Source · Select Committees · Public Accounts Committee
Nineteenth Report - MoD Equipment Plan 2023–2033
Public Accounts Committee
HC 451
Published 8 March 2024
Recommendations
8
Rejected
MoD lacks long-term budget certainty beyond March 2025, hindering equipment planning.
Recommendation
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 …
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Government Response Summary
The government explicitly disagreed with the committee's implied recommendation for more budget certainty, stating the Prime Minister's commitment to 2.5% GDP defence spending by 2030 and detailing existing commercial policy changes. It also stated it would not set out a list of capability cuts.
HM Treasury
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10
Accepted
Inconsistent MoD planning approaches undermine transparency and parliamentary scrutiny of equipment affordability.
Recommendation
This flexibility means that users of the Plan, including Parliament, cannot compare Commands and other budget holders on a like-for-like basis.29 The MoD assured us that its ability to understand the Armed Forces’ capability and operational risks was unaffected by …
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Government Response Summary
The government agrees with the recommendation and commits to standardizing the data produced and presented for the Equipment Plan from the Annual Budgeting Cycle planning round process, with a target implementation date of Spring 2025.
HM Treasury
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15
Accepted
Lessons from Ukraine highlight MoD need for investment in weapon stockpiles and supply chain resilience.
Recommendation
Key lessons from the war in Ukraine include the need for the Armed Forces to invest in weapon stockpiles and ensure resilience and agility in sustaining military capabilities.43 The MoD has earmarked £5 billion over the decade to 2032–33 to …
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Government Response Summary
The government accepted the recommendation, agreeing to provide clearer signals to industry on future demand through the new Integrated Procurement Model and existing tools like the Acquisition Pipeline, with a target implementation date of Spring 2025. It also committed to forming a new alliance with industry for long-term strategic alignment.
HM Treasury
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19
Accepted
MoD's funding shortfalls and uncommitted contracts undermine defence suppliers' confidence.
Recommendation
The MoD said that it tries to publish as much of its defence pipeline as it can to build supplier confidence.57 However, its failure to provide budgets that match ambition, such as the £5.9 billion funding shortfall in the shipbuilding …
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Government Response Summary
The government agrees with the recommendation to build supplier confidence, committing to provide a clearer signal to industry on future demand and improve visibility of long-term planning through the new Integrated Procurement Model by Spring 2025, continuing to publish the Acquisition Pipeline twice yearly.
HM Treasury
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22
Accepted
External market demand for components and skills slows defence equipment delivery significantly.
Recommendation
Since the end of COVID-19 restrictions, there has been increased international demand for key components and skilled workers from other sectors, such as the car and commercial aviation industries.69 This has contributed to the slow delivery of defence equipment, including …
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Government Response Summary
The government accepted the recommendation, stating it has introduced a new Integrated Procurement Model, announced in February 2024, to increase the pace of military capability delivery, with implementation beginning in April 2024 and continuing through 2025.
HM Treasury
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Conclusions (22)
2
Conclusion
Acknowledged
The Plan is inconsistent because some parts of the Armed Forces include the costs of all capabilities that the government expects them to deliver, while others only include those they can afford. The MoD’s aim is that the Plan provides a reliable assessment of the affordability of its equipment programme …
Government Response Summary
The government agrees with the recommendation and states that, for transparency and ease of comparison, the department will seek to standardise the data produced and presented for the Equipment Plan starting from the Annual Budgeting Cycle planning round process.
3
Conclusion
Rejected
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 …
Government Response Summary
The government rejected the recommendation, stating that hypothesizing about future funding shifts from conventional to nuclear budgets would be speculative and not useful for planning.
4
Conclusion
Accepted
Uncertainty about the MoD’s future demand for equipment hinders its work with industry to develop a resilient, responsive, and cost-effective supply chain. Key lessons from the war in Ukraine include the need for the Armed Forces to invest in weapon stockpiles and ensure resilience and agility in sustaining military capabilities. …
Government Response Summary
The government agreed, stating it is already addressing the recommendation through the Integrated Procurement Model, Defence and Security Industrial Strategy, and other initiatives, including continuing to publish the Acquisition Pipeline twice yearly.
