By David Williams
22 February 2011
MPs today condemned a ‘cycle of failure’ at the Ministry of Defence after finding that £8bn had been wasted on just four projects in the past year. They also criticised the department’s short-term cost-cutting approach, which they said would cost billions of pounds over time.
In a report, The Major Projects Report 2010, the Commons Public Accounts Committee criticised the department for failing to understand the consequences of its decisions.
Chair Margaret Hodge said: ‘The MoD must demonstrate the same discipline in its defence procurement that our forces demonstrate in the field.’
She condemned the department for taking ‘short-term decisions to delay and re-scope projects to keep its in-year spending within the voted limits’.
Hodge added: ‘Such decisions have been taken without a full understanding of the financial implications – the consequence has been hugely damaging.’
Project cancellations, such as scrapping the Nimrod fighter jet, and other delays led to costs of £8bn last year, the committee found.
The PAC said decisions to delay the procurement of a new generation of aircraft carriers, causing £1.6bn in extra costs, had ‘set a new benchmark in poor corporate decision-making’.
Although progress had been made in other areas of spending, the gains had been wiped out by the losses incurred in the four projects the MPs examined.
Hodge said that the department recognised that it had to tackle ‘problems which have affected defence procurement for decades’, warning that it failed to do so, ‘the cycle of failure’ would continue.
The committee noted that the government’s Strategic Defence and Security Review, published last October, gave the department the chance to bring its spending inside annual limits.
‘We will look to the MoD to demonstrate that it is now planning to remain within budget,’ the committee said, noting that the department had a ‘poor track record’ of making decisions that gave taxpayers the best value for money.
The PAC said MoD spending commitments exceeded budget forecasts over the next ten years by £36bn.
