UK MoD over-optimistic about military equipment budget, says PAC report


The UK Ministry of Defence (MoD) has been over-optimistic in planning its military equipment budget and deadlines for major defence procurement, says a report by the Public Accounts Committee (PAC).

According to 'The Ministry of Defence: The Major Projects Report 2011', despite cuts made during the Strategic Defence and Security Review (SDSR) in late 2010 along with two additional cost-saving exercises, MoD still says that finances were "broadly in balance".

The report says that the ministry's 15 most expensive projects had increased in cost by more than £6.1bn, equivalent to an 11.4% increase, since their approval, with an increase of more than £466m during 2010 to 2011.

Additionally, the projects have also been delayed by a total of 322 months.

The report adds that the MoD's cancellation or delaying of large projects to save money in the short term is of particular concern considering the level of expenditure that has been wasted in the long term.

Scrapping the Nimrod MRA4 maritime patrol aircraft programme at a later stage resulted in £3.4bn of funding being wasted, and delaying the Astute submarines has increased the cost to the taxpayer by almost £2bn.

The forecast cost of the Queen Elizabeth aircraft carriers has risen by £2.8bn since they were first approved in 2008.

PAC chairman and Labour MP, Margaret Hodge, said: "It is unacceptable that the department still cannot identify the extent of the current gap between resources and expenditure."

Hodge added: "Rather than the over-optimism which has held sway at the start of major projects, what is needed is realism: about the complexities of projects, the long-term costs of decisions taken today and the implications down the line of short-term budget cuts."

Meanwhile, UK defence secretary, Philip Hammond, assured that the government had embarked on a "radical" programme of reform to halt cost increases and will soon reveal its "affordable, deliverable programme".