Recommendation 9

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