Source · Select Committees · Public Accounts Committee
Recommendation 9
9
The Permanent Secretary also explained that the Department has had to live with an annual...
Conclusion
The Permanent Secretary also explained that the Department has had to live with an annual budget cycle and plan its equipment programme without the certainty of funding over a 10-year period. He explained that this was very difficult to manage. The 2020 Spending Review has provided the Department with the certainty of funding for the 7 Qq 24, 29, 30, 36, 43, 44, 56, 65, 76 8 C&AG’s Report, para 13 9 Qq 31, 32, 72,73 10 C&AG’s Report, para 13 11 Committee of Public Accounts, Defence Capability and Equipment Plan, 10th Report of Session 2019–2021, 15 July 2020 paras 1, 7 12 Qq 24, 30, 31, 39, 13 C&AG’s Report, para 2.3 14 Qq 10 - 13, 15 Q 35 16 Q 36 10 Defence Equipment Plan 2020–2030 next four years, providing it with a basis for planning and the opportunity to address the structural problems with the Equipment Plan.17 The Permanent Secretary told us that in 2010 the defence budget had been made affordable, but at the expense of capability. Then in 2015, capability shortfalls were addressed but without sufficient funding. The budget was, therefore, constantly unbalanced in one way or another. He told us that he hoped now to develop a coherent and sensible package of capabilities which are backed up by resources, allowing the Department to plan properly in the longer-term.18 Producing a reliable assessment of funding shortfalls
Government Response
Acknowledged
HM Government
Acknowledged
3.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 3.2 Alongside the Equipment Plan 2021, the department will write to the Committee, outlining the key principles that will guide future investment decisions and steps the department is taking to ensure that the equipment plan remains affordable and delivers value for money. 3.3 Since the Committee's report, the department published the Defence Command Paper which sets out new policy aims and the capability decisions that were underpinned by the additional £16.5 billion investment from the 2020 Spending Review. The department has taken a balanced approach, with an appropriate level of risk and contingency, investing in the current programme and new capabilities such as space, research and development (R&D) and the Future Combat Air System (FCAS). In doing so, the department has demonstrated that it has the mechanisms in place to deliver a coherent programme and to fund modernisation will disinvest in capabilities such as in the case of Warrior Capability Sustainability Programme (CSP). 3.4 Alongside this firmer financial footing, the department is already strengthening the approach to managing the defence portfolio whilst ensuring agility to respond to future threats and opportunities. The department’s approach will build on the current acquisition and approval transformation programme (AATP) and new policy framework outlined in the Defence and Security Industrial Strategy published in March 2021 to ensure future investment decisions deliver long-term value for money. The department will provide further details alongside the Equipment Plan 2021.