22 July 2010 | Angeline Albert
The UK’s Ministry of Defence (MoD) is operating beyond its means because it lacks full details of what it buys, according to the government’s spending watchdog.
A report this week by the National Audit Office (NAO), examined the department’s management of the defence budget.
It concluded that while the MoD has an understanding of the component parts of its spend - such as fuel costs and salaries - it needs to enhance visibility across the whole spectrum.
The report said the MoD “would find it easier to prioritise and find efficiencies if it had better visibility of its costs”.
This lack of visibility means “it does not have a straightforward basis to determine which areas of expenditure should receive priority when budgets are insufficient to fund all previously planned activities,” it said.
“A crucial question for the MoD is whether it can use strategic financial management to stop living beyond its means. The current Strategic Defence and Security Review will provide an opportunity for the MoD to balance its books in the short-term. The greater challenge will be to keep spending plans affordable in the longer term,” said Amyas Morse, comptroller and auditor general at the NAO.
The MoD is one of the UK’s largest spending departments, responsible for more than £42 billion a year.