Source · Select Committees · Public Accounts Committee
Recommendation 21
21
Acknowledged
The Department acknowledged that inflation also makes it difficult for suppliers to deliver due to...
Conclusion
The Department acknowledged that inflation also makes it difficult for suppliers to deliver due to rising staff and material costs.55 As a result, the Department is changing its contractual approach to take account of the inflation risk and avoid suppliers charging a higher premium for continuing to take this risk on.56 47 Q 95 48 C&AG’s Report, para 2.14; Ministry of Defence, The Defence Equipment Plan 2022–2032, P11 49 Q 88 50 Q 89, C&AG’s Report, para 1.15 51 Q 86 52 Qq 79, 81 53 Q 51 54 Q 112 55 Q 52; C&AG’s Report, para 2.13 56 Q 88 14 MoD Equipment Plan 2022–2032
Government Response Summary
The government agrees with the committee's recommendation and states that the department continuously updates its forecast of the cost of the equipment plan and reviews its affordability through the annual financial planning process.
Government Response
Acknowledged
HM Government
Acknowledged
5.1 The government agrees with the Committee’s recommendation. Target implementation date: September 2023 5.2 The department continuously updates its forecast of the cost of the equipment plan and reviews its affordability through the annual financial planning process, which involves bottom-up costing by delivery agents, such as Defence Equipment & Support, through programme cost reviews. 5.3 The government announced an additional £5 billion for defence in the remaining two years of the 2020 Spending Review settlement at the 2023 Spring Budget, but the department still faces financial pressures and is working to adjust its plans to balance the department’s objectives and outputs with the funding available to it.