Recommendation 4

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 than expected as fewer personnel have left the armed forces than normal since 2020 because of the pandemic. Similarly, there are as yet no plans to make an additional £2.5 billion cut to workforce costs, which is also already assumed in the Department’s plans. And the Department does not know how it will afford the pay rises likely to be required as a result of higher inflation and wage growth in the wider economy in the next few years. The condition of the Department’s estate is set to continue to decline despite an additional £500m to be spent on ‘preventative’ maintenance. Service accommodation remains in a very bad way which risks harming recruitment and retention of personnel with key skills. Recommendation: The next Equipment Plan report must clearly set out the quantified realistic affordability risk to it posed by the Department’s plans for its other areas of spending.