Recommendation 25

The National Audit Office has also reported that the Department’s continued focus on living within its in-year budget is affecting its ability to develop the military capabilities that are needed.72 The commands undertook yet another re-prioritisation exercise to balance the annual budget for 2020–21, either descoping equipment projects or delaying expenditure. This focus on living within its annual budget means the Commands must manage long-term projects within short-term expenditure approvals, which also leads to higher overall costs. The Department now estimates a funding shortfall of £8.3 billion in the next five years.73