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3 September 2013 | Will Green
MPs have raised concerns about the affordability of two new aircraft carriers and the ability of the Ministry of Defence (MoD) to manage the programme.
In its latest report on the Carrier Strike programme, the Committee of Public Accounts (PAC) said the MoD has a “history of making poor decisions” and it provided “deeply flawed information” when a U-turn was taken over the aircraft to be flown from the aircraft carriers.
The Carrier Strike programme was given the green light in 2007, but in 2010 politicians decided to change the type of aircraft on the basis of flawed information surrounding supposed savings and enhanced capability – including failing to take VAT and inflation into account in the cost of converting the carriers.
MPs said it was originally estimated that converting the carriers would cost between £500 and £800 million, but the figure was in fact £2 billion. In 2012, it was decided to revert to the original aircraft, a decision that will cost taxpayers £74 million.
In Carrier Strike: the 2012 reversion decision the PAC said: “Despite this change of mind, the department still faces major challenges to the affordability of the Carrier Strike programme, particularly with the uncontrolled cost growth in the aircraft and carriers, and the misalignment of essential capabilities such as the radar system needed to protect the carriers.
“In addition, the department might not have the skills or capability to manage the programme, despite having some 400 staff working on it.”
MPs recommend the MoD establishes clear cost and time baselines for the carriers, improves information for the 2015 Strategic Defence and Security Review, and the National Audit Office should examine whether the MoD has the capability to procure equipment and support and manage contracts.
Labour MP Margaret Hodge, chairwoman of the PAC, said: “The committee is still not convinced that the MoD has this programme under control. It remains subject to huge technical and commercial risks, with the potential for further uncontrolled growth in costs.”
The MoD said cost calculations in 2010 included military equipment that was VAT exempt and VAT liable, but this had "no bearing on the decision to change the variant of Joint Strike Fighter procured".
Defence secretary Philip Hammond said: "We are currently negotiating with industry to seek to secure proper alignment between industry and the MoD over the balance of the project and so bring the costs under control, but we are doing so within the context of a contract that gives us very little negotiating leverage."