- Report today says “optimism bias” affecting MoD budget
planning and huge financial risks have been “ignored”
- Ministry has failed to adapt Equipment plan and lacks the
urgency required to develop and deliver the enhanced capabilities
the Armed Forces need
- Military equipment beset by problems and delays leaving UK
land forces needing to “catch up” to fulfil NATO commitments
In a report today, the Public Accounts Committee expresses
serious doubts about whether the MoD’s 10-year rolling Equipment
Plan process is affordable or agile and responsive enough to
react to the new more volatile world we face now.
The MoD acknowledges that the current Equipment Plan does not
resolve the significant risk that the UK could not provide NATO
with an operational Army division. Programmes to help fulfil our
commitments such as Ajax and Morpheus are beset by problems and
delays and have been for many years. The invasion of Ukraine has
challenged strategic assumptions and has necessitated a refresh
of the 2021 Integrated Review of security, defence, development,
and foreign policy.
The Committee suggests the Ministry’s assessment that its
Equipment Plan is affordable over the next ten years suffers from
optimism bias. The Ministry has not included external cost
pressures, including inflation and foreign exchange movements, in
its central assessment of the Plan’s affordability. It’s unsure
if the £2.1 billion increase in costs it has predicted accurately
reflects inflation over the period in the Plan. The MoD has a
forecast deficit of £2.6 billion in the first seven years of the
Plan. To rectify this, it relies on having a budget surplus of
£5.2 billion in the Plan’s final three years.
The Plan’s affordability also assumes a reduction in project
costs by £30.4 billion during the next ten years. This depends on
the MoD achieving all planned efficiencies and savings, though
there are not yet plans for £1.6 billion cost reductions and £3.4
billion efficiency savings, of which it needs over £2 billion in
the next three years.
Comments by the Deputy Chair of the Committee
, Deputy Chair of the
Public Accounts Committee:
“If the MoD does not act swiftly to address the fragility of its
supply chain, replenish its stocks, and modernise its
capabilities, the UK may struggle to maintain its essential
contribution to NATO. The 2022-2032 Equipment Plan is already
somewhat out of date. It doesn’t reflect the lessons emerging
from Ukraine, more than a year in. And every year it’s the same
problems – multi-billion-pound procurement problems. Equipment
arrives in service many years late and significantly over-budget,
and some of it just isn’t arriving at all. The MoD still does not
have or seem to be able to attract the skills it needs to deliver
the Plan.
Neither taxpayers nor our Armed Forces are being served well.
There needs to be meaningful change of this broken system. The
Department needs to break from this cycle of costly delay and
failure and deliver a fundamental, root and branch reform of
defence procurement.”
