1.  Thank you for your letter of 17 January, setting out the supplementary questions on the Defence White Paper and Departmental Performance Report 1998-99 arising from the Committee's session with the Principal Finance Officer on 12 January. As requested, the answers to those questions are set out on the attached pages.

  2.  On the question of efficiency, we hope to be in a position to provide the committee with a more comprehensive list of efficiency measures around the end of February. We will then be happy to discuss how we can take this exercise forward.

The savings from cancelling the Royal Marines' arctic warfare exercise in Norway (Q291, Q300).

  Total savings are estimated to amount to about £3 million.

Whether any ships taken off exercises since 1 April 1998 were withdrawn because of insufficient crew availability (Q297); and the crew establishment and actual strength of HMS Westminster when withdrawn from FLOTEX (Q299, Q300)?

  No ships have been withdrawn from exercises due to insufficient crew availability. Generally speaking ships on task are intended to be at 100 per cent manning, and are given greater manning priority in order to achieve this. However, depending on the task, some departments aboard can accept a level of under-bearing. With regard to HMS Westminster, the crew establishment for a Type 23 frigate is 182. At the time when she was withdrawn from FLOTEX, her actual bearing was 175 (ie 96 per cent manned).

Whether any change in the UK's usage of BATUS would change the terms of any equipment sales or transfers to Canada (Q302)?

  The terms of any equipment sales or transfers to Canada are not affected by the UK's usage of the BATUS training area.

Confirmation that the increased shortage of trained service personnel since the SDR has not produced an underspend on the pay budgets that was planned at the time of the SDR (Q340)

  In concluding the Strategic Defence Review, we settled our forward financial plans on the basis of assumptions about the future size of the Armed Forces. These started from a position of undermanning, and reflected projected numbers each year thereafter in line with our plans for a return to full manning across all three Services by around 2004-05. The defence budget for the period to 2001-02 includes provision to cover planned manpower strengths, but not the additional pay bill that we would incur if we were fully manned in those years. There is therefore no underspend arising from the difference between the two, because no such provision has been included in the budget.

  But manning levels, particularly in the Army, have currently fallen below our SDR projections. That shortfall does lead to savings in the Service manpower bill in this financial year. However, in order to address these shortfalls, we are spending more on recruitment, trainees and retention than we had previously planned.

The receipts achieved from the disposal of warships arising from the SDR (Q381, Q382)

  No receipts have accrued, to date, from the disposal of the vessels made available by the SDR; the market for such sales is, for a variety of reasons, depressed at present. However, the Disposal Sales Agency continues its efforts to secure customers for these ships, working closely with the UK maritime defence industry.

25 January 2000