The Ministry of Defence has been fined due to procedural failings.

The Ministry of Defence was fined £31,6m as it “had not appropriately sought nor gained necessary approval from HM-Treasury prior to the placement of some contracts”. The Ministry of Defence was also fined £1 million for failing to seek assurances that high-paid off-payroll appointees had arrangements in place to pay income tax and national insurance.

The information came to light when clarification was sought over an entry in the Department’s Annual Report and Accounts 2013 to 2014.

“With reference to page 109 of his Department’s Annual Report and Accounts 2013 to 2014 and page 17 of his Department’s Annual Report and Accounts 2014 to 2015, if for what reasons his Department was fined (a) £31.6 million and (b) £1 million by HM Treasury.”

Jeremy Quin, Minister for Defence Procurement, responded:

“ARAc 2013-14 – £31.6 million Fine from HMT

There were no fines of this value reported in the MOD ARAc 2013-2014 publication. A fine of this amount however was reported in the MOD ARAc for 2015-16 and it is this entry that we assume is being referenced in the question.

This fine related to instances where the Department had not appropriately sought nor gained necessary approval from HM-Treasury prior to the placement of some contracts. As a result of this procedural failure, HM Treasury imposed a £31.6million fine upon the Department. The Department undertook extensive action to address the procedural weaknesses, no further fines of this nature have been imposed upon Defence in the subsequent years.

ARAc 2014-15 – £1 million Fine from HMT

This HM Treasury fine was imposed for failures by the Department to seek assurance from a number of high-paid off-payroll appointees that they were paying the correct tax and National Insurance. This relates to procedural failures to seek assurance as part of the onboarding process for off-payroll staff to confirm the arrangements in place for those individuals to pay income tax and national insurance. The Department has implemented revised processes for the management of off-payroll employees including the new responsibilities placed on employers by changes to IR35 legislation. As a result, no further fines of this type have been imposed since.”

Subscribe
Notify of
guest
57 Comments
oldest
newest
Inline Feedbacks
View all comments
Goldilocks
Goldilocks
18 days ago

Ironic, as its one of the main reasons the MOD (mainly the Army) is in such a mess finacially

Joe Soaps
Joe Soaps
17 days ago
Reply to  Goldilocks

Hardly surprising when a 4 star decides to spend…wait for it 85k, yes eighty five thousand pounds on a projector because the original one was “too noisy” for him. Easiest thing doing, spend some one else money.

Airborne
Airborne
16 days ago
Reply to  Joe Soaps

Really? When, where was that? Seems a little unlikely that would be authorised no matter the number of stars. Quite shocking of true.

Graham Moore
Graham Moore
17 days ago
Reply to  Goldilocks

I don’t think so. MoD placing contracts without Treasury authorisation is very rare – in fact I had not heard of a single case before this story. The MoD will not be in financial trouble due to a £36m fine – that is exceptionally ‘small beer.’

Charles verrier
Charles verrier
18 days ago

So – A Government department is fined and the money goes to.. The Government. Remind me how this acts as any kind of deterrent or punishment?

Observer101
Observer101
18 days ago

People’s careers are affected by such sanctions, which should have some value in deterring repeat failures (or at least you would think so, then again…!).

Paul.P
Paul.P
17 days ago

Be interesting to know the contracts….Ajax or Sea Ceptor for example. Bit of a difference.

david
david
17 days ago

I was thinking the same thing. A government body fines another government body. The employees (civil servents) who caused the error are probably promoted (out of harms way).

James
James
17 days ago

And probably costs millions in legal procedures just to issue the fine!

geoff
geoff
17 days ago

And more to the point Charles-whose money is it? no prizes-the British Taxpayer!

maurice10
maurice10
18 days ago

Fiscal control is necessary, but not when that fine could be spent on much needed Army procurement. It’s nonsense when all said and done.

David Barry
David Barry
18 days ago
Reply to  maurice10

Wouldn’t let Army lose in a sweet shop.

However, that fine needs to relate / be connected to the annual performance reviews of the individuals concerned so that they do not receive any pay rises. Harsh? It’s gone on too long and an example needs to be set.

BB85
BB85
17 days ago
Reply to  David Barry

Exactly a fine of that nature in the private sector would guarantee dismissal.

