Question to the Ministry of Defence:

To ask the Secretary of State for Defence, how his Department defines the commercial exploitation levy; and how much was received by his Department from that levy in financial years (a) 2012-13, (b) 2013-14 and (c) 2014-15.

The Ministry of Defence (MOD) defines the commercial exploitation levy as a form of royalty for any commercial sales of a design, use of special tooling or the granting of licences where the MOD has contributed to research and development costs. There are no restrictions on the categories of contracts to which the levy applies, but the vast majority relate to equipment, including software. This is because MOD research and development funding is largely in support of equipment development.

The general aim of levy arrangements should be to take a consistent, simple and quick approach to obtaining the maximum return possible without harming sales. It is negotiated on a contract by contract basis and represents either a percentage of sales or a profit sharing agreement.

The amount of levy received during the financial years requested is as follows: