Recommendations & Conclusions
33 items
2
Recommendation
Fifty-Second Report - Ministry of Defen…
The Department appears complacent about the affordability of its Plan and still does not yet have robust arrangements in place to control the cost of its largest programmes. The Department believes that its Spending Review settlement and the decisions it has taken mean its Equipment Plan is now affordable, and …
Government response. 2023. This will reflect the revised costs for defueling/deconstruction and uncontracted liabilities. 2.3 As noted to the Committee, Électricité de France’s (EDF) strategies, plans and the estimated costs are scrutinised, challenged, and approved by the Non-NDA liabilities assurance team (NLA) …
HM Treasury
3
Conclusion
Fifty-Second Report - Ministry of Defen…
The Plan’s affordability relies on the Department achieving a number of different types of savings, including £7 billion of ‘cost reductions’ by 2031. The Top Level Budgets (TLBs) do not yet have plans to achieve £4 billion of the ‘cost reductions’, which is almost as much as the savings expected …
Government response. 3.1 The government agrees with the Committee’s recommendation. Recommendation implemented 3.2 This recommendation has been implemented and TLBs have targets and plans to achieve these savings. 3.3 As outlined in the Equipment Plan 2021-2031 (EP21), the department’s top level budget …
HM Treasury
4
Conclusion
Fifty-Second Report - Ministry of Defen…
Likely additional costs in other areas of departmental spending, such as on its workforce and sizeable estate, may squeeze the Plan’s budget in future years, further threatening its affordability. The Department’s plans to make substantial reductions to its military and civilian workforces over the next 10 years are already harder …
Government response. 4.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2022 4.2 The department recognises the importance of managing risks to affordability, particularly from challenges in areas such as workforce and estates. 4.3 The EP21 set out an …
HM Treasury
5
Conclusion
Fifty-Second Report - Ministry of Defen…
The Department remains a long way short of having the finance skills it needs to manage the Plan effectively. Strong financial skills are needed to manage the large and complex set of programmes, crucial to a well managed and affordable Plan. But according to HM Treasury, the Department is in …
Government response. 5.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2023 5.2 The department is committed to improving financial professionalism recognising that this is vital to improving financial outcomes. It takes time to train personnel and the department …
HM Treasury
6
Conclusion
Fifty-Second Report - Ministry of Defen…
The Department has made little impact in its efforts to change its longstanding cultural resistance to change or criticism, which has for many years hindered a clear-eyed view of its equipment procurement performance. Senior officials do not acknowledge the poor state of affairs of current procurement, as outlined in NAO …
Government response. 6.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2022 6.2 The department monitors progress of National Audit Office’s (NAO’s) Value for Money recommendations including Equipment Plan report recommendations. The status of the recommendations is reviewed annually. …
HM Treasury
1
Conclusion
Fifty-Second Report - Ministry of Defen…
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Ministry of Defence (the Department) on the Department’s ten-year Equipment Plan (the Plan) which sets out its plans for the procurement and support of military equipment between 2021 and 2031.1
Government response. Based on a report by the National Audit Office, the Committee took evidence on 28 February 2022 from the Ministry of Defence. The Committee published its report on 11 May 2022. This is the government’s response to the Committee’s report.
HM Treasury
7
Conclusion
Fifty-Second Report - Ministry of Defen…
Outside the Plan, we asked if the proposed cuts to the regular Army to 73,000 from 82,000 meant the UK would not have enough soldiers.10 The Department stressed to us that the UK has “responded positively” to every request from NATO for further support.11 Development of new capabilities
Government response. 1. PAC conclusion: The considerable uncertainty facing the Programme has caused a loss of the critical skills needed to develop the business case, created delays and increased the risk of nugatory spending and health and safety incidents. 1. PAC recommendation: …
HM Treasury
8
Conclusion
Fifty-Second Report - Ministry of Defen…
The Department told us that it intended to use the Plan’s increased budget to fund both new capabilities and existing programmes. Significantly the Plan now includes £8.65 billion budget for the Future Combat Air System (FCAS) programme. This is a step change as previous Plans did not include money to …
Government response. 2.3 The Future Combat Air System Concept and Assessment phase involving government and industry concludes in 2024. It will provide the evidence and a degree of maturity of the programme specification, schedule, and associated costs. The department is also separately …
HM Treasury
9
Conclusion
Fifty-Second Report - Ministry of Defen…
The Department also told us it intends to buy more F-35 aircraft.16 It had previously told us that the 48 F-35 aircraft it is currently purchasing would not be enough to sustain Carrier Strike operations throughout the life of its two aircraft carriers.17 We heard that it now intends to …
Government response. The Department also told us it intends to buy more F-35 aircraft.16 It had previously told us that the 48 F-35 aircraft it is currently purchasing would not be enough to sustain Carrier Strike operations throughout the life of its …
HM Treasury
10
Conclusion
Fifty-Second Report - Ministry of Defen…
An example of new funding for more established programmes is the new radar for the Typhoon. Although it had been in development for several years before the decision to buy it was announced in 2015, the Department did not include the cost in recent Plans as it was not affordable.19 …
HM Treasury
11
Conclusion
Fifty-Second Report - Ministry of Defen…
More widely, the Committee asked whether the Plan was now based on a large number of past assumptions, observing that it does not include funding for capabilities 7 Q2 8 Q8 9 Q86 10 Qq 7–8 11 Q88 12 Q64 13 Q68 14 Q71 15 Q75 16 Q54 17 Committee …
HM Treasury
12
Conclusion
Fifty-Second Report - Ministry of Defen…
However, the NAO report found that in the Plan the Department has only set aside £1.05 billion from 2026–27 to 2030–31 to exploit research to develop usable military capabilities.24 This expenditure is only 0.4% of the Plan’s total budget, although the Department believes the boundary between R&D and exploitation is …
HM Treasury
13
Conclusion
Fifty-Second Report - Ministry of Defen…
The Department told us that, thanks to the funding increase in the Spending Review and the Integrated Review process, it thinks the Plan is now affordable, although there are financial and capability risks in its delivery.27 The Department also told us that it had a clearer strategy than before, with …
HM Treasury
14
Conclusion
Fifty-Second Report - Ministry of Defen…
This is the first time the Department has claimed the Plan is affordable for four years. And given the NAO has repeatedly reported on the Department’s focus on short term affordability at the expense of long-term value for money, we asked how the Department was guarding against accruing capability risk …
HM Treasury
15
Conclusion
Fifty-Second Report - Ministry of Defen…
We asked why the Department is forecasting to spend more than its capital budget in seven of the next 10 years. The Department responded that the differences in those years were quite small and it judged them to be manageable.32 It had taken a conscious decision not to fully “address …
HM Treasury
16
Conclusion
Fifty-Second Report - Ministry of Defen…
We considered the Department’s controls over the costs of the Plan’s largest programmes, in particular the nuclear projects such as Dreadnought submarines and the replacement Warhead programme. As the NAO notes, nuclear projects amount to about £60 billion in the Plan, which is more than a quarter of its value.34 …
HM Treasury
17
Conclusion
Fifty-Second Report - Ministry of Defen…
The Department told us that it was confident that the Dreadnought programme would not exceed its lifetime budget of £31 billion plus £10 billion contingency.38 It did not agree that the contingency amounted to a blank cheque, and said that HM Treasury only gave out its funds based on the …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: Spring 2023 2.5 The purpose of the Dreadnought contingency is clearly defined. It was established in recognition of the difficulties in accurately forecasting the costs of such complex programmes. It …
HM Treasury
18
Conclusion
Fifty-Second Report - Ministry of Defen…
On the replacement Warhead programme, the Department pointed to its 2021 action to bring the Atomic Weapons Establishment back under direct Government control, to help better control costs. In addition, it is investing in skills in the Defence Nuclear Organisation. But the Department did acknowledge that refinement of costs was …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: Spring 2023 2.5 The purpose of the Dreadnought contingency is clearly defined. It was established in recognition of the difficulties in accurately forecasting the costs of such complex programmes. It …
HM Treasury
19
Conclusion
Fifty-Second Report - Ministry of Defen…
The Plan’s affordability depends on the Department achieving a number of different types of savings by March 2031. As the NAO reported, these amount to nearly £22 billion, which comprises around £12 billion of ‘management adjustments for realism’, £7 billion of ‘planned cost reductions’ and £2.8 billion of ‘potential efficiencies …
Government response. The government agrees with the Committee’s recommendation. Recommendation implemented 3.2 This recommendation has been implemented and TLBs have targets and plans to achieve these savings. 3.3 As outlined in the Equipment Plan 2021-2031 (EP21), the department’s top level budget holders …
HM Treasury
20
Conclusion
Fifty-Second Report - Ministry of Defen…
Pressed on the £4 billion for which there are no plans yet, the Department explained that the target is based on an assumption of what the TLBs can deliver. The Department told us that Head Office scrutinises about 80 of the 400 projects in setting its savings targets for TLBs, …
Government response. The government agrees with the Committee’s recommendation. Recommendation implemented 3.2 This recommendation has been implemented and TLBs have targets and plans to achieve these savings. 3.3 As outlined in the Equipment Plan 2021-2031 (EP21), the department’s top level budget holders …
HM Treasury
21
Conclusion
Fifty-Second Report - Ministry of Defen…
We noted that £2.6 billion of the £4 billion savings—two thirds of the total—needs to be achieved by March 2025. This is despite the fact that contractual commitments limit TLBs’ flexibility to make savings, for example 62% of Air Command’s spend is already committed over the next ten years. Air …
Government response. The government agrees with the Committee’s recommendation. Recommendation implemented 3.2 This recommendation has been implemented and TLBs have targets and plans to achieve these savings. 3.3 As outlined in the Equipment Plan 2021-2031 (EP21), the department’s top level budget holders …
HM Treasury
22
Conclusion
Fifty-Second Report - Ministry of Defen…
The Department has made a number of assumptions about how much it will spend on its workforce (and other operating costs) and on its estate and infrastructure over the next 10 years. If it spends more than it currently expects to on these areas, it may have to reduce spending …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2022 4.2 The department recognises the importance of managing risks to affordability, particularly from challenges in areas such as workforce and estates. 4.3 The EP21 set out an affordable …
HM Treasury
23
Conclusion
Fifty-Second Report - Ministry of Defen…
The Department plans to make substantial reductions to its military and civilian workforces over the next 10 years. These include reducing the Army from 82,000 to 73,000; other savings equivalent to reducing trained military workforce by 6,350 (and their untrained workforce by 1,450) by 2030; and a 10% further reduction …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2022 4.2 The department recognises the importance of managing risks to affordability, particularly from challenges in areas such as workforce and estates. 4.3 The EP21 set out an affordable …
HM Treasury
24
Conclusion
Fifty-Second Report - Ministry of Defen…
In addition to these reductions, the Department’s spending plans currently assume further workforce savings of £2.5 billion over the 10 years to March 2031.52 The Department told us that plans had not yet been drawn up to achieve these reductions, and they will be subject to agreement in the next …
Government response. 4.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2022 4.2 The department recognises the importance of managing risks to affordability, particularly from challenges in areas such as workforce and estates. 4.3 The EP21 set out an …
HM Treasury
25
Conclusion
Fifty-Second Report - Ministry of Defen…
The condition of the Department’s estate is set to continue to decline despite an additional £500m to be spent on ‘preventative’ maintenance until March 2025.55 Service accommodation remains in a very bad way which risks harming recruitment and retention of personnel with key skills. The Department told us it recognised …
Government response. 4.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2022 4.2 The department recognises the importance of managing risks to affordability, particularly from challenges in areas such as workforce and estates. 4.3 The EP21 set out an …
HM Treasury
26
Conclusion
Fifty-Second Report - Ministry of Defen…
