Select committee: Public Accounts Committee
Conclusion 10
Fiftieth Report - Defence Equipment Plan 2020–2030
Published 16 Mar 2021
Addressed to HM Treasury
Public Accounts Committee Defence Equipment Plan 2020-2030 All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Conclusion (the committee's words)
The Department acknowledged the risk of costs escalating on its biggest programmes— nuclear submarines and IT and communications systems—which are large, complex programmes involving the development of new technologies.19 It told us it assesses the risk of cost increases on projects and has embedded £13.5 billion in costings to enable senior responsible owners to manage risks that arise from delivering their projects. But the Department admitted that its independent cost assessors had estimated that there was £3.9 billion of risk over and above what is included in project budgets and the Department is also tracking £20 billion of cost increases that it judges, on balance, probably will not occur although at least some of these may materialise.20 The National Audit Office’s report also concluded that the Department’s approach to analysing cost risk and uncertainty means it is likely to have understated the level of risk in the Plan’s central forecast.21 While the Department has taken a more prudent approach on some high-risk projects, including the Dreadnought submarine programme, it has not explored whether its approach to assessing risk remains appropriate for new, complex projects.22
From: Public Accounts Committee, Fiftieth Report - Defence Equipment Plan 2020–2030 (HC 693), 16 March 2021
Government response
The government responded to the whole report on 31 August 2021 (deadline 16 May 2021).
Summary written by Accountability Index from the government's response. It is not the government's own words.The government states that it agrees with the Committee's recommendations that are set out in the response, each with a stated target implementation date, and sets out related work already under way.
- On affordability, it agrees that the next Equipment Plan report must demonstrate affordability, and says that report (Autumn 2021) will set out the implications of the 2020 Spending Review settlement and the Integrated Review.
- On transparency over the additional funding, it agrees and says it "will write to the Committee before summer recess" with a summary of investment and savings decisions, with a target date of June 2021.
- On defence cost inflation, it agrees and says it will write to the Committee alongside the Autumn 2021 Equipment Plan report, and states it "is committed to changing attitudes and behaviours within the Defence acquisition system".
- On finance capability, it agrees with a target date of March 2023, noting that "It takes time to both train and recruit professionally qualified staff, but numbers will increase over time."