The Public Accounts Committee report finds uncertainty over affordability gap reduces Department's ability to make informed decisions about defence.
Equipment Plan for 2017 to 2027 is not realistic
Last year we reported that the Ministry of Defence’s Equipment Plan was at greater risk of becoming unaffordable than at any time since its inception in 2012.
These risks have now increased and the Ministry of Defence simply does not have enough money to buy all the equipment it says it needs.
It is worrying that the Department is back in the position it found itself in earlier in the decade. The Equipment Plan for 2017 to 2027 is not realistic and the Department lacks cost control.
Affordability gap forecast at least £4.9 billion
A significant affordability gap has again opened up; with forecast costs at least £4.9 billion, and potentially as much as £20.8 billion, more than the £179.7 billion budget.
The Department is reluctant to present openly an assessment of the affordability gap and has failed to report transparently to Parliament and the public about the financial risks it faces.
The Department has put its faith in the Modernising Defence Programme to solve its affordability issues and to prepare for the continued challenges of a fast-changing defence landscape, including the UK’s capabilities for cyber, chemical, biological, radiological, nuclear and electromagnetic attacks.
We are highly sceptical that the Modernising Defence Programme will be able to return the Department to a balanced position.
Comment from Committee Chair, Meg Hillier MP: “The MoD’s national security responsibilities give it a unique and critical place in the public sector but that is no excuse for a lack of rigour in its financial affairs.
“It is concerning that the Department could find itself more than £20 billion short of the funding required to buy the equipment it says it needs.
“The MoD’s inability to better quantify that affordability gap has consequences not just for its confirmed spending plans, but also its ability to prepare for serious challenges in national defence.
“The Department must be more rigorous and realistic in its approach to costing its equipment plan. It also needs to be more open with Parliament and the public about its finances, commitments and their costs to taxpayers.
“We heard a lot in evidence about the Modernising Defence Programme but I am concerned this may end up adding more costs to what is already an overstretched budget."
Click here for the full report, on the UK Parliament website.