The National Audit Office have released a report examining what they call the ‘affordability gap’ of the MoD’s equipment plan.
The following numbers are the key points raised by the report, which can be found here.
Total size of the Ministry of Defence’s (the Department’s) 10-year equipment and support budget, including contingency
The minimum size of the affordability gap in the Department’s Equipment Plan, after contingency
Additional affordability gap if all identified financial risks materialise and no assumed savings are achieved
£20.8bn is the potential affordability gap (£4.9 billion + £15.9 billion)
Costs not included in the Plan
Excess of the Department’s forecast project costs over the 2017 budget, that are not included in the Plan
The Department’s forecast cost of buying five Type 31e frigates not included in the Plan
£6 billion is the Centrally held contingency, £4.9 billion the minimum affordability gap.
Further risks to affordability
Estimated potential understatement of costs in the Plan as calculated by the Department’s Cost Assurance and Analysis Service
Potential increase in costs if the Department had used the exchange rate prevailing at the start of the Plan period (1 April 2017) to forecast costs
Remaining savings assumed within the Plan that the Department must achieve over the next 10 years
£15.9 billion is the additional affordability gap if all identified financial risks materialise and no assumed savings are achieved