Conclusion 3

The MoD’s prioritisation of the Defence Nuclear Enterprise carries a risk that this will further squeeze budgets for conventional capabilities. Maintaining the nuclear deterrent remains the MoD’s highest defence priority. This year’s Plan is the first time that the MoD has set out its nuclear budget separately from other defence spending, and it has sought to limit the long-term costs of its nuclear programmes by prioritising their quicker delivery over immediate cost constraints. The MoD said that its nuclear programmes are in a much healthier position than for many years and that the £7.9 billion deficit in the nuclear budget is manageable. To deliver these savings requires significant work and is a huge challenge. We are concerned that this will be difficult to deliver. The MoD has agreed a minimum budget with HM Treasury for its nuclear activities, and it said that it might ask HM Treasury for more money for nuclear programmes in future planning rounds. If additional money is not forthcoming, the MoD has the flexibility to redirect money from its budgets for conventional equipment to nuclear programmes. However, the current budget for conventional equipment is £9 billion less than forecast costs, and HM Treasury recognises that it will be difficult for the MoD to fund fully its nuclear requirements through the reprioritisation of conventional capabilities. Recommendation 3: The MoD should build upon the transparency it introduced in this year’s Plan regarding nuclear costs and budgets by reporting trends in nuclear funding and how these might affect budgets for conventional capabilities in future Plans.