MP, Labour’s Shadow Minister
for the Armed Forces and Defence
Procurement, responding to the National Audit
Office’s report on the MoD Equipment Plan, said:
“Today’s report from the National Audit Office should serve as a
wake-up call to ministers. The warning signs have been there for
a long time but it is becoming increasingly clear that the
Government is in danger of losing control of the defence
budget.
“Ministers ought to have clearly defined priorities and should
ensure that, in these uncertain times, Britain’s defence
expenditure should not be the subject of ill thought-out public
expenditure cuts. The defence budget has been slashed since 2010
and the Government is only meeting the 2 per cent of GDP
commitment through creative accounting.
“The Government should meet this commitment properly. Ministers
also need to respond urgently to the concerns raised by the NAO.
And they should confirm when the long-overdue National
Shipbuilding Strategy will be published.
“Only Labour can deliver a serious, joined-up Defence Industrial
Strategy, as we did in Government. Our approach would safeguard
Britain’s industrial base, secure high quality jobs throughout
the supply chain, and protect our national sovereignty, while
achieving value for money.”
Notes to Editors
The affordability of the Plan is now at greater risk
than at any time since reporting was introduced in
2012 and the Department faces the risk
that in future it may have to return to a situation where
affordability of the portfolio is maintained by delaying or
reducing the scope of projects. The cost of the new commitments
included in the Review considerably exceeds the net increase in
funding for the Plan. The Department has agreed to fund these new
commitments partly through demanding efficiency targets, from
both within the existing Plan and from the wider Defence budget.
All existing headroom has had also to be allocated to meet
the new commitments arising from the Review, with the result that
this money is not now available to fund newly emerging
requirements during the period covered by the Plan.
Moreover, the risk of cost growth is still evident in
the Plan, both in existing projects and also
because a greater proportion of large projects are at an early
stage of development (largely due to a number of new high-value
commitments introduced by the Review). This risk is
further increased as the Department’s current costing policy has
historically underestimated the cost of projects in their early
stage of development. The Department also faces a
significant potential threat to affordability as a result of
exchange rate movements against the pound.
