UK NAO says MoD’s ten-year equipment plan ‘not affordable’

2 February 2018 (Last Updated February 2nd, 2018 12:37)

The UK National Audit Office (NAO) has said that the Ministry of Defence’s (MoD) new ten-year equipment plan is 'not affordable.'

The UK National Audit Office (NAO) has said that the Ministry of Defence’s (MoD) new ten-year equipment plan is ‘not affordable.’

A report from NAO also noted that the plan does not offer a realistic idea of the future costs to be incurred by the defence department.

The plan has failed to forecast the actual costs required over the next ten years for the purchase and maintenance of the equipment that it has determined the UK armed forces would require.

NAO head Amyas Morse said: “The department’s equipment plan is not affordable. At present, the affordability gap ranges from a minimum of £4.9bn to £20.8bn if financial risks materialise and ambitious savings are not achieved.”

The 2017 equipment plan shows expenditure on equipment and associated support to be £179.7bn, including a £6bn contingency.

“Through its report, the UK office highlighted that the MoD has not included £9.6bn of forecast costs in the plan.”

The NAO has calculated a minimum affordability gap of £4.9bn, assuming the contingency will be used.

The report projects an additional potential affordability gap of £15.9bn if all risks of cost growth materialise and the MoD does not achieve any of the savings assumed in the plan. This increases the total potential affordability gap to £20.8bn.

Through its report, the UK office highlighted that the MoD has not included £9.6bn of forecast costs in the plan.

The NAO has also found that the UK department has stated lesser forecast costs by at least an additional £1.3bn, with the planned cost of procuring five Type 31e frigates are not included in the plan.

According to the UK MoD, the department is reported to have achieved savings of around £7.9bn against a target of £16bn, with more than £8bn yet to be achieved by 2027.

However, the NAO has found that there is a lack of transparency on the full amount of savings included in the equipment plan and the department does not have sufficient evidence to support the savings it has claimed to have achieved.