The legacy of debt we inherited has necessitated tough decisions to get our economy back on track. Labour left us with a multi-billion-pound black hole in the Defence budget; bringing this back into balance is a vital part of how we tackle the deficit and protect our national security.

Even so, we still maintain the fourth largest defence budget in the world and we will continue to be one of only five countries in NATO meeting our commitment to spend 2 per cent of GDP on Defence.

We have also recognised that we need to do much more to ensure that our Armed Forces have the support they need, in recognition of the sacrifices they make for our country. We are working to rebuild the Armed Forces Covenant and we have already enshrined the principles in law.

The bigger picture

• In May 2012, we announced that after years of profligate spending under Labour, the Defence budget has been put back on a stable footing. We’ve built in £8 billion of contingency, so that if we do have a problem we can manage it without destroying the rest of the programme or running to the Treasury as the previous Labour Government did.

Adapting our armed forces to the 21st Century

Action to date

• In October 2010, the Government published the outcome of the Strategic Defence and Security Review which set out the Government's plans for defence reform. Changes outlined by the review include:

  • The Ministry of Defence’s budget will be cut by 8 per cent.
  • We will reduce the Army by 7,000 personnel (no changes to units involved in Afghanistan), in Royal Navy by around 5,000 personnel and in the RAF by 5,000 personnel. Civilian personnel will be reduced by 25,000.
  • We will introduce 12 new heavy lift Chinook helicopters, new protected mobility vehicles and enhanced communications equipment.
  • We will introduce seven new Astute-class nuclear submarines, complete the production of six Type 45 destroyers and start a new programme to develop less expensive, more flexible, modern frigate.
  • We will base the RAF around a fast jet fleet of Typhoon and Joint Strike Fighter aircraft, complemented by a growing number of unmanned aerial vehicles and the A400M transport aircraft together with the existing fleet of C-17 aircraft and new strategic tanker aircraft.

• In July 2012 we published Army 2020, a plan for restructuring the Army to make it more flexible and agile.

• In November 2012 we published our consultation on the future of the Reserves.

Planned actions

• We will implement Army 2020 to create a more flexible and agile Army.

• We are investing £1.8 billion to train up 30,000 Reserves, who will be a vital integrated component of the Army.

Balancing the defence budget

Action to date

• In May 2012 we announced that the £38 billion black hole in the defence budget inherited from Labour had been eliminated, with a small annual reserve built in.

• We've built in £8 billion of unallocated headroom and put a sizeable contingency into the equipment plan, which has never been done before, so that if we do have a problem we can manage it without destroying the rest of the programme or running to the Treasury.

Planned actions

• We will run a balanced defence budget going forward.

Rebuilding the Military Covenant

Action to date

• We have enshrined the Military Covenant into law for the first time – something Labour failed to do during their 13 years in power - and committed to conducting a regular review of the convent to ensure that parliament has a chance to scrutinise the review through a transparent annual report.

• We've doubled the operational allowance that had been paid under the previous Government to over £5,000 for a typical six-month tour.

• We have changed the rules on rest and recuperation so that any days of leave lost due to delays in operational requirements will be added to post-tour leave.

• We are providing university and further education scholarships to the children of members of the armed forces who have been killed since 1990.

• We have included 36,000 service children as part of the pupil premium, recognising the uniqueness of service life and its effect on service children and service communities.

• We have provided further funding of £3 million per year for state schools with service children, including those of reservists.

• We have set up a new Community Covenant scheme where local communities are able to bid for £30 million of government funding for local projects connecting people to the armed forces in their communities.

• We have doubled the Council Tax rebate for those serving on Operations from 25 per cent to 50 per cent.

• We have committed an extra £20 million for health care and are pressing ahead with implementing the recommendations of the Murrison Review, including introducing structured mental health surveillance inquiries to routine service medical examinations and to all discharge medicals. A new 24-hour veterans mental health helpline was launched in 2011.

• We have provided more support for ex-Service personnel to study at university by reducing the qualifying time from six to four years for the Enhanced Learning Credits scheme, which provides up to £6,000 for ex-Service Personnel to study at university.

Planned actions

• The 2012 Budget announced that we will spend an additional £100 million in 2013-14 to improve accommodation for up to 1,275 military personnel. The money will help deliver new and refurbished Single Living and Service Family Accommodation.

Maintaining our nuclear deterrent

Action to date

• We have retained our sovereign nuclear capability by investing over £1 billion in the Raynesway plant, which produces the nuclear power plants used to power our submarines.

• We approved the 'initial gate' investment and selected a submarine design for the successor nuclear deterrent in 2011. In May 2012 we signed contracts for the first 18 months of work on the assessment phase on the successor Submarine programme.

• A Trident replacement is included within the core equipment programme.

Planned actions

• The programme is now its assessment phase, which includes design, purchasing long lead items, preparing for production and technology development.

• The final 'main gate' decision on a Trident replacement will be made in 2016.

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