Skip to main content

Statement on Major Projects Report 2015 and Equipment Plan 2015-2025

22 October 2015

A statement from Meg Hillier MP, Chair of the Committee of Public Accounts:

Chair's statement

The forecast cost of buying and supporting military equipment over the next ten years has risen by £3.5 billion since this time last year. Despite the staggering amount of money involved, the Ministry of Defence's own analysts admit it has underestimated the actual cost of its Equipment Plan by £5 billion. If this turns out to be the case, its £4.3 billion contingency will not be sufficient to buy and support the equipment it needs.

The Ministry and its contractors are struggling to deliver its projects on schedule, incurring an overall delay of five years in the last 12 months. It is encouraging that the Ministry's spending in 2014-15 was a much closer match to its budget than in previous years. But I am concerned that the Ministry once again spent substantial amounts of taxpayers' money on short-term extra work in order to reduce an underspend created in large part by a failure to deliver planned work. Without this, the Ministry would have underspent its budget by £732 million.

Maintaining the affordability of the Equipment Plan depends in large part on achieving billions of pounds worth of savings already built into the Plan. Yet the Ministry cannot tell whether these are on target, and savings made so far have been offset by increases in the cost of projects elsewhere. Parliament and the taxpayer cannot have total confidence in the affordability of the Plan while this remains the case.

I welcome the progress the Ministry has made in managing the costs of its major projects and the way it procures equipment, and its commitment to developing a more cost-effective way of keeping Parliament informed about major defence projects. But I am concerned that serious risks remain to the affordability and stability of its ten-year Equipment Plan.

Further information

Image: PA