Statement on Ministry of Defence: Equipment Plan 2012-2022

"The Ministry must have a realistic Equipment Plan if it is to strike a better balance between delivering the capability it requires and the taxpayer funds it has available. However, the Ministry’s track record in forecasting accurately the cost of its largest projects hardly inspires confidence. Between 2000 and 2012, the cost of its 69 largest projects ballooned by £11 billion. Independent analysis in 2009 found that final project costs were typically 40 per cent higher than the Ministry’s initial forecasts.

Given this past performance, I am dismayed that the Ministry is still taking an over-optimistic view to putting a price on risk and uncertainty. The Ministry’s own internal review warned that this plan understates costs by as much as £12.5 billion. If this proves to be the case, it will eat up the entire £8 billion unallocated budget that is viewed by the Chief of the Defence Staff as necessary to deliver the full intent behind the future shape of the Armed Forces as set out in Future Force 2020.

This Equipment Plan is a welcome step towards trying to close the gap between the Ministry’s defence ambitions and forecast funding but it must now deliver. My committee will be taking evidence from the Ministry early next month and we will want to know what action it will be taking to learn the lessons of its past experience to inject greater rigour and realism into its forecasts."