Labour’s “Dossier of Waste in the Ministry of Defence” reveals Ministers wasted £13 billion of taxpayers’ money

Today, Labour publishes its “Dossier of Waste in the Ministry of Defence” which reveals that the Government has wasted at least £13 billion of taxpayers’ money in 67 officially confirmed cases of MoD waste since 2010, with £4 billion wasted while the current Defence Secretary has been in post.

Shadow Defence Secretary John Healey says Labour’s audit of waste shows that “the MoD is a uniquely failing department” and that “Ministers are failing British troops and British taxpayers”.

Labour’s audit examines the extent of waste within the MoD, drawing on official published sources of information, and identifies 67 officially confirmed cases of waste, the cost of which could have been avoided or reduced by better MoD judgement or management.

The analysis found that MoD mismanagement has led to £4.8 billion of taxpayers’ money being handed out for cancelled contracts and £5.6 billion on overspent projects, while a further £2.6 billion of investment has been written off.

If this wasted public money had been reduced, funding could have been available to strengthen the UK’s Armed Forces and avoid cuts forced by budget pressures to troops, planes, ships and vital equipment. 

The Government is cutting the Army’s main battle tank numbers by a third to 148, while the cost to restore the Challenger 3 tank fleet to 227 is £430 million and the waste in 2019-2020 MoD Accounts alone was £406 million. The price tag for new Type 45 Destroyers is £1 billion, so the waste confirmed since 2019 alone could have covered the cost of four.    

The Government has no grip on spending at the Ministry of Defence. The National Audit Office (NAO) has declared the defence equipment plan “unaffordable” for the last four years in a row and has warned of a funding black hole in the defence budget of up to £17 billion. 

A recent report by the Public Accounts Committee concluded that the Ministry of Defence’s procurement system is “broken and is repeatedly wasting taxpayers’ money”.

Labour’s audit is the first step in fixing the failing system. In Government, Labour would make the Ministry of Defence the first department subject to its new Office for Value for Money’s tough spending regime and commission the NAO to conduct a comprehensive audit of Ministry of Defence waste to deal with these problems.

Launching Labour’s “Dossier of Waste in the Ministry of Defence”, Shadow Defence Secretary John Healey said: 

“The Ministry of Defence has blown billions of pounds at the same time as cutting back our Armed Forces.  

“The MoD is a uniquely failing department, yet Ministers have taken no serious steps to secure value for taxpayers’ money.

“This scale of waste is totally unacceptable. Ministers are failing British troops and British taxpayers.

“A Labour Government would get to grips with these deep-seated problems from day one. We would commission the NAO to conduct an across-the-board audit of MoD waste and make the MoD the first department subject to our new Office for Value for Money’s new tough spending regime.” 

Ends

Notes to Editors 

• Labour’s “Dossier of Waste in the Ministry of Defence” can be found here: https://labour.org.uk/mod-waste

Summary of Key Findings

• Between 2010 and 2021, 67 officially confirmed cases of wastage have been identified totalling over £13 billion of taxpayer’s money. £4 billion has been wasted since 2019 alone, while the present Defence Secretary has been in post.  

• £4.8 billion has been wasted on cancelled contracts since 2010
• £5.6 billion has been overspent on MoD projects since 2010. 
• £71 million was spent on unplanned life extensions since 2010
• £2.6 billion has been wasted on write-offs since 2010

https://labour.org.uk/mod-waste

Opportunity Cost from MOD waste 

• Army Main Battle Tanks. The government announced in the Integrated Review their intention to cut main battle tank numbers by a third (227 tanks, down to 148). The cost of restoring the future Challenger 3 tank fleet to 227 tanks is £430 million, based on a recent £800 million contract with RBSL for 148 Challenger 3 tanks. This sum of £430 million is comparable to:

• Type 26 Frigates. The cost of a new Type 26 Frigate is around £300 million, a cost covered 44 times over with the total wasted expenditure identified in this audit report 
• Type 45 Destroyers. The cost of new Type 45 Destroyers is £1 billion each, so the wastage identified since 2019 alone could have covered the cost of 4 new Type 45 Destroyers. The cost of a new Type 45 Destroyer is also only 7.5% of the total waste identified in this report
• RAF Hercules Aircraft. The Defence Command Paper announced that the entire Hercules fleet of 14 aircraft is to be scrapped. Modern Super-Hercules cost around £150 million per aircraft, so a fleet of 14 would cost £2.1 billion, a sum comparable to the amount of money the MoD have wasted on write-offs alone since 2010 (£2.6 billion).

• NAO Report: The Equipment Plan 2020 to 2030 (January 2021)

• 2021 Infrastructure and Projects Authority annual report (March 2021)

• Public Accounts Committee Report: Improving the performance of major defence equipment contracts (November 2021)