Spiralling Cost of UK Defence Projects Signals Hard Choices: Spending on new equipment rises 20% to £82bn over 10 years (excerpt)
(Source: Financial Times; published Feb 05, 2017^
by Sam Jones
A series of enormous British defence projects are at risk after the Ministry of Defence revealed that costs had risen by a fifth and that it has already eaten through the £10.7bn of “headroom” built into its budget last year.

The projected spend on new equipment has risen by 20 per cent to £82bn over the next 10 years, while the spend on supporting the new kit has risen even further — up 30 per cent to £23.4bn, according to the latest annual equipment plan.

As a result, the UK may have to choose between its new projects for ships, aircraft and tanks.

The costs and numbers have yet to be finalised on new Type-31 frigates — a lighter, dialled-down version of the eight Type-26 frigates the Royal Navy has ordered.

Few believe that the replacement of the nuclear-armed Vanguard submarine fleet with four new Dreadnought-class boats will remain in line with projections, with the last estimate revising the spend on the project upwards from £25bn to £31bn, with £10bn in additional contingencies.

The army’s plans for new armoured vehicles are also proving more expensive than expected.

Analysts warned that the MoD’s finances have not been so shaky since 2010, when a £38bn black hole in the equipment budget saw the navy retire its last aircraft carrier and its Harrier jets.

“There’s a risk that we return to the sort of approach we saw in the MoD before 2010,” said Malcolm Chalmers, deputy director of the Royal United Services Institute. “One where there are difficult choices that have to be made on existing equipment commitments in order to balance the books. Rather than face up to those, the historic response at MoD has simply been to push programmes to the right and allow service dates to slip.”

After five years of restraint, Mr Chalmers said, the 2015 Strategic Defence and Security Review saw the UK government make “very significant” commitments to military spending. “More has been taken on than would be justified by the resources that have been made available.” (end of excerpt)

Click here for the full story, on the Financial Times website.


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