The MoD lacks cost control and faces a potential £20.8bn 'affordability gap' © Crown copyright
The MoD lacks cost control and faces a potential £20.8bn 'affordability gap' © Crown copyright

MPs 'sceptical' over £16bn MoD savings

Will Green is news editor of Supply Management
10 May 2018

MPs have cast doubt on savings plans totalling £16bn drawn up by the Ministry of Defence (MoD).

In a report on the MoD’s Equipment Plan, the Public Accounts Committee (PAC) questioned both achieved and planned savings. It said the department claimed savings of £7.9bn since 2012, but “the full amount of savings included in the plan is not clear and the department does not have evidence that shows how it has achieved all the savings it claims to have made to date”.

The PAC said there were around £8.1bn of savings still to be achieved by 2027 “but given the extent of the challenge and its patchy past performance, we remain sceptical”.

“The majority of the remaining savings ideas are at an early stage of development, with implementation plans still to be developed,” MPs said.

“The department recognises past weakness in recording progress against savings and that there are a number of historic overlapping efficiency programmes that have prevented appropriate management.”

The report said the Equipment Plan, a 10-year forecast of defence spending on equipment and support, was “not realistic” and the MoD “lacks cost control”. MPs said there was a “significant affordability gap” of at least £4.9bn, and potentially as much as £20.8bn, above the £179.7bn budget.

MPs said they were “highly sceptical” the Modernising Defence Programme “will be able to return the department to a balanced position”. The programme, separate to the Equipment Plan, is assessing affordability and how the UK should prepare for challenges including cyber and chemical attacks.

PAC chair Meg Hillier said: “The department must be more rigorous and realistic in its approach to costing its equipment plan. It also needs to be more open with Parliament and the public about its finances, commitments and their costs to taxpayers.

“We heard a lot in evidence about the Modernising Defence Programme but I am concerned this may end up adding more costs to what is already an overstretched budget.”

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