Source · Select Committees · Public Accounts Committee
Recommendation 14
14
Acknowledged
The Department told us that its 2022–2032 Equipment Plan is affordable, as the equipment budget...
Conclusion
The Department told us that its 2022–2032 Equipment Plan is affordable, as the equipment budget exceeds forecast costs by £2.6 billion (1% of budget). However, we noted that the aggregate surplus obscures financial pressures in the short-term and in some Top Level Budgets – those organisations, including front line commands, responsible for delivering defence outcomes within budgets delegated by the Department. The Plan is in deficit for the first seven years by £2.6 billion and is only affordable because of a £5.2 billion surplus in the final three years. Furthermore, over the full ten years, four out of six Top Level Budgets are in deficit.37 Most significantly, the Army’s equipment programme is more than £2 billion in deficit over the ten years of the Plan.38
Government Response Summary
The department will provide an assessment of the key sources of uncertainty and risk in the forward plan in the next update to the committee; forecasting across ten-years is inherently uncertain, plans need to be flexible to adapt to change, and the equipment plan report includes an upper and lower cost estimate for the ten-year plan.
Government Response
Acknowledged
HM Government
Acknowledged
4.1 The government agrees with the Committee’s recommendation. Target implementation date: December 2023 4.2 Forecasting across ten-years is inherently uncertain. In a complex plan with many large programmes, forecasts change as delivery schedules and cost estimates mature. Improving forecasting can help to reduce this risk, but the department’s plans need to be flexible to adapt to change. 4.3 The equipment plan report includes an upper and lower cost estimate for the ten-year plan based on uncertainty in key variables such as savings and efficiencies assumptions. To inform the costing ranges, the department carries out a rigorous annual process to review and challenge delivery teams’ costings through an independent assessment by the Cost Assurance and Analysis Service. 4.4 In the next update to the committee, the department will provide an assessment of the key sources of uncertainty and risk in the forward plan.