The Ministry of Defence has published plans to spend over £186bn in the next ten years in its 2018 Defence Equipment Plan, let’s take a look at what it contains.
The plan, found here, also outlines £935m in increased forecast costs for major infrastructure projects during 2017/18. These include an increase of £458m for HMS Queen Elizabeth and her F-35B jets. The rise in F-35B costs were attributed to changes in exchange rates, although the MoD say that these changes ‘were anticipated’.
‘Since 2015 the world has become more uncertain, volatile and dangerous at a faster rate than predicted’
Defence Equipment Plan 2018
The MoD has managed to offset cost increases with cost reductions elsewhere, notably on the Poseidon MRA1 programme (£207m), Apache ‘Sustainment Programme’ (£132m), and the Type 26 frigates (£104m).
A headline failure for the MoD has been the upgrade plans for the Warrior infantry fighting vehicle. This programme is now 13 months behind schedule, and £62m over-budget.
Note the Army's Warrior Capability Sustainment Programme. Costs have risen from £1.32 billion to £1.55 billion. This equals £4.1 million per vehicle for a fleet that will remain in service for less than 15 years. https://t.co/jaAw4Z6Eo3
— Nicholas Drummond (@nicholadrummond) November 5, 2018
Despite the cost reductions, the National Audit Office (NAO) stated that the MoD’s plan ‘remains unaffordable and is not sustainable if the Department wants to deliver longer-term value for money’. The MoD were however praised for being ‘more transparent than in previous years’.
The MoD forecasts spending £193bn on equipment in the next ten years, £7bn above its £186bn budget for that period. The NAO warned that in a ‘worst case scenario’, this gap could rise to £14.8bn. This figure is however lower than the £20.8bn worst case scenario forecast in January 2018.
The MoD must decide ‘which programmes to defer, de-scope or delete as soon as possible’ according to the NAO.
Minister for Defence Procurement Stuart Andrew said he was “grateful” for the NAO’s report. He said ministers would be “rigorously pursuing productivity and efficiency gains” and “prioritising capabilities to meet the changing threat environment”.
Shadow Defence Secretary Nia Griffith said: “This report on the Government’s Defence Equipment Plan is very damning.
“We need proper investment in our nation’s defences, not just political posturing from the Defence Secretary. You cannot do security on the cheap”.
She added “it is high time that Conservative Ministers stopped relying on unrealistic efficiency savings and got to grips with the huge affordability gap in the Defence Equipment plan”.