Source · Select Committees · Public Accounts Committee
Recommendation 1
1
Rejected
Committee receives evidence from MoD regarding the Equipment Plan 2023–2033.
Conclusion
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Ministry of Defence (the MoD) on the Equipment Plan 2023–2033 (the Plan).2
Government Response Summary
The government disagreed with an unspecified recommendation, which it interpreted as a request to set out a list of capabilities that would be cut if budget assumptions are not met, stating this would create operational security risks and undermine industry confidence.
Government Response
Rejected
HM Government
Rejected
The government disagrees with the Committee’s recommendation. The Prime Minister has committed to defence spending reaching 2.5% of GDP in 2030. The Ministry of Defence (the department) has already implemented changes to commercial policy to manage inflation and continues to make greater use of index-linked fixed price contracts to prevent firms from either applying high premia on firm price bids or not bidding entirely. Engagement with the department’s main suppliers to discuss how inflation will be treated in future contracts, including a view of what is reasonable for payroll costs, is ongoing. The government sets out the capability required by the Armed Forces via Strategic Reviews such as the Integrated Review and Defence Command Papers. The department does not intend to set out a list of capabilities that would be cut if certain budget assumptions are not met as this would create a risk to operational security and undermine industry confidence. The department is continuing to work through the Defence Command Paper 2023 which signals a shift to focus more on Artificial Intelligence, autonomous and digital capabilities to modernise the Armed Forces, and reinforces the importance of assuring the department’s supply chains.