Recommendation 8

The MoD asserted that it was not a gamble to assume that its budget will increase to 2.5% of GDP.21 At present, however, the MoD has budget certainty only to the end of March 2025, which hinders its ability to plan with any degree of precision over 10 years.22 The MoD said that it made sense for defence to have a multi-year settlement.23 From a military perspective, a five-year settlement would help the MoD provide long-term deterrence by allowing it to build the confidence the defence industry needs to invest in its capacity.24 The MoD also told us that if government’s ambition for defence spending was reduced to less than 2.5%, it would need to revise the level of capability it could buy to match the smaller budget.25 12 Q 12; Correspondence from MoD to PAC, 4 December 2023 13 Q 12; C&AG’s Report, para 1.8 14 Qq 12, 13 15 Q 62 16 Qq 13, 68, 69 17 Q 16 18 Qq 19, 20, 136–138 19 Q 99 20 Q 13; C&AG’s Report, para 2.25 21 Q 66 22 Qq 18, 19, 93 23 Qq 70, 71 24 Q 73 25 Q 67 10 MoD Equipment Plan 2023–2033 Inconsistencies in the Plan