A report issued by the Public Accounts Committee has revealed that the UK Ministry of Defence (MoD) could be short of £20.8bn to procure equipment for the next decade.
The report finds that uncertainty over the affordability gap affects the department’s ability to make informed decisions about defence.
Last year, the Public Accounts Committee report stated that the MoD’s Equipment Plan was at largest risk of becoming unaffordable since its establishment in 2012 and the risks have increased.
The Equipment Plan for 2017 to 2027 is not realistic and the UK MoD has failed in cost control, the report adds.
The panel forecasts a deficit of at least £4.9bn and potentially as much as £20.8bn over the ten-year £179.7bn budget for equipment.
Public Accounts Committee chair Meg Hillier said: “The MoD’s national security responsibilities give it a unique and critical place in the public sector but that is no excuse for a lack of rigour in its financial affairs.
“It is concerning that the department could find itself more than £20bn short of the funding required to buy the equipment it says it needs.
“The MoD’s inability to better quantify that affordability gap has consequences not just for its confirmed spending plans, but also its ability to prepare for serious challenges in national defence.”
The MoD is not only reluctant to provide an assessment of the affordability gap but has also failed to inform the UK Parliament and the public about its financial risks.
Hillier further said that the MoD needs to be more rigorous and realistic in its approach to plan the costing of its equipment acquisition programme.
Further, the department should be more transparent with Parliament and the public about its finances, commitments and costs to taxpayers, added Hillier.