Recommendation 14

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 and higher cost in the Plan’s later years, by trying to save money in the early years. The Department acknowledged that, in seeking balance, it has made some decisions to defer a few future capability enhancements that will cost more overall. It noted the NAO’s example of the three-year delay in purchasing a new model of Chinook helicopter which will result in a net cost of £295 million.30 According to the Department, “In a world of low inflation, that is an acceptable management technique”, but a world of high inflation will require changes to the “processes, approvals and mindset” in the way the Plan is put together.31