27 July 2007 | Paul Snell
The Ministry of Defence (MoD) will make cuts of 5 per cent a year in administration as part of the latest Comprehensive Spending Review (CSR).
The cuts of 5 per cent year-on-year will be made in administration over the next three years. The department is also aiming to cuts costs at its head office by 25 per cent. These reductions will be in addition to £2.8 billion of savings made since the previous CSR in 2004.
But the department will get more money to spend, and this week announced plans to pay £3.9 billion for two new aircraft carriers. The CSR settlement will give the department a total annual budget of £34 billion in 2008-09, rising to £36.9 billion by 2010-11.
The MoD expects the cost of the new ships to go down, before a final price is confirmed in 2009. The department has also announced a new 10-year £1 billion contract with Rolls-Royce to supply water reactors in its nuclear submarines. The department expects to save £120 million compared with the previous deal.