The Equipment Plan 2021 to 2031

The Department has not yet fixed its long-standing problems in managing the Plan. It will struggle to do so unless its Head Office, working with the TLBs, makes a fundamental change to the way it builds, and reports on, the Plan. In particular, the Department should: a) ensure all components of the Plan’s budgets and costs are prepared on a consistent basis between TLBs and across years, including for example on contingency, apportionment of defence budget shortfalls, and the basis for calculating the range which expresses affordability. This would provide comparability and enable stakeholders to track progress and variability of performance;

Ref Page 13, paragraph 25, point a

b) as part of the process of putting the Plan together, clearly set out the respective roles and responsibilities of TLBs and Head Office, including clarifying who is in charge of each part of the process. The objective of this would be to build a shared focus on creating the right incentives for maximising long-term value for money, such as how Head Office takes factors such as quality of cost information, historical delivery of efficiencies or forecasting accuracy into account when allocating budgets and future savings targets to TLBs;

Ref Page 13, paragraph 25, point b · Implemented 12/2022

c) if total forecast spending exceeds overall control totals in any year, include a section within its Equipment Plan report explaining why the accounting officer is satisfied that this outcome is compliant with Managing Public Money’s standards of regularity, propriety and value for money;

Ref Page 13, paragraph 25, point c · Implemented 12/2022

d) in reporting on future assumed or targeted cost reductions within the Plan, make a clear distinction between those which are supported by a clear plan to achieve them, and those which represent an additional target, and provide supporting evidence;

Ref Page 13, paragraph 25, point d · Implemented 12/2023

e) in order to give more assurance on the completeness of the Plan, carry out regular audits of capability gaps across TLBs and, subject to national security constraints, publish a high-level summary of the results, such as whether gaps are closing or widening over time; and

Ref Page 14, paragraph 25, point e · Implemented 12/2022

f) explore the inter-dependencies between the three plans that make up the overall defence plan (the Equipment Plan, Infrastructure Plan, and the plan for operating costs). Using this analysis, it should assess the delivery risks of the Infrastructure and operating costs plans and how these may affect the affordability of the Equipment Plan over the next 10 years and include this in its report on the Equipment Plan.

Ref Page 14, paragraph 25, point f · Implemented 12/2022

HM Treasury should: g) define the purpose of the Dreadnought contingency and establish new governance arrangements, including the conditions under which additional funds will be provided to the Department. This work should be undertaken with the aim of incentivising the Department to complete submarine-building on time and in a way that represents value for money.

Ref Page 14, paragraph 25, point g · Implemented Q1 2023-24