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UK security put at risk by MoD's 'vague' budget plans, says spending watchdog

The Ministry of Defence's refusal to admit to a ?21bn black hole is putting Britain’s national security at risk and making it impossible for arms companies to plan for what the military can actually afford.
The claim comes in a damning report by the MPs who make up the Government’s spending watchdog committee.
In it they attack the 10-year “equipment plan” setting out defence spending priorities, saying the MoD “simply does not have enough money to buy all the equipment it says it needs”.
They blast the MoD’s plan for 2017 to 2027 as “not realistic”, adding that the department “lacks cost control” which will allow it buy equipment such as new Trident missile submarines, Type 31e frigates, F-35 fighters and armoured vehicles.
They also point to a “significant affordability gap” of “at least ?4.9bn and potentially as much as ?20.8bn” across the entire ?179.7bn decade-long budget. The MoD hopes a cost-saving programme will make up for this shortfall – something the MPs question.
Meg Hillier MP, who chairs the Public Account Committee which monitors government spending, led the criticism.
“The MoD’s national security responsibilities give it a unique and critical place in the public sector but that is no excuse for a lack of rigour in its financial affairs,” she said. “It is concerning the MoD could find itself more than ?20bn short of the funding required.
UK security put at risk by MoD's 'vague' budget plans, says spending watchdog

Costs relating to the Navy's new Trident nuclear submarines were highlighted as a major worry 

Credit:
MoD/BAE Systems
“The MoD’s inability to better quantify that affordability gap has consequences not just for its spending plans, but also its ability to prepare for serious challenges in national defence.”
The watchdog raised concerns about the cost-saving “Modernising Defence Programme” (MDP), aimed to produce efficiencies to make the budget affordable, saying that it “may end up adding costs to what is an already overstretched budget”.
Uncertainty over the budget is also pushing up costs of the equipment the MoD does buy, with defence companies unable to budget in the long term and delays in orders meaning prices rise. Reductions to the size of orders also ramps up costs as development costs are amortised over smaller orders.
The PAC’s report called on the MoD to make a realistic assessment of what MDP is likely to deliver, criticising what it called the “vagueness” of previous answers, the department’s “reluctance to acknowledge” how exposed it could be, and over-optimistic forecasts.
UK security put at risk by MoD's 'vague' budget plans, says spending watchdog

Meg Hillier MP, chairwoman of the Public Accounts Committee, has warned that the MoD's spending plan is posing security risks to the UK

Credit:
Christine Boyd
A lack of transparency to parliament and taxpayers about the likely price of equipment were also attacked, with scant detail about the true cost of the 138 F-35 jets to Britain and increasing budget pressure on new Dreadnought submarines singled out.
The committee also said a lack of flexibility in the 10-year plan “does not reflect the continually changing defence landscape”, reducing the military’s ability to deliver capabilities needed in the future, citing new threats such as cyber warfare and artificial intelligence.
To guard against this, the MPs said the MoD needs to be more flexible and recognise the “need for a strong UK defence industry to underpin our ability to react to emerging threats”.
The defence industry said the MoD faces “serious challenges” but has long argued for a more long-term and realistic approach from it so arms companies can plan better.
Paul Everitt, chief executive of defence industry trade group ADS, added: “A closer long-term partnership between government and industry can deliver better value to taxpayers and give our military the capability and agility they need to protect the public.”
Responding to the PAC report – which echoed similar findings from the National Audit Office earlier this year – the MoD said: “We are committed to delivering large, complex and technologically challenging defence programmes as part of our ?180bn plan to give our military the very best equipment. We recognise financial risk comes with that, but the potential affordability gap highlighted by this report reflects an unlikely, worst-case scenario in which all possibilities materialise.
"We are on track to meet our ?16bn savings target and will also review these recommendations as part of our Modernising Defence Programme, which aims to strengthen our Armed Forces in the face of intensifying threats.”
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