MoD accused of ‘woeful’ response to concerns over equipment funding black hole

There is a funding black hole of at least £7 billion in plans for kit for the armed forces due to Government dithering over which projects to fully finance, cancel or scale back, the Commons public spending watchdog said.

In a scathing report, MPs on the Public Accounts Committee (PAC) said the Ministry of Defence (MoD) “lacks the capability to accurately cost programmes within its equipment plan” and the actual shortfall in funding could amount to £14.8 billion or more by 2028.

The committee said the MoD was assuming it would achieve significant savings despite not having a “coherent and credible plan” to monitor and deliver them.

The cross-party committee concluded the 10-year equipment plan “remains unaffordable as Government continues to delay decisions on its priorities, and on whether to increase funding or stop, delay or scale back programmes”.

They added: “We remain sceptical that the department is close to reconciling what it says it needs with the funding it has available.”

The MoD insisted that it would deliver this year’s element of the equipment plan within budget, and was addressing the “financial challenges posed by ambitious, complex programmes”.

The PAC demanded more information on the risks associated with major projects, including the purchase of F-35 stealth jets and Type 31e frigates.

Public Accounts Committee chairwoman Meg Hillier said the MoD's response to concerns over the plan had been 'woeful' (PA Archive/PA)
Public Accounts Committee chairwoman Meg Hillier said the MoD's response to concerns over the plan had been 'woeful' (PA Archive/PA)

The committee’s chairwoman Meg Hillier said: “In terms of poor financial planning, the Ministry of Defence is a repeat offender.”

Progress in addressing concerns raised by the committee in May 2018 had been “woeful” she said, adding: “The MoD simply cannot afford everything it says it needs and it is not acceptable for officials to continue deferring decisions that have a bearing on its current affordability gap and longer-term risks.

“A department that is unwilling or unable to take the action required to help it live within its means is failing taxpayers, who rightly expect Government to deliver the best possible value for their money.

“We urge the MoD to act on our recommendations now, work with the Treasury to ensure its funding and planning models are fit for purpose, and bring some much-needed clarity to its priorities and costs.”

A MoD spokesman said: “We are confident that we will deliver the equipment plan within budget this year, as we did last year, as we strive to ensure our military have the very best ships, aircraft and vehicles.

“At the same time, we are addressing the financial challenges posed by ambitious, complex programmes, after securing a £1.8 billion financial boost for defence and reducing forecast costs by £9.5 billion through efficiency savings.

“We are grateful for the PAC’s report on the equipment plan, and we will carefully review all of its recommendations.”