Tommo
Tommo
16 days ago
Reply to  BB85

BB85 But,as its the Civil Service it equates too an early retirement with all perks intact ie a well earned taxpayers funded guilt edge pension but no Luncheon Vouchers

Mike
Mike
17 days ago
Reply to  David Barry

“Wouldn’t let the Army lose in a sweet shop”
How about RN Type 45 destroyers that love nothing more than breaking down and RAF Chinooks that sat in hangers for years unable to fly. Two quick examples from the other services. All three services have had procurement issues, AJAX is just the hot topic right now.

Joe16
Joe16
17 days ago
Reply to  Mike

To a certain extent, yes, the Army is certainly the whipping boy of the moment. I’ve not doubt that the Navy and RAF are glad for the breather. But, to be fair, the Army have consistently failed to manage their existing fleets of equipment through life in any appreciable way over the last 15-20 years at least; two of their three current major programmes (Warrior CSP and Ajax) are in such a bad way that they’ve already cancelled at least one of them; most commentators (ex-military and civilian alike) don’t see their future force plans as fit for purpose or… Read more »

Mike
Mike
17 days ago
Reply to  Joe16

Joe, that’s a great answer and not half as knee jerk as my initial response. I think you make some good points, to continue our conversation; I do not think it is the Army who are at total fault with AJAX. It was rejected by the Army during trials which highlighted vibration amongst other issues. It is back with the manufacturer to sort,(If possible) although to get this far has indeed cost the Army a lot financially. The dropping of WR CSP was pure cost. WR hulls have been in service for a very long time, and lots of them… Read more »

andy a
andy a
16 days ago
Reply to  Joe16

I believe we bought a number of chinooks to add to the force and the spec wasnt workable with our forces, they sat in a warehouse and had to be downgraded and it cost millions. Please feel free to correct me if u can remember the story as its bit vague to me.

MikeR
MikeR
14 days ago
Reply to  andy a

If I recall correctly, the chinooks in question were purchased without the appropriate agreements in place relating to software integration to fuse our bespoke kit to the installed controls. Meaning they could only fly in clear weather, daytime only. The use of bespoke kit was an attempt to save money which spectacular backfired.

MikeR
MikeR
14 days ago
Reply to  MikeR

I have found a link to a story, the Procurment of these chinooks was described as one of the most incompetent procurements of all time.
http://news.bbc.co.uk/1/hi/uk/3606325.stm

Phylyp
Phylyp
18 days ago

How about personal accountability, instead of fining the MoD? You know, fine the individuals who signed off those incorrect decisions. Ridiculous idea, I know. Next I’ll be wishing for unicorns.

Last edited 18 days ago by Phylyp
John Clark
John Clark
17 days ago
Reply to  Phylyp

Personal accountability is a dirty word in many areas of the public sector unfortunately.

It’s far too easy for incompetent individuals to hide inside monolithic organisations like the MOD, in much the same way as the teaching profession.

You have Unions fighting the case for anyone who’s a paid up member, no matter how useless. In the teaching community, it’s often easier to allow a contract to naturally terminate, than it is to take on the fury of the teaching Unions and sack someone.

The private sector would come as a very rude shock indeed…

Jon
Jon
10 hours ago
Reply to  John Clark

John, I dont agree with what you say about incompetent teachers being able to hide away and evade detection. I’m a former primary school teacher and I still do the odd bit of supply now. Teachers are observed constantly, their childrens academic levels are scrutinised monthly and parents are more on the ball with their childs progress than before. Yes the Unions are there to act for teachers should they be hauled over the coals for their performance. They dont protect them from evidence gained from the above. They do however provide an ally for the teacher, who often is… Read more »

John Clark
John Clark
6 hours ago
Reply to  Jon

Hi Jon, Thanks for your input. I would offer an observation that you might be able to answer. Has there ever been a single occasion that teaching Unions have called for strike action that wasn’t directly related to pay and pensions? Have they ever (even once) in 50 years, called for industrial action over poor school resourcing or overcrowding in classrooms etc? It seems that the two main teaching Unions are unreformed dinosaurs, cut from the same cloth as the old NUM, calling for strike action at the drop of a hat, actions that never appear to be in the… Read more »

Jon
Jon
2 hours ago
Reply to  John Clark

Yep, John, absolutely agree. Money, pensions etc are the mainstay for teaching unions. I guess because they are controlled directly by the government.