In order to produce a Plan which is effective, realistic and affordable, the Department needs to have in place the right arrangements and capabilities, many of which have previously been absent or incomplete. With such a financially complex Plan, it is vital for the Department’s people to have strong financial …
Government response. 6.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2022 6.2 The department monitors progress of National Audit Office’s (NAO’s) Value for Money recommendations including Equipment Plan report recommendations. The status of the recommendations is reviewed annually. …
HM Treasury
27
Conclusion
Fifty-Second Report - Ministry of Defen…
Strong financial skills are necessary at all levels for good management of the many hundreds of complex projects which make up the Plan. Yet, according to HM Treasury, the Department languishes in the third quartile of government departments in terms of financial capability. And the proportion of professionally trained financial …
Government response. 5.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2023 5.2 The department is committed to improving financial professionalism recognising that this is vital to improving financial outcomes. It takes time to train personnel and the department …
HM Treasury
28
Conclusion
Fifty-Second Report - Ministry of Defen…
We were interested as to why there had been so little progress since last year. The Department acknowledged “we are not where we want to be”, but told us that things were going in the right direction, and that there was a ‘sea change’ in the Department’s sense of cost …
Government response. 5.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2023 5.2 The department is committed to improving financial professionalism recognising that this is vital to improving financial outcomes. It takes time to train personnel and the department …
HM Treasury
29
Conclusion
Fifty-Second Report - Ministry of Defen…
We found that our witnesses did not readily acknowledge the poor state of affairs of current procurement. The Chief Executive of Defence Equipment and Support told us that, while he did not pretend his programmes were perfect, there has been significant improvements in controlling their costs, making efficiencies and delivering …
Government response. 6.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2022 6.2 The department monitors progress of National Audit Office’s (NAO’s) Value for Money recommendations including Equipment Plan report recommendations. The status of the recommendations is reviewed annually. …
HM Treasury
30
Conclusion
Fifty-Second Report - Ministry of Defen…
We were interested to understand why information about project performance does not always seem to flow freely and openly through the Department. The Permanent Secretary told us about the Ajax programme’s Health and Safety Report’s identification 57 C&AG’s report, para 3.3 58 Q116; C&AG’s report, para 3.17 59 Qq 149, …
Government response. 6.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2022 6.2 The department monitors progress of National Audit Office’s (NAO’s) Value for Money recommendations including Equipment Plan report recommendations. The status of the recommendations is reviewed annually. …
HM Treasury
31
Conclusion
Fifty-Second Report - Ministry of Defen…
We asked about the lack of tolerance of those involved in projects to voice their concerns without facing serious repercussions. The Permanent Secretary told us that “there are some particular challenges within the uniform chain of command about how you raise concerns” and he wanted the Department to have “the …
Government response. 6.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2022 6.2 The department monitors progress of National Audit Office’s (NAO’s) Value for Money recommendations including Equipment Plan report recommendations. The status of the recommendations is reviewed annually. …
HM Treasury
32
Conclusion
Fifty-Second Report - Ministry of Defen…
Departmental reform efforts have made limited progress. We note the NAO’s finding that the current Defence Transformation Programme, of which a key element is to change both processes and culture within the Department, is already behind schedule. A July 2021 internal review of the programme found that improvements were needed …
Government response. 6.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2022 6.2 The department monitors progress of National Audit Office’s (NAO’s) Value for Money recommendations including Equipment Plan report recommendations. The status of the recommendations is reviewed annually. …
HM Treasury
33
Conclusion
Fifty-Second Report - Ministry of Defen…
The Permanent Secretary insisted that progress is being made on changing behaviour and culture, but admitted that such changes “are not quick”. He also said that reducing the level of bullying, harassment and discrimination within the Department is a matter of personal priority for him. This is encouraging but he …
Government response. 6.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2022 6.2 The department monitors progress of National Audit Office’s (NAO’s) Value for Money recommendations including Equipment Plan report recommendations. The status of the recommendations is reviewed annually. …
HM Treasury