Chair's statement: Major Projects Report 2014 and Equipment Plan 2014-2024
13 January 2015
A statement from The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts:
I welcome the fact that there are some signs of improvement in the Ministry’s defence planning.
However, officials are still being far too over optimistic in estimating future procurement and support costs, an issue the NAO and Public Accounts Committee have been raising for a number of years. If its own internal assurance service is telling it that future procurement costs may be underestimated by as much as £3.2 billion and support costs by £2 billion, clearly the Ministry is still lacking enough staff with the right skills to forecast and manage costs properly.
If it cannot get its forecasts right, we cannot have confidence that the Equipment Plan is robust and fit for purpose. Furthermore if these underestimates turn out to be realised, it would exhaust the Ministry’s £4.6 billion contingency budget.
The affordability of the Plan also remains unclear. The cost of the 2014-24 Equipment Plan has fallen but only limited savings (£0.4 billion) for support and procurement costs had been achieved by June 2014, compared to the £6.3 billion of savings the Department needs to make over the ten year life of the plan. The Ministry has not even identified where many of these future savings are going to come from.
I look forward to hearing from officials how the MoD is going to up its game and really get a grip on the costs and risks associated with its defence planning.