Parliament’s spending watchdog has accused the UK Ministry of Defence of overambitious spending which outstrips its resources, as it revealed that the “black hole” in the armed forces equipment budget is now as high as £17.4bn.
A National Audit Office report published on Tuesday chastised the MoD for presenting an unaffordable equipment plan for the fourth year running and warned that the department’s calculations do not even include the full cost of flagship projects such as the Tempest future fighter jet programme, the successor to the Astute submarine, and a new military space command.
The criticism comes just two months after Downing Street announced a surprise £16.5bn boost to MoD budgets over the next four years to reinvigorate the armed forces and fund new investments in cyber, space and naval capability. However, the watchdog warned that even with this new spending, some tough decisions about savings would have to be made.
“To date, the MoD's fundamental problem has been that the cost of delivering its ambition far exceeds its available budget,” said Gareth Davies, head of the NAO. “Faced with an unaffordable equipment programme, it has adopted a short-term approach to financial management that restricts the military commands from developing the equipment they need and leads to increased costs in the longer-term.”
According to the report, the MoD estimates a shortfall of £7.3bn in its £190bn equipment budget for 2020-2030, although in a worst-case scenario, the shortfall may be as large as £17.4bn. Last year the worst-case estimate was £13bn, but the NAO has cautioned that the figures are not directly comparable because of changes in the way the deficits are calculated.
The MoD emphasised that the plan had been prepared before the funding boost secured in November and said the defence secretary was “committed to matching ambition with resource for future equipment plans.”
However Meg Hillier, chair of the public accounts committee, said while the £16.5bn spending settlement might give the MoD some “much-needed breathing space”, this might not be enough to develop the capabilities the armed forces need.
“MoD still has to make hard-headed decisions about what it can afford,” she said. “The equipment plan needs to be more than just a wish list, reliant on nebulous ‘efficiency savings’ to make the sums add up.”
While all military services have funding shortfalls, the Royal Navy’s is the largest at £4.3bn, or 12 per cent of its overall costs. The navy is central to Boris Johnson’s plans to strengthen the armed forces after the prime minister promised last year that new investments in shipbuilding would “restore Britain's position as the foremost naval power in Europe”.
Malcolm Chalmers, deputy director-general of the Royal United Services Institute, said the funding injection provided “an opportunity to bring the MoD equipment budget back into balance, with all the advantages this can bring in terms of timely and cost-effective procurement.”
“But it also makes clear that the extra money for defence equipment will largely be spent on funding existing, albeit previously underfunded, commitments — not on entirely new programmes,” he added.