost of managing co-operative defence equipment programmes involving European nations (e.g. A400M). Belgium and Spain are now also members.

Other Government Departments (OGDs) refers to government departments outside the MOD that the MOD spends money with.

Standard Industrial Classification (SIC) Codes classify business establishments and other statistical units by the type of economic activity in which they are engaged. The classification is maintained by the ONS.

Trading Funds (TFs) were introduced by the Government under the Trading Funds Act 1973 as a “means of financing trading operations of a government department which, hitherto, have been carried out on Vote”. They are self-accounting units that have greater freedom, than other government departments, in managing their own financial and management activities. They are free to negotiate their own terms and conditions with their staff. For this reason, their grading structures do not always match that of the rest of the Ministry. From 2017/18 there is now only one MOD Trading Fund - UK Hydrographic Office.

UK Hydrographic Office (UKHO) was formed as a Trading Fund of the MOD in 1996 and is responsible for the provision of global hydrographic products and services to UK Defence and commercial mariners. In addition, UKHO discharges the UK’s obligation to provide hydrographic products and services needed for safe navigation in UK waters.

11. Further Information

11.1 Symbols

Figures marked with a superscript ^r are revised from the last edition.

11.2 Rounding

Where rounding has been used, totals and sub-totals have been rounded separately and so may not equal the sums of their rounded parts. Total expenditure figures have been rounded to three significant figures, per person expenditure figures have been rounded to the nearest £10. The total numbers of jobs supported by MOD expenditure has been rounded to the nearest 1,000, the number of jobs supported by MOD expenditure by region has been rounded to the nearest 100 and the number of jobs supported per 100,000 in FTE employment has been rounded to the nearest 10.

11.3 Revisions

Corrections to the published statistics will be made if errors are found, or if figures change because of improvements to methodology or changes to definitions. When making corrections, we will follow the Ministry of Defence Statistics Revisions and Corrections Policy. All corrected figures will be identified by the symbol ^r, and an explanation will be given of the reason for and size of the revision. Corrections which would have a significant impact on the utility of the statistics will be corrected as soon as possible, by reissuing the publication.

Total jobs for 2017/18 have been revised due to updated employment estimates in ABS and BRES figures for 2017 from the ONS.

11.4 Contact Us

Defence Statistics welcomes feedback on our statistical products. If you have any comments or questions about this publication or about our statistics in general, you can contact us as follows:

Defence Statistics (Defence Expenditure Analysis)

Telephone: 030 679 84442

Email: DefStrat-Econ-ESES-PQFOI@mod.gov.uk

If you require information which is not available within this or other available publications, you may wish to submit a Request for Information to the Ministry of Defence under the Freedom of Information Act 2000.

If you wish to correspond by mail, our postal address is:

Defence Statistics (Defence Expenditure Analysis)
Ministry of Defence
Oak 0 West, #6028
MOD Abbey Wood North
Bristol
BS34 8QW

For general MOD enquiries, please call: 020 7218 9000

1. This publication often uses the term jobs to mean full-time equivalent employment. ↩