Resources and equipment, right down to pencil sharpeners are the schools responsibility, or the individual academies of which many schools are part of now.

But senior civil servants wasting millions, then waltzing off into the sunset has got to be addressed. Making each manager personally responsible what happens under him would perhaps force a change.

lee1
lee1
17 days ago
Reply to  Phylyp

It would simply be pinned on a lower ranking person in the MOD rather than the Senior management. The Senior manager would then be promoted.

You know who is ultimately responsible for these decisions as the head of the MOD? The Defence Minister! But getting Ministers to take responsibility is like forcing a boulder through a keyhole…

Jonathan
Jonathan
18 days ago

So money is spent on money going around and around government departments. This really is insanity. What about if there is a procedure breach they solve the problem not waste taxpayers money by pointlessly moving money around departments.

Graham Moore
Graham Moore
17 days ago
Reply to  Jonathan

I guess you would prefer that defaulting individuals were disciplined? That would make sense to me.

Jonathan
Jonathan
17 days ago
Reply to  Graham Moore

Hi graham, it depends I’m not keen on disciplining individuals who are just working as part of a system as a first step ( most errors are forced by a system, such as lack of clarity of process, poor training, to much work, impossible goal setting etc) for me you need to hold the leaders to account for what happens in their services, making sure that they make sure everything works properly, processes are clear, staff are trained, correct resources are in place and clear goals are set. If leaders don’t do that after it’s been made clear there are… Read more »

Graham Moore
Graham Moore
17 days ago
Reply to  Jonathan

Yes, I totally agree with that.

PaulW
PaulW
18 days ago

Why does HMT have control over individual MoD contracts? Is that a control freak thing. MoD contracts are made against MoD budgets. That’s an MoD thing. End of. Let the people who know about defence things be responsible for defence things. HMT should only get involved in the overall picture. Anything else is having fingers in other peoples pies.

Paul.P
Paul.P
17 days ago
Reply to  PaulW

Cash flow I expect….HMT needs to know if HMG needs to borrow i.e. issue bonds to finance govt spend.

farouk
farouk
18 days ago

Reminds me of the good old days when you saw one of your mates tapping the boards for going into the red with his bank. (I once received a warning letter from mine stating that they would write a letter to my unit because I had gone into the red, I concerned looked into the matter and found that the pay office hadn’t paid me that month, and so I wrote them a nice polite letter stating just that and that, if they did write such a letter, that I would take the person who had signed that letter to… Read more »

Airborne
Airborne
16 days ago
Reply to  farouk

Ah I remember those days although I was only a young crow and things did improve……I got a loan….

Dave Wolfy
Dave Wolfy
17 days ago

Splendid, but who?
There must be a who!

Tommo
Tommo
17 days ago
Reply to  Dave Wolfy

Fave 50 yrar wait until Kew archives will make WHO’s name available for Public consumption get yer teeth into that scandal

Tommo
Tommo
17 days ago
Reply to  Tommo

Year not yrar arghhh

Tommo
Tommo
17 days ago

Oh what a tangled Web these Cival servants weave and which one will be held too account ,forced to retire and then given a gilt edge pension

Robert Lisowski
Robert Lisowski
17 days ago

Be interesting to know how The Treasury found out. Also how was the £31.6m calculated?

Jason M Holmes
Jason M Holmes
17 days ago

That’s the new gym at RAF Wyton scrapped then!

Tommo
Tommo
16 days ago
Reply to  Jason M Holmes

I’m sure the Gym was a smokescreen for a SRs Wine bar , with Pole dancing equipment

AV
17 days ago

The fine relates to 6 to 8 years ago….any news as to why this is flagged up now?..

AV
17 days ago
Reply to  AV

Apart from someone ‘seeking’ a clarification…

Tommo
Tommo
16 days ago
Reply to  AV

Probably a stocktake Audit of Whitehall spirit and wine store , then too cover their own tracks ,blamed the Army

Stc
Stc
17 days ago

It’s madness, surely the people, if mistakes were made and it does wiff of judge and jury, then they should lose their jobs ? The fine maybe small, but it would make difference if say spent on poor houseing some of our troops live in. No 11 needs to be held to account in Parliament and justify how this makes the UK safer? Are they saying it’s corrupt or just someone not doting the TS or ticking the right boxes. Any taxes that should have been paid needs to be recovered by IR.

