UK defence: No credible Government plan to deliver desired military capabilities

8 March 2024

MoD unwilling to make difficult decisions needed to balance budgets amid largest ever defence deficit

The Ministry of Defence (MoD) has not credibly demonstrated how it will manage its funding to deliver the military capabilities the Government wants. In a report published today, the Public Accounts Committee (PAC) calls on the Government to get firmer control of defence procurement, amid the largest deficit ever between the MoD’s budget and its military capability requirements.

Despite a budget increase of £46.3 billion over the next ten years compared to last year’s Equipment Plan, this year’s Plan’s £16.9bn deficit marks an unmistakable deterioration in its financial position. The PAC warns that the real deficit would actually be £12bn bigger than the £16.9bn estimate if all parts of the Armed Forces took the same approach to including the full costs of all the capabilities that the government expects them to deliver.

Part of the reason for this deterioration is inflation and adverse foreign exchange movements but the PAC’s report finds the greatest cause of cost increases is the MoD’s decision to fully fund the nuclear enterprise, with costs at the Defence Nuclear Organisation – responsible for the UK’s nuclear deterrent – having increased by £38.2 billion since last year’s Plan.

The report finds the MoD has put off making major decisions about cancelling programmes it cannot afford. Instead, it has optimistically assumed that the plan would be affordable if the government fulfilled its long-term aspiration to spend 2.5% of GDP on defence each year, despite there being no guarantee on whether this will happen.

The PAC’s inquiry found that MoD is increasingly reliant on the UK’s allies to protect our national interests. NATO membership deters hostility, but the report warns such deterrence can only be effective if our Armed Forces are credible. This is undermined by issues including more people leaving the Armed Forces than being recruited, the mothballing of Royal Navy ships due to crew shortages, and the unavailability this year of the only ship able to fully replenish aircraft carriers. Given that many of our allies face similar capability challenges, the report calls on the MoD to develop mitigations for how it would deal with the risk of allied support being curtailed or withdrawn.

Chair's comment

Dame Meg Hillier MP, Chair of the Committee, said:

“In an increasingly volatile world, the Ministry of Defence’s lack of a credible plan to deliver fully funded military capability as desired by Government leaves us in an alarming place. But this problem is not new. Year-on-year our committee has seen budget overruns and delays in defence procurement. A lack of discipline in the MoD’s budgeting and approach has led to an inconsistent plan that just isn’t a reliable overview of the equipment programme’s affordability.

We’re disappointed that not only are the same problems we’re used to seeing on display here, but they also appear to be getting worse. Despite a budget increase, this year’s Plan shows a clear deterioration in affordability. The MoD must get to a better grip, or it won’t be able to deliver the military capabilities our country needs."

Further information

Image: MoD