Recommendations & Conclusions
7 items
3
Conclusion
Nineteenth Report - MoD Equipment Plan …
Rejected
The MoD’s prioritisation of the Defence Nuclear Enterprise carries a risk that this will further squeeze budgets for conventional capabilities. Maintaining the nuclear deterrent remains the MoD’s highest defence priority. This year’s Plan is the first time that the MoD has set out its nuclear budget separately from other defence …
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The MoD’s prioritisation of the Defence Nuclear Enterprise carries a risk that this will further squeeze budgets for conventional capabilities. Maintaining the nuclear deterrent remains the MoD’s highest defence priority. This year’s Plan is the first time that the MoD has set out its nuclear budget separately from other defence spending, and it has sought to limit the long-term costs of its nuclear programmes by prioritising their quicker delivery over immediate cost constraints. The MoD said that its nuclear programmes are in a much healthier position than for many years and that the £7.9 billion deficit in the nuclear budget is manageable. To deliver these savings requires significant work and is a huge challenge. We are concerned that this will be difficult to deliver. The MoD has agreed a minimum budget with HM Treasury for its nuclear activities, and it said that it might ask HM Treasury for more money for nuclear programmes in future planning rounds. If additional money is not forthcoming, the MoD has the flexibility to redirect money from its budgets for conventional equipment to nuclear programmes. However, the current budget for conventional equipment is £9 billion less than forecast costs, and HM Treasury recognises that it will be difficult for the MoD to fund fully its nuclear requirements through the reprioritisation of conventional capabilities. Recommendation 3: The MoD should build upon the transparency it introduced in this year’s Plan regarding nuclear costs and budgets by reporting trends in nuclear funding and how these might affect budgets for conventional capabilities in future Plans.
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Government response AI summary
The government rejected the recommendation, stating that hypothesizing about future funding shifts from conventional to nuclear budgets would be speculative and not useful for planning.
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HM Treasury
1
Conclusion
Nineteenth Report - MoD Equipment Plan …
Rejected
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Ministry of Defence (the MoD) on the Equipment Plan 2023–2033 (the Plan).2
Government response AI summary
The government disagreed with an unspecified recommendation, which it interpreted as a request to set out a list of capabilities that would be cut if budget assumptions are not met, stating this would create operational security risks and undermine industry confidence.
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HM Treasury
7
Conclusion
Nineteenth Report - MoD Equipment Plan …
Rejected
The MoD told us that if the government fulfils its commitment to spending 2.5% of Gross Domestic Product (GDP) each year on defence, the Plan could well be affordable.18 The current defence budget is 2.1% of GDP, which increases to 2.25% when the UK’s support for Ukraine is included. The …
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The MoD told us that if the government fulfils its commitment to spending 2.5% of Gross Domestic Product (GDP) each year on defence, the Plan could well be affordable.18 The current defence budget is 2.1% of GDP, which increases to 2.25% when the UK’s support for Ukraine is included. The MoD said that the difference between 2.25% and 2.5% of GDP is about £6 billion or £7 billion.19 However, the government will only increase non- Ukraine defence spending to 2.5% of GDP if fiscal and economic circumstances allow, and there is no certainty when or whether this will occur.20
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Government response AI summary
The government disagrees with the implied recommendation, stating the Prime Minister's commitment to 2.5% GDP by 2030 and explaining that it will not set out a list of potential capability cuts due to operational security risks.
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HM Treasury
8
Recommendation
Nineteenth Report - MoD Equipment Plan …
Rejected
The MoD asserted that it was not a gamble to assume that its budget will increase to 2.5% of GDP.21 At present, however, the MoD has budget certainty only to the end of March 2025, which hinders its ability to plan with any degree of precision over 10 years.22 The …
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The MoD asserted that it was not a gamble to assume that its budget will increase to 2.5% of GDP.21 At present, however, the MoD has budget certainty only to the end of March 2025, which hinders its ability to plan with any degree of precision over 10 years.22 The MoD said that it made sense for defence to have a multi-year settlement.23 From a military perspective, a five-year settlement would help the MoD provide long-term deterrence by allowing it to build the confidence the defence industry needs to invest in its capacity.24 The MoD also told us that if government’s ambition for defence spending was reduced to less than 2.5%, it would need to revise the level of capability it could buy to match the smaller budget.25 12 Q 12; Correspondence from MoD to PAC, 4 December 2023 13 Q 12; C&AG’s Report, para 1.8 14 Qq 12, 13 15 Q 62 16 Qq 13, 68, 69 17 Q 16 18 Qq 19, 20, 136–138 19 Q 99 20 Q 13; C&AG’s Report, para 2.25 21 Q 66 22 Qq 18, 19, 93 23 Qq 70, 71 24 Q 73 25 Q 67 10 MoD Equipment Plan 2023–2033 Inconsistencies in the Plan
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Government response AI summary
The government explicitly disagreed with the committee's implied recommendation for more budget certainty, stating the Prime Minister's commitment to 2.5% GDP defence spending by 2030 and detailing existing commercial policy changes. It also stated it would not set out a list of capability cuts.
