MPs alarmed at MoD’s lack of proper plan to fund armed forces

Public Accounts Committee calls on Ministry of Defence to make "difficult choices about which equipment programmes it can and cannot afford”
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By Jonathan Owen

08 Mar 2024

The Ministry of Defence does not have a proper plan in place to fund the armed forces, leaving the UK increasingly reliant on its allies for support, MPs have warned.

A new report released by the Public Accounts Committee today on the MoD’s equipment plan for the next decade also reveals a record black hole in the department’s accounts despite a budget increase of £46.3bn over the next ten years. The report comes out just a few days after the Spring Budget was published, which contained no new funding for defence.

The budget deficit has soared to £16.9bn in “a marked deterioration” in the department’s financial position and is the highest since the MoD began publishing equipment plans in 2012.

However, the true figure is far higher because “some parts of the Armed Forces have not included costs for all the capabilities government expects the MoD to provide, but only those they can afford”.

The report adds: “The Army, for example, could need around £12bn more to fund all the capabilities the government seeks.”

Inflation and adverse foreign exchange movements are among the factors behind the cost increases –but the single biggest reason is the MoD’s decision to fully fund the defence nuclear enterprise, which is responsible for the UK’s nuclear deterrent, the report says.

It accuses the MoD of not having had “the discipline to balance its budget by making the difficult choices about which equipment programmes it can and cannot afford” and hoping that the government will “fulfil its aspiration” to spend 2.5% of GDP on defence every year.

“The MoD is becoming increasingly reliant on the UK’s allies to protect the UK’s national interests, which carries the risk that such support might not always be available," the report states. 

Less than 5% of the MoD's major equipment programmes are “currently rated as highly likely to be delivered to time, budget and quality,” it adds.

“Successful delivery seems unachievable” for more than one in ten programmes, including nuclear submarine reactors, new communications technology and missiles, according to the report. The rest are rated amber, "which means that delivery appears feasible, but there exist significant issues requiring management attention”.

The report also warns that the credibility of the UK’s armed forces is “undermined by widely reported recruitment and retention issues” including “the mothballing of Royal Navy ships because of crew shortages”.

The Mod has also faced “difficulties both in funding teams to support SROs, and in recruiting and retaining suitably qualified and experienced staff”. The department admits that it is “facing a slow and steady attrition of skilled staff, because they have attractive skillsets that are wanted by many industries in a vibrant job market,” according to the report.

It recommends that the MoD develop plans to mitigate the impact on the UK of the risk that allied support might be curtailed or withdrawn, and plan for cuts that will be needed if the government does not spend 2.5% GDP on defence.

The MoD should also demonstrate in its future equipment plans “that it has a disciplined approach to budgeting which keeps costs in line with the funding available, challenges project teams on costs and takes account of risks such as inflation”.

This comes just weeks after the committee took the MoD to task for putting armed forces personnel at “significant risk” from inventory failures such as out of date medical supplies.

PAC chair Dame Meg Hillier 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."

Yet this problem is not new, she noted. “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.”

The situation appears to be worsening, she added: “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."

Sue Ferns, senior deputy general secretary of Prospect union, echoed the concerns. “Intelligent procurement and spending have long been a problem in the department, characterised by a failure to get either value for money, or to spend in a way which actually boosts our own sovereign capability,” she said. “The issue is compounded by the ongoing critical recruitment shortfall in MoD meaning skills and knowledge are not being replaced, and morale among workers is at rock bottom,” Ferns added.

In a statement, an MOD spokesperson said: “We are delivering the capabilities our forces need - significantly increasing spending on defence equipment to £288.6 billion over the next decade, introducing a new procurement model to improve acquisition, and confirming our aspiration to spend 2.5% GDP on defence.”


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