MoD Equipment Plan nearly £3bn over budget

The National Audit Office has reported that the Ministry of Defence’s Equipment Plan is still unaffordable, with the department estimating that costs will be £2.9 billion higher than its budget over 2019-2029.

The Equipment Plan sets out the MoD’s equipment and support budget over the next decade,  including spending on equipment already in use and that in development. It accounts for 42 per cent of the MoD’s total spending, meaning stability of the wider defence budget depends on it’s effective management. This marks the third successive year that the plan has been found to be unaffordable.

However, the plan forecasts spending £183.6 billion on equipment and support costs over the next ten years, against a £180.7 billion budget. The NAO suggests that these costs could vary, and in a worst case scenario, should all the risks identified by the MoD materialise, could grow to an overspend of £13 billion.

The spending watchdog did, however, did say that the MoD has made ‘more optimistic judgments’ than last year, which removed costs to the value of £7.8 billion. In spite of this, the report deems that the MoD undoubtedly faces more significant shortfalls over the next five years, but now has less flexibility to respond to short-term financial pressures.

Gareth Davies, head of the NAO, said: “The MoD has not made the necessary strategic decisions to address the 10-year affordability gap and there is evidence that its continued short-term focus on living within annual budgets is increasingly affecting the Armed Forces’ ability to maintain and enhance the UK’s military capability. The MoD needs to determine its strategic priorities so that it can develop an affordable long-term programme of investment.”