Source · Select Committees · Public Accounts Committee
Recommendation 19
19
The Plan’s affordability depends on the Department achieving a number of different types of savings...
Conclusion
The Plan’s affordability depends on the Department achieving a number of different types of savings by March 2031. As the NAO reported, these amount to nearly £22 billion, which comprises around £12 billion of ‘management adjustments for realism’, £7 billion of ‘planned cost reductions’ and £2.8 billion of ‘potential efficiencies which project teams have lower confidence in achieving’.42 We asked about the so-called ‘planned cost reductions’, where £4 billion of the £7 billion assumed savings do not have a plan supporting them. The Department told us that it was confident that all the savings would be achieved, and that in setting the overall target the Department attempts to judge the right balance between risk and maximising capability delivery over 10 years.43
Government Response
Not Addressed
HM Government
Not Addressed
The government agrees with the Committee’s recommendation. Recommendation implemented 3.2 This recommendation has been implemented and TLBs have targets and plans to achieve these savings. 3.3 As outlined in the Equipment Plan 2021-2031 (EP21), the department’s top level budget holders (TLBs) have planned £7 billion of cost reductions over ten years. The department closely monitors and scrutinises Top Level Budget (TLB) planned cost reductions in the annual budget cycle. If there are concerns about the deliverability of these savings the department would work with TLBs to identify remedial action. 3.4 As explained in EP21, the department considers that the savings are achievable. This was demonstrated in financial year 2020-21 when the department held spending to within budget without the need for a centrally directed savings exercise. 3.5 Further information on TLB cost reductions will be included in the upcoming Equipment Plan 2022 due to be published in Autumn 2022.