The Ministry of Defence budget is “very strained” and future projects will be put at risk if its flagship Carrier Strike programme runs over budget, MPs have warned.
The department has insisted that the programme – which incorporates two aircraft carriers, new F-35 Lightning II jets and a new radar system – is “tremendous value for money” and costs are under control.
But the Commons’ Public Accounts Committee cautioned in a new report that the programme was not yet fully costed and questions remain over how to maximise the deployment of the carriers to ensure value for money.
The committee has repeatedly raised concerns about the defence budget following the commitments made in the last Strategic Defence and Security Review, and warned in today’s report that any cost overruns in Carrier Strike could threaten the successful delivery of other projects.
An MoD spokesperson said that the new aircraft carriers will be “highly versatile” – able to cope with everything from disaster relief to high-end warfighting – and will play a vital role in keeping Britain safe for the next 50 years, their expected service life.
The approved cost for both carriers is £6.2bn.
“This is a crucial investment that will revolutionise our ability to defend our nation as we face intensifying threats, and we are committed to keeping costs under control,” the spokesperson added.
But the MoD is currently weighing up its options on deployment of Carrier Strike, and the PAC said decisions will “require some compromises because of the available budget, equipment and personnel”.
The committee called on the department to ensure that the carriers are designed to be used to the fullest extent and as flexibly as possible to secure value for money from the “expensive” investment.
It also called for a more detailed estimate of the cost of supporting and operating Carrier Strike.
The fluctuating value of the pound since Britain’s EU exit vote has exposed the department to further cost pressures, particularly as it is buying the jets from the United States in dollars. The MoD has asked the Treasury if it can help fill the funding gap created by the difference in exchange rates, and the PAC called for the matter to be resolved as a matter of urgency.
The committee also raised concerns about possible delays to the programme caused by technical issues with the jets. But the MoD dismissed the concerns, insisting “that the level of technical challenge with the jets is normal when compared to other aircraft”, the report said.
Meanwhile the department’s trading entity, Defence Equipment and Support, is undergoing transformation to improve skills and capabilities, and the report called on the MoD to monitor its progress on innovating to meet staffing needs.
Meg Hillier, Labour MP and PAC chair, said: “There is a lot at stake with Carrier Strike – a hugely complex, costly programme intended to be at the heart of national defence for years to come.
“The project continues to leave the MoD exposed financially. Government must bring Carrier Strike in on budget or risk jeopardising the funds available for other defence programmes.”
She added that the uncertainty over costs, the impact of foreign exchange rates and the questions over deployment are all taking place as the MoD “awaits clarity on the future size of the defence budget”.
The department said it is the fifth largest defence spender in the world, and that the government has committed to increasing the £36bn defence budget by at least 0.5% each year for the rest of this Parliament.