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HM Treasury
11
Conclusion
Nineteenth Report - MoD Equipment Plan …
Rejected
Maintaining the nuclear deterrent remains the MoD’s highest defence priority. This year’s Plan is the first time that the MoD has set out its nuclear budget separately from other defence spending.35 The MoD has sought to de-risk and limit the long-term costs of its nuclear programmes by prioritising their quicker …
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Maintaining the nuclear deterrent remains the MoD’s highest defence priority. This year’s Plan is the first time that the MoD has set out its nuclear budget separately from other defence spending.35 The MoD has sought to de-risk and limit the long-term costs of its nuclear programmes by prioritising their quicker delivery over immediate cost constraints.36
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Government response AI summary
The government rejects the committee's observation regarding the nuclear budget, stating that speculating on future funding shifts from conventional to nuclear is unhelpful for planning, and nuclear funding is ringfenced.
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HM Treasury
12
Conclusion
Nineteenth Report - MoD Equipment Plan …
Rejected
The MoD said that its nuclear programmes are in a much healthier position than for many years.37 The MoD has agreed a minimum 10-year budget with HM Treasury for its nuclear activities of £109.8 billion, and it said that the £7.9 billion deficit in the 26 C&AG’s Report, para 1.3 …
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The MoD said that its nuclear programmes are in a much healthier position than for many years.37 The MoD has agreed a minimum 10-year budget with HM Treasury for its nuclear activities of £109.8 billion, and it said that the £7.9 billion deficit in the 26 C&AG’s Report, para 1.3 27 Qq 24, 25 28 Q 26; C&AG’s Report, para 1.12 29 C&AG’s Report, para 1.13 30 Qq 24, 25 31 House of Lords, Ministry of Defence: Equipment Plan, volume 834, 7 December 2023 32 Q 26 33 Qq 27, 65 34 Q 26 35 C&AG’s Report, paras 16, 2.16 36 Q 12; C&AG’s Report, para 2.17 37 Q 78 MoD Equipment Plan 2023–2033 11 nuclear budget compared to forecast costs was broadly manageable.38 However, the MoD acknowledged that it cannot rule out asking HM Treasury for more money for nuclear programmes in future planning rounds.39
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Government response AI summary
The government rejects the committee's observation regarding the nuclear budget, stating that speculating on future funding shifts from conventional to nuclear is unhelpful for planning, and nuclear funding is ringfenced.
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HM Treasury
13
Conclusion
Nineteenth Report - MoD Equipment Plan …
Rejected
The MoD’s prioritisation of the nuclear enterprise carries a risk that this will further squeeze budgets for conventional capabilities, because if additional money is not forthcoming, the MoD has the flexibility to redirect money from its conventional equipment budgets to nuclear programmes.40 However, HM Treasury recognises that it will be …
Read more
The MoD’s prioritisation of the nuclear enterprise carries a risk that this will further squeeze budgets for conventional capabilities, because if additional money is not forthcoming, the MoD has the flexibility to redirect money from its conventional equipment budgets to nuclear programmes.40 However, HM Treasury recognises that it will be difficult for the MoD to fund fully its nuclear requirements through the reprioritisation of conventional capabilities, given that the forecast cost for conventional equipment is £9 billion more than the expected budget.41 38 Q 77; C&AG’s Report, para 2.17 39 Q 78; C&AG’s Report, para 2.15 40 Qq 80, 82; C&AG’s Report, para 2.19 41 C&AG’s Report, para 2.19 12 MoD Equipment Plan 2023–2033 2 Wider issues affecting the Equipment Plan Working with the supply chain
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Government response AI summary
The government rejects the committee's observation regarding the nuclear budget, stating that speculating on future funding shifts from conventional to nuclear is unhelpful for planning, and nuclear funding is ringfenced.
Read full response →
HM Treasury