5
Conclusion
Accepted
The MoD’s strategy for replacing ageing capabilities is undermined by the slow delivery of new systems, resulting in military capability gaps. Despite the MoD working with prime contractors to better understand its supply chain, increased international demand for key components and skilled workers has contributed to the slow delivery of …
Government Response Summary
The government agreed, outlining that the new Integrated Procurement Model's implementation begins in April 2024 and will continue through 2024-2025, with monitoring of delivery pace and appropriate updates.
6
Conclusion
Accepted
The MoD is becoming increasingly reliant on the UK’s allies to protect the UK’s national interests, which carries the risk that such support might not always be available. Recent international developments, including the war in Ukraine, have reinforced the importance of strategic international partnerships for the UK. The UK has …
Government Response Summary
The government agreed, stating that allied support is already understood, reviewed as part of capability planning, and rigorously scrutinized during force testing, with identified risks regularly captured and reviewed for mitigation.
1
Conclusion
Rejected
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.
7
Conclusion
Rejected
The MoD told us that if the government fulfils its commitment to spending 2.5% of Gross Domestic Product (GDP) each year on defence, the Plan could well be affordable.18 The current defence budget is 2.1% of GDP, which increases to 2.25% when the UK’s support for Ukraine is included. The …
Government Response Summary
The government disagrees with the implied recommendation, stating the Prime Minister's commitment to 2.5% GDP by 2030 and explaining that it will not set out a list of potential capability cuts due to operational security risks.
9
Conclusion
Accepted
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 …
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.
11
Conclusion
Rejected
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.35 The MoD has sought to de-risk and limit the long-term costs of its nuclear programmes by prioritising their quicker …
Government Response Summary
The government rejects the committee's observation regarding the nuclear budget, stating that speculating on future funding shifts from conventional to nuclear is unhelpful for planning, and nuclear funding is ringfenced.
12
Conclusion
Rejected
The MoD said that its nuclear programmes are in a much healthier position than for many years.37 The MoD has agreed a minimum 10-year budget with HM Treasury for its nuclear activities of £109.8 billion, and it said that the £7.9 billion deficit in the 26 C&AG’s Report, para 1.3 …
Government Response Summary
The government rejects the committee's observation regarding the nuclear budget, stating that speculating on future funding shifts from conventional to nuclear is unhelpful for planning, and nuclear funding is ringfenced.
13
Conclusion
Rejected
The MoD’s prioritisation of the nuclear enterprise carries a risk that this will further squeeze budgets for conventional capabilities, because if additional money is not forthcoming, the MoD has the flexibility to redirect money from its conventional equipment budgets to nuclear programmes.40 However, HM Treasury recognises that it will be …
Government Response Summary
The government rejects the committee's observation regarding the nuclear budget, stating that speculating on future funding shifts from conventional to nuclear is unhelpful for planning, and nuclear funding is ringfenced.
14
Conclusion
Accepted
The Ministry of Defence (the MoD) is working with industry to develop a resilient, responsive, and cost-effective supply chain. For example, it told us that it has been working with the Defence Suppliers Forum, which covers about 80 companies directly and the whole supply chain through trade associations, to ensure …
Government Response Summary
The government agrees with the implied recommendation to strengthen supply chain resilience and transparency, committing to provide a clearer signal to industry on future demand through the new Integrated Procurement Model and continued publication of the Acquisition Pipeline, with a target implementation date of Spring 2025.
16
Conclusion
Accepted
The MoD recognises that building capacity, including the industrial skills base, will take time, and that for industry to invest in this it must have confidence that the MoD’s demand will continue.46 For example, the MoD estimates that over the next 10 years industry probably needs an extra 10,000 or …
Government Response Summary
The government agrees with the implied recommendation to build industrial capacity and skills, committing to provide a clearer signal to industry on future demand through the new Integrated Procurement Model and improved visibility of the acquisition pipeline by Spring 2025.
