Source · Select Committees · Public Accounts Committee
Recommendation 9
9
Accepted
MoD budget holders use inconsistent approaches in forecasting equipment costs and capabilities.
Conclusion
The MoD’s aim is that the Plan provides a reliable assessment of the affordability of its equipment programme and demonstrates to Parliament how it will manage its funding to deliver equipment projects.26 The MoD’s headquarters provides the Front Line Commands and other budget holders with guidance on preparing their cost forecasts. However, it allows the budget holders to take different approaches to whether they include in their forecast costs all the capabilities they need to meet government’s expectations, or just those capabilities that they can afford.27 For example, the Royal Navy has included in the Plan predicted costs for all the capabilities the MoD expects it to deliver, and it has reported a 10-year budget deficit of £15.3 billion. In contrast, the Army has reported a deficit of £1.2 billion because it only includes those projects it can afford: its deficit would increase by around £12 billion if it included all the capabilities it needs.28
Government Response Summary
The government agrees and will standardize the data production and presentation for the Equipment Plan from the Annual Budgeting Cycle planning round process to improve transparency and comparability, with a target implementation date of Spring 2025.
Government Response
Accepted
HM Government
Accepted
2.1 The government agrees with the Committee’s recommendation. Target implementation date: Spring 2025 2.2 All Top-Level Budget Holders (TLBs) already operate within the same standardised financial planning processes. The department’s operating model, where responsibility for managing the equipment plan is delegated to TLBs, acknowledges that they have different financial positions and carry a balance between capability and financial risk. 2.3 For transparency and for ease of comparison, the department will seek to standardise the data that is produced and how it is presented for the Equipment Plan from the Annual Budgeting Cycle planning round process.