Secretary of State for Defence (): I wish to inform Parliament
that the Permanent Secretary for the Ministry of Defence has
written to the Chair of the Public Accounts Committee with our
2023 update on the affordability of the 2023 Defence Equipment
Plan as at the end of financial year 2022-23, which details the
Department’s spending plans in equipment procurement and support
projects over a period of 10 years.
I am placing a copy of his letter and the supplementary tables in
the Library of the House and they have been published online.
This more concise update takes the place of the usual Equipment
Plan financial summary report and maintains continuity of
financial reporting ahead of implementing the outcomes of the
Integrated Review Refresh and the Defence Command Paper 2023
(DCP23). I welcome the continued engagement of the National Audit
Office (NAO) who have today published their independent
assessment of our plans.
The world is increasingly dangerous and the transition into a
multipolar, fragmented and contested world had happened more
quickly and definitively than anticipated in the original
Integrated Review. The risk of escalation is greater than at any
time in decades.
This year’s Equipment Plan comes at a time where there are
significant financial pressures due to pivotal world events,
including the ongoing war in Ukraine, and the plan recognises the
significant impact inflation has had on Defence’s budget.
We have increased the budget for the Equipment Plan to £288.6
billion. Against this assumption we estimated there was a 6%
pressure, but there are other reasonable scenarios in which the
department has a surplus over ten years. The position reported in
the plan and by the NAO does not reflect the Government’s
aspiration to increase defence spending to 2.5% of GDP as soon as
economic and fiscal conditions allow.
While we are currently forecasting a pressure, the department is
confident it can live within its equipment budget, with only 25%
of the Equipment Plan committed over the next decade, providing
the headroom to adjust the programme as needed and ensuring we
can remain responsive to emerging events. We have also made
significant changes to how we manage the nuclear enterprise which
will support us to deliver the nuclear deterrent on schedule.
We published DCP23 this summer and work is already underway to
develop proposals to deliver its intent within our current
budget. The additional funding from the 2022 Autumn Statement and
2023 Spring Budget is already allowing us to make new investments
in stockpiles and munitions.
While we recognise the affordability challenge of the 2023-2033
Equipment Plan, it is only right that the choices we make to
address this reflect the Government’s priorities as set out in
DCP23, as the department focuses more on Artificial Intelligence,
digital capabilities and assuring supply chains to modernise our
Armed Forces. We continue to work on reform to our acquisition
processes including more iterative development of capabilities.