17
Conclusion
Accepted
Because of high and volatile inflation, the MoD has changed its approach to contracting with suppliers. Formerly, around 25% of contracts were ‘firm price’, whereby the supplier bore the inflation risk.51 However, the MoD said that the cost of such firm price contracts has now become too great, and that …
Government Response Summary
The government agrees with the implied recommendation to foster good industry relations, committing to improve visibility of long-term planning and form a new alliance with industry through the Integrated Procurement Model by Spring 2025, thereby supporting industry's ability to plan and invest.
18
Conclusion
Accepted
The MoD has also launched some initiatives to demonstrate a long-term commitment to industry regarding future demand, including an order with BAE Systems for 155mm artillery shells.54 The MoD told us that it wanted to develop an “always-on production line on munitions”, so that it could surge supply when necessary.55 …
Government Response Summary
The government agrees with the implied recommendation to demonstrate long-term commitment and guidance to industry, committing to provide a clearer signal on future demand and improve visibility of long-term planning through the new Integrated Procurement Model by Spring 2025.
20
Conclusion
Accepted
Only two of the 46 MoD equipment projects that are included in the Government Major Projects Portfolio (GMPP) are rated as being highly likely to be delivered to time, budget and quality (green).60 Successful delivery appears to be unachievable for five GMPP projects (red), including replacement communications technology, nuclear submarine …
Government Response Summary
The government agrees and will implement the Integrated Procurement Model from April 2024, aiming to drive increased pace in delivery of military capability through new services, guidance, and independent advice, with full implementation continuing through 2024-2025.
21
Conclusion
Accepted
The MoD has made some progress with training senior responsible owners (SROs) and increasing the proportion of their time spent on delivering projects.64 SROs also now 52 Q 23 53 Qq 21, 23; C&AG’s Report, para 2.4 54 Qq 31, 113; C&AG’s Report, para 2.6 55 Q 30 56 Q …
Government Response Summary
The government agrees and will implement the Integrated Procurement Model from April 2024, aiming to drive increased pace in delivery of military capability through new services, guidance, and independent advice, with full implementation continuing through 2024-2025.
23
Conclusion
Accepted
An emphasis on pace is one of five key features of the new “Integrated Procurement Model” which the Minister for Defence Procurement announced on 28 February.73 For example, the MoD plans to get new capabilities into the hands of the Armed Forces more quickly by introducing them into service when …
Government Response Summary
The government agrees and confirms the implementation of the Integrated Procurement Model from April 2024, designed to drive increased pace in military capability delivery through new services, guidance, and independent advice, with full implementation continuing through 2024-2025.
24
Conclusion
Accepted
In the meantime, the intensive use of existing equipment is contributing to a maintenance backlog that will take more time and money to address, leaving the UK’s Armed Forces having to make do with fewer pieces of ageing equipment nearing the end of their in-service lives.75 For example, there is …
Government Response Summary
The government agrees with the committee's implied concern regarding equipment readiness and responds by implementing a new Integrated Procurement Model from April 2024, designed to accelerate the delivery of military capability.
25
Conclusion
Acknowledged
Recent international developments, including the war in Ukraine, have underlined the importance of strategic international partnerships for the UK.79 The UK has been working with its allies, including Ukraine, to develop interoperable equipment, pool essential munitions and encourage industry to build its capacity to supply the equipment they need.80
Government Response Summary
The government agrees with the importance of strategic international partnerships and describes its ongoing efforts to capitalize on the UK's convening power, review allied support, and engage industry, with a target implementation date of Spring 2025.
26
Conclusion
However, for deterrence to be effective, the UK’s Armed Forces must be credible.81 Such credibility is undermined by widely reported recruitment and retention issues, with eight people leaving the Armed Forces for every five who are recruited.82 Despite the MoD’s assurances that it took this issue very seriously, it accepted …
27
Conclusion
Accepted
In the meantime, the MoD is considering mothballing Royal Navy ships because of crew shortages, and the only Royal Navy ship able to fully replenish the UK’s aircraft carriers is unavailable this year because of a refit.86 With the support of its allies, the UK’s Armed Forces continue to fulfil …
Government Response Summary
The government agrees with the implied recommendation to address capability challenges, committing to ensuring balanced capabilities, driving cooperative burden-sharing with allies, and rigorously reviewing allied support and identified risks as part of ongoing capability planning and force testing, with a target implementation date of Spring 2025.