Recommendation 6

The Department continues to be unclear about what additional capability the taxpayer will get from the extra £16.5 billion in the 2020 Spending Review. We remain to be convinced that the government’s substantial uplift to the Department’s budget will not simply be used to plug financial holes across its programmes. We are struck in recent evidence sessions by how many departmental witnesses with differing responsibilities have pointed to the additional funding as a solution to their problems. We note that as well as addressing £7 billion affordability gap in the Department’s 2020–2030 Equipment Plan, the Department is spending £6.6 billion 8 Improving the performance of major defence equipment contracts on R&D, and additional funding for pension changes and enhancing childcare for service personnel. It had previously written to us to say that the money would be used for both new and existing capabilities. However, witnesses could not say whether truly additional capabilities will be delivered through the additional funding. In addition, the Permanent Secretary was unclear about the basis of the assumptions informing its calculations of funding over the next ten years, including what has and has not been approved. Recommendations: The Committee expects to see absolute clarity in the Equipment Plan 2021–2031 about what additional capability the Armed Forces is getting for the additional £16.5 billion and how it has secured the long-term affordability of the Plan. It should clearly distinguish between new capabilities and those already in development. Improving the performance of major defence equipment contracts 9 1 The system for delivering major equipment capabilities