MoD Has Little Flexibility to Deal with Changing Military Priorities
(Source: House of Commons Public Accounts Committee; issued April 25, 2017)
The Public Accounts Committee reported on the Ministry of Defence's £178 billion defence equipment and support plan.

We are very concerned that the Ministry of Defence’s (the Department’s) Equipment Plan is at greater risk of becoming unaffordable than at any time since its inception in 2012.

Maintaining affordability is now heavily reliant on a highly ambitious, but still under-developed, programme of efficiency savings from within the Plan and the wider Defence budget.

The Plan continues to be vulnerable to cost growth because of uncertainties around the costs of new projects, continued problems with cost control on some long-standing projects, and the significant fall in the value of the pound against the US dollar.

The Department has used more than £10 billion previously set aside to meet new requirements to help fund its existing core programme, leaving it little flexibility to deal with changing military priorities. Over the past five years the Department has transformed its financial management of large projects.

We are worried that the increase in commitments without a commensurate increase in funding puts this stability and the ability of the Department to deliver what our forces need to operate effectively at real risk.


Click here for the full report (58 PDF pages) on the UK Parliament website.

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'Military Jets and Warships Risk Being Unaffordable'
(Source: British Forces News; issued April 25, 2017)
Plans for new warships, jets and other military equipment risk becoming unaffordable because of increased costs and the collapse in the value of sterling.

The cross-party Commons Public Accounts Committee made the warning, and said it was "very concerned" about the £178 billion defence equipment plan.

It warned that in the coming years the impact of the fall in the value of the pound against the US dollar could increase the cost of programmes, with the F-35 fighter jet and P-8 Poseidon maritime patrol aircraft "particularly vulnerable to exchange rate fluctuations".

The MPs said: "We are very concerned that the Ministry of Defence's equipment plan is at greater risk of becoming unaffordable than at any time since its inception in 2012."

Keeping the plan affordable was "heavily reliant" on a "highly ambitious, but still under-developed" programme of efficiency savings.

"The department has used more than £10 billion previously set aside to meet new requirements to help fund its existing core programme, leaving it little flexibility to deal with changing military priorities."

The committee said: "We are worried that the increase in commitments without a commensurate increase in funding puts this stability and the ability of the department to deliver what our forces need to operate effectively at real risk."

The MoD expects to spend £178 billion between 2016 and 2026, but the MPs warned that "uncertainties and over-optimism in project costs mean that the cost of the plan may be significantly understated".

The MPs also criticised the Type 26 warship programme, with failure by the MoD to agree a "workable way forward" with the main contractor "which has compromised maritime capability and placed further upward pressure on costs".

When the National Audit Office reported on the issue in January, Defence Procurement Minister Harriett Baldwin said:

"We are focused on maintaining an affordable programme and delivering the efficiencies we need to reinvest in cutting-edge ships, planes, versatile strike brigades, and greater cyber capabilities, so that our Armed Forces have the equipment they need to keep the UK safe and secure."

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