Aircraft plan switch 'to cost £74m'

Royal NavyAbandoned plans to switch the fighter aircraft for the Royal Navy's new carriers will cost taxpayers £74 million, according to a public spending watchdog.

Last May, Defence Secretary Philip Hammond decided to revert to plans by the former Labour government to acquire the jump jet version of the US-built F-35 Joint Strike Fighter.
%VIRTUAL-SkimlinksPromo%
Under proposals set out in the 2010 strategic defence and security review (SDSR), the coalition had intended to switch to the more capable F-35C carrier variant of the aircraft - even though it meant mothballing one of the two carriers on grounds of affordability - but the costs of fitting the necessary catapults and arrester gear, ''cats and traps'', had more than doubled to £2 billion.

Although the department "acted quickly" once it had realised the problems with switching, the decision made in the defence review was based on "immature data and flawed assumptions", and the subsequent work cost about £74 million, the National Audit Office (NAO) said.
Margaret Hodge, who chairs the Public Accounts Committee, said the u-turn was the result of "wildly over-optimistic assumptions" made in the SDSR and called for the MoD to "get a grip on this ongoing fiasco".

She said: "The saga of the terrible waste of public money on the Carrier Strike project continues. This report shows that a further £74 million at least has been thrown away on top of the billions of pounds of notes already torn up. When this programme got the green light in 2007, we were supposed to get two aircraft carriers, available from 2016 and 2018, at a cost to the taxpayer of £3.65 billion. We are now on course to spend £5.5 billion, get one operational carrier and have no aircraft carrier capability for nearly a decade."

Ms Hodge added: "This latest u-turn came about because the decisions taken in the SDSR were based on the same wildly over-optimistic assumptions and poor understanding of costs and risks that have characterised this programme from the start. We are also now looking at a further delay of another two years because the ministry has decided to postpone the early-warning system that is a key part of the carrier programme.

"This means the UK will have no carrier Strike operating capability until 2022. What the Ministry of Defence needs to do now is stop backtracking on decisions and haemorrhaging money, and finally get a grip on this ongoing fiasco."

The 2012 decision to switch back to jump jets will be £1.2 billion cheaper than the carrier variant over the next decade, according to the MoD.

Amyas Morse, head of the NAO, said: "It is good that the MoD acted promptly, once it became clear that pursuing the option to buy the carrier variant aircraft would cost a lot more money and add another three years to the whole programme. But to achieve value for money in this project, the department will have to manage significant technical and affordability risks, and be consistent in sticking to the present plan."

5 PHOTOS
Five biggest taxpayer stings
See Gallery
Aircraft plan switch 'to cost £74m'

Most recently HM Revenue & Customs let Vodafone off the hook - for quite a sum. Vodafone paid out just £1.25 billion despite an original tax bill being closer to £8 billion (HMRC has always refused to reveal how much it thought the Vodafone final bill was). The episode was made even more shaming and painful because Vodafone was given several years to come good with the cash owed - even though it was sitting on a substantial cash pile at the time.

The Exchequer is estimated to have lost around £10 million to Goldman Sachs recently through an 'error' made by HMRC. The episode relates to an employee benefit trust run by Goldman allowing employees to take non-repayable loans that had no National Insurance contributions tied to them. HMRC did claw back the full amount from more than 20 businesses - but not Goldman. HMRC remains cagey about the details of the deal. Little HMRC accountability or transparency.

Huge problems with QinetiQ, the former Defence Evaluation and Research Agency, or DERA. A lack of clarity on contractual arrangements at the outset didn't help, allowing private equity company Carlyle to hammer the price down (why would you start negotiations when you didn't know the company's true value?). The Ministry of Defence behaved, it was said, like "an innocent at a table of card-sharps". Estimated cost to the taxpayer - £90 million. Huge sums were later made by QinetiQ management when the company listed.

The TaxPayers' Alliances estimates £2.7bn worth of taxpayer cash was wasted with a super-expensive 'National Programme for IT in the NHS'. The Department of Health, in the end, had very little to show for it as a consequence. Another example of poor management and a seemingly ingrained inability to provide taxpayers' with value for money.


"BT is paid £9 million to implement systems at each NHS site, even though the same systems have been purchased for under £2 million by NHS organisations outside the Programme", the Commons Public Accounts Committee noted.

Contentious. The Office for National Statistics estimated this has declined 3.4% since 1997, "with inputs increasing by 38%." The Centre for Economics and Business Research estimate that this inefficiency costs the taxpayer £58.4 billion a year.

Given the above record, are there any deals that the taxpayer has actually won out on? Not many, but the one successful project was the roll out of new Jobcentre Plus offices. It came in £314 million under budget, claims the Taxpayers' Alliance. A small cheer.

HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE
Read Full Story

FROM OUR PARTNERS