Source · Select Committees · Public Accounts Committee
Recommendation 8
8
When asked if the financial problems with the Defence budget were ever likely to change,...
Conclusion
When asked if the financial problems with the Defence budget were ever likely to change, the Permanent Secretary pointed first to the Department not having a very good understanding of the drivers of inflation with defence projects. Second, and in his view probably most importantly, he highlighted the inherent difficulties of long-term and technical projects, where threats change, and where new capabilities come along that render as potentially obsolete equipment yet to be procured. He commented that “there is always going to be…a degree of flux, which is difficult to predict, in a defence procurement programme of this scale and tenor.”15 He also considered that, while the recently announced additional funding put the Department in a “much, much, much better position” to get the whole programme into balance, there would still be “tensions and flux” with which his successor would continue to struggle.16
Government Response
Acknowledged
HM Government
Acknowledged
4.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 4.2 The department will write to the Committee alongside the department’s annual Equipment Plan report which will be published in Autumn 2021. 4.3 Understanding defence cost inflation is critical to enabling the department to make realistic and affordable plans. Defence’s economics and statistics teams routinely review evidence on Defence inflation. 4.4 The department is committed to changing attitudes and behaviours within the Defence acquisition system. The department has already upgraded our investment decision-making approach and its work on acquisition culture and behaviours focuses on setting programmes up for success from the outset. This encourages early consideration of the strategic factors that affect programme risk and complexity and could drive up costs. This work will continue as part of wider acquisition and approvals transformation. 4.5 In addition, the Defence and Security Industrial Strategy (DSIS) will inform and shape ongoing work to take a more strategic approach towards UK defence and security industries.