Minister for Defence Procurement (): I am pleased to place in the
Library of the House a copy of the 2021 Defence Equipment Plan
Report, which sets out our plans to deliver the equipment needed
by our Armed Forces to defend the country and protect our
national interest.
This year’s equipment plan report is one of the most important in
recent years as it implements the strategy and financial reset
provided by the Integrated Review, the Defence Command Paper and
Spending Review. The Integrated Review outlined the evolving
nature of the threats we face. This Equipment Plan sets out how
our military capability will evolve to meet these threats within
an affordable financial envelope.
This Equipment Plan sets out how we are funding the capabilities
we need, including more ships for the Royal Navy, a new batch of
F-35s, a new medium helicopter and a major upgrade to our Land
equipment. This represents a significant enhancement on last
year’s capability plans while, through additional investment and
tough prioritisation, we have reversed the £7.3 billion pressure
on the plan outlined last year to a surplus.
This year is the first since 2018 when we have entered a new
financial year with a funded contingency for the equipment plan.
We have funding set aside to deal with urgent operational
requirements and funding set aside for future research and
development and its exploitation. We have made good progress in
the first year of delivery and for the first time in many years,
we expect to live within budget without Ministers having to take
decisions on savings measures in year or running central savings
exercises.
This has been possible by setting a clear vision for the Armed
Forces through last year’s Integrated Review and Defence Command
Paper, which has allowed us to retire less relevant equipment and
refocus our programme on the kit we need for the future. We are
making progress on delivering this change, including cancelling
the Warrior sustainment programme and setting out plans for a
more high-tech and agile Army as set out in our recent Future
Soldier publication. This Equipment Plan relies on fewer low
confidence efficiency measures than in previous years and our
plans to reduce costs are supported by significant investments in
acquisition, support and digital programmes to improve the way
the department operates.
We have, alongside capability investments, reversed the decline
in Defence R&D spend with a £6.6bn ring fenced commitment.
This will help reduce the risks associated with identifying and
bringing into development the game-changing future capabilities
we will need to meet the future threat.
However, delivering state of the art Defence capabilities carries
inherent risk. On a plan of this scale and over this timeline
there will always be risks to affordability. We are clear-eyed on
those risks and set them out in our report. As the National Audit
Office have said, the MOD is responsible for some of the most
technically complex, risky and costly procurement programmes in
Government. New, large and complex programmes like the Future
Combat Air System, which will deliver the next generation of
combat air capability, and the replacement warhead, which will
allow us to renew the UK’s nuclear deterrent, are extraordinarily
complex endeavours. We continue to carry out and publish our own
independent challenge of costings to help us understand and
mitigate financial risk. Excluding Dreadnought, which has its own
contingency funding, the risk identified in programmes which were
reviewed both last year and this reduced by £0.3bn, showing an
improvement in the department’s costing and management of risk.
However, additional risk inevitably arises from new programmes
entering the Plan, including the warhead programme.
Planning over ten years is inherently uncertain and we must be
able to respond to changing threats and project-specific
circumstances. As challenges emerge on programmes which delay
expenditure, we will be flexible in accelerating other programmes
to maintain momentum and where possible reduce cost. The HM
Treasury £10 billion contingency for Dreadnought shields the rest
of the Equipment Plan from changes in annual spend on our largest
and most complex programme. We continue to reduce risk through
the forward purchase of foreign currency.
New funding has enabled key decisions to be taken and priorities
set but this alone is not enough to deliver on time and to
budget. Having the right skills, tools, data and processes are
critical. The department has made real progress, which we set out
in our report, but we recognise there is more to do. To deliver
value for money for the taxpayer we have invested in our
acquisition reform programme which aims to improve the speed and
agility of our procurement processes and we are working to
improve the capability and availability of senior responsible
owners for programmes.
The nature of Defence means that the plan is not without risks to
which we will be agile in responding, however, new funding, a
clear vision and a balanced plan mean that this is a very
different programme to those of recent years.
REPORT ATTACHED
