§ Lord Astor of Heverasked Her Majesty's Government:
By how much the Ministry of Defence plans to reduce its annual cost of capital charge in 2004–05 and in each of the next three financial years.[HL331]
§ Lord BachThe cost of capital charge in the Ministry of Defence's accounts reflects the size of the department's asset base which is dominated by fighting equipment and intangible assets related to the acquisition of fighting equipment. TheFuture Capabilities White Paper published on 21 July set out our plans for our future force structures, including both reductions in the numbers of some equipments and enhancements in some capabilities, which are driven by our security requirements in a changing world. Future cost of capital charges will be substantially determined by the impact of these changes. We expect however that the cost of capital charge associated with other areas on our asset base will reduce over the next few years as a consequence, for example, of the rationalisation of the defence estate under the MoD's efficiency programme.