MoD unwilling to make difficult decisions needed to balance
budgets amid largest ever defence deficit
The Ministry of Defence (MoD) has not credibly demonstrated how
it will manage its funding to deliver the military capabilities
the Government wants. In a report published today, the Public
Accounts Committee (PAC) calls on the Government to get firmer
control of defence procurement, amid the largest deficit ever
between the MoD’s budget and its military capability
requirements.
Despite a budget increase of £46.3 billion over the next ten
years compared to last year’s Equipment Plan, this year’s Plan’s
£16.9bn deficit marks an unmistakable deterioration in its
financial position. The PAC warns that the real deficit would
actually be £12bn bigger than the £16.9bn estimate if all parts
of the Armed Forces took the same approach to including the full
costs of all the capabilities that the government expects them to
deliver.
Part of the reason for this deterioration is inflation and
adverse foreign exchange movements but the PAC’s report finds the
greatest cause of cost increases is the MoD’s decision to fully
fund the nuclear enterprise, with costs at the Defence Nuclear
Organisation – responsible for the UK’s nuclear deterrent –
having increased by £38.2 billion since last year’s Plan.
The report finds the MoD has put off making major decisions about
cancelling programmes it cannot afford. Instead, it has
optimistically assumed that the plan would be affordable if the
government fulfilled its long-term aspiration to spend 2.5% of
GDP on defence each year, despite there being no guarantee on
whether this will happen.
The PAC’s inquiry found that MoD is increasingly reliant on the
UK’s allies to protect our national interests. NATO membership
deters hostility, but the report warns such deterrence can only
be effective if our Armed Forces are credible. This is undermined
by issues including more people leaving the Armed Forces than
being recruited, the mothballing of Royal Navy ships due to crew
shortages, and the unavailability this year of the only ship able
to fully replenish aircraft carriers. Given that many of our
allies face similar capability challenges, the report calls on
the MoD to develop mitigations for how it would deal with the
risk of allied support being curtailed or withdrawn.
Chair's comment
, Chair of the Committee, said:
“In an increasingly volatile world, the Ministry of Defence’s
lack of a credible plan to deliver fully funded military
capability as desired by Government leaves us in an alarming
place. But this problem is not new. Year-on-year our committee
has seen budget overruns and delays in defence procurement.
A lack of discipline in the MoD’s budgeting and approach has led
to an inconsistent plan that just isn’t a reliable overview of
the equipment programme’s affordability.
We’re disappointed that not only are the same problems we’re used
to seeing on display here, but they also appear to be getting
worse. Despite a budget increase, this year’s Plan shows a clear
deterioration in affordability. The MoD must get to a better
grip, or it won’t be able to deliver the military capabilities
our country needs."
