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Armed Forces

My Lords, much of the new equipment that we have developed because of problems in the theatre will be incorporated into mainstream planning. That is only normal and right. Perhaps I could tell the House of the new arrangement entered into with the Treasury for funding UORs and clarify the point that seems to have been misleading some people about the clawback that it was suggested might occur. The new approach with the Treasury means that, in the three years of the Comprehensive Spending Review, the reserve will continue to pay all additional costs of operations up front and will pay outright for UORs up to a mutually agreed total. Beyond that, the MOD and the Treasury will split the cost 50:50, with the MoD having to repay its share two years later, by which time there could have been adjustments in the programme. The Treasury will give an extra £200 million in 2010-11 to ensure that the new arrangements are cost-neutral to defence.