12 September 2007 | Paul Snell
Figures claiming more than £780 million savings on major defence projects forecast by the Ministry of Defence (MoD) have been "massaged", according to MPs.
Following a review in 2005-06, the MoD said it had reduced the cost of its 20 biggest projects by £781 million. However, a report by the Public Accounts Committee, published yesterday said that £448 million of this total was re-classified as spending on other procurement projects or transferred to other budgets. While this has reduced the cost of individual projects, it is not an overall saving to the department.
Edward Leigh, chairman of the PAC, said in a statement: "Old habits die hard. We have no idea what cuts will have to be made to other activities of our armed forces as a result of this massaging of the figures."
The MoD said that the transfer of costs allowed project teams to be assessed on costs over which they have direct control. "We have been clear that we do not claim these as savings to the department," said defence minister Lord Drayson. "This measure will help us take a more effective corporate approach to cost management. This was properly costed, and as the PAC report acknowledges this was a reasonable measure."
The report also revealed that the 20 largest MoD projects are now 2.6 billion over budget and the cumulative delay on projects has now reached 36 years.