Charles
Charles
17 days ago

What items did they let £31.6m contract(s) for?

Rob N
Rob N
17 days ago

This is just stupid. How does it help for the treasury to take money away from defence…? The treasury has too much power and autonomy.

Dusty
Dusty
17 days ago

IMHO that’s why there was the big uplift to the Defence Budget in the last Spending Review. Made the Government look good and shut up the Tri-Service Chiefs about lack of funding, all because the Chancellor knew they were going to get a big chunk of change back in the coffers by way of fines! SR just a paper exercise as normal, never a real commitment to provide desperately needed investment.

simon
simon
16 days ago
Reply to  Dusty

The defence budget increased by £16.5 billion over 4 years. The fine was £31.6 million for 1 year. even at £4.125 billion per year the fine is ~0.7% of the increase. given there be 95 million wasted looking at a new missile, that is now not going to be purchased

Dusty
Dusty
16 days ago
Reply to  simon

I get the mathematical breakdown provided however, my point is MoD were getting one of the biggest SR budget increases I can remember. Now a lot of that extra funding is going back into Central Government coffers so no actual physical increase to the amount promised, just numbers moving on the Chancellor’s ledger. As for wasting £95M on a new single use weapon, I would sooner see that money invested in developing forward operating troop vehicles that neither roll over on a bit of a slope killing it’s passengers, nor creates so much noise it destroys their hearing, potentially ending… Read more »

Rob N
Rob N
14 days ago
Reply to  Dusty

Yes Ajax is rubbish and the sooner we cut our losses and scrap it the better.

Steven Alfred Rake
Steven Alfred Rake
15 days ago

Just my 10 bobs worth, If you look at establishments like Abby Wood it was built to house 5000 people but now there are over 10,000 people trying to use the place so that over half have no access to the a secure terminal, very little parking, no accommodation.
It is not fit for propose, I think the Civil service should be disbanded and have the relevant wings of the armed forces run there own budgets, if they need civilian help then they should be free to enlist that help directly.
Too many fat cats getting fatter in the CS.

Dusty
Dusty
13 days ago

Sorry but not all of us Civil Servants are fat cats. R&R across all wings is getting harder to achieve especially when Government want to reduce the overall headcount of SP’s meaning their skills have to be channeled into the combat functions of the particular wing. CS’s are required to fill the skills gaps this creates and yet Government wants to reduce the CS headcount too which makes our workload more demanding; working in the CS is not the cushy number some seem to believe it to be. It’s a symbiotic relationship without which a lot of functions that specialist… Read more »

Steven Alfred Rake
Steven Alfred Rake
13 days ago
Reply to  Dusty

Hello Dusty, Is good to see some one fighting the CS corner, but unfortunately the lack of accountability makes the whole process in the CS not particularly cost affective and in some cases bordering on criminal. If you look at the USMC and how they operate, which has a similar budget to the UKs armed forces and they are also a Tri service. When they need equipment they appoint a senior officer as well as SNCOs who are experts in the feild of the required equipment or the equipment being replaced, then if they need civilian expertise they then recruit… Read more »

Dusty
Dusty
13 days ago

Hiya. Think we might have crossed wires here a bit. You seem to be referencing more to the Senior Civil Service hence the fat cats reference. I’m focussing on the Civil Service I work for, the worker bees that SP’s are more likely to know and work with. To me SCS and CS are two distinct and separate businesses bundled together under one title. The SCS being referred to as mandarins in the media doesn’t help define this. I’ve no desire to offend or argue with you or your remarks, nor be scooped up into the often negative reports that… Read more »

Steven Alfred Rake
Steven Alfred Rake
13 days ago
Reply to  Dusty

Hello Dusty, We come to a similar conclusion (well on the same page) but it is not just the CS that treats the junior ranks as “pee-ones”
As Churchill said “power corrupts and absolute power corrupts absolutely”
All people involved in decision making should be held accountable for their decisions Politician, SC and Military.

Nick
Nick
14 days ago

So basically the government their dummy out because their mates missed a chance to cash in on a contract.