World

May 15, 2013

United Kingdom military ‘unrealistic’ on cost risks

Britain’s Ministry of Defence has taken an over-optimistic approach to its equipment budget, an influential committee of lawmakers warned May 14, expressing doubts that the department plagued by cost overruns and late delivery of projects has properly planned for potential pitfalls over the next decade.

Britain’s military is shrinking from 102,000 troops to around 80,000 by the end of the decade – part of efforts to make steep cuts to public spending ordered by Prime Minister David Cameron. But the Ministry of Defence has pledged that spending on equipment will increase.

It detailed to Parliament its 10-year, 159-billion-pound ($243-billion) plan to purchase and maintain military equipment. The Committee of Public Accounts welcomed that gesture as a positive step, but tore into the plan in a report published May 14 – saying it relies on assumptions about future funding, lacked data to prove its spending plans were realistic and failed to take into account potential cost increases and an uncertain future.

“The Ministry of Defence has made a good start in trying to get to grips with its budget but its deep-seated problems cannot be solved overnight, and we do not yet have confidence that its equipment plan is affordable,” committee chair Margaret Hodge said in a statement. “The department claims to have contingency plans in place but there is a lack of transparency that prevents the committee’s full understanding on this issue.”

The ministry of defense needs to show it has “other options to cut costs if its budget assumptions turn out, as they so often do, to be over-optimistic,” she added.

Last year, the government announced the scrapping of 17 major defense units, including the Yorkshire Regiment’s 2nd Battalion, whose history stretches back 300 years. Plans of a new fleet of military jets and an aircraft carrier have been axed, while the introduction of new attack submarines has been put on hold.

Through it all, the Ministry of Defence has insisted that equipment spending will rise and pointed to a Treasury promise to deliver an annual 1 percent equipment budget increase over five years starting 2015.

Philip Dunne, Minister for Defense Equipment, Support and Technology, shrugged off the suggestion that money could fail to materialize, saying in a statement the government is committed to increasing the equipment budget and is confident the armed forces will have what they need to defend U.K. interests.

But the Committee of Public Account said one major issue with the equipment plan stems from an “incomplete understanding” of the support costs accounting for more than half its budget. Plus, with the military lacking systems to collect data on actual spending and reconcile that with forecast costs, “it is difficult to understand why the department is confident it can manage its budget,” the report said.

The committee also said that the ministry had failed to show how it is dealing with costly delays on delivering equipment and how it will respond when Sea King helicopters go out of service in 2016.

The Ministry of Defense did not directly address a recurring criticism of its spending on equipment – its struggle to deliver projects on agreed timetables, which for years has driven up costs. But it stressed that investments are being made in helicopters to replace Sea Kings when they retire.

The committee report noted those challenges and expressed concerns that the defense ministry might lack the expertise to enforce timetables.

“The department also needs to act as a more intelligent customer, in order to ensure industry delivers projects to agreed timescales,” the report added.

 




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