MPs have slammed the Ministry of Defence for losing track of more than £6bn of military assets and having its accounts qualified for the fourth successive year.
The defence select committee said it was ‘dismayed’ that the National Audit Office had found it necessary to qualify the 2009/10 accounts, after assurances from the MoD that it was unlikely that this would happen again.The committee report, The performance of the Ministry of Defence 2009/10, said that it was ‘surprising and worrying’ that the MoD had not foreseen the qualification although it was unable to properly account for the existence and condition of equipment and spares worth £6.3bn.
This includes spares to the value of £5.5bn and £752m of military equipment, including £568m of assets such as firearms and £184m of battlefield radios.
Despite the concern over the MoD’s inventory management, the department expects its stock control problems to continue for another two to four years as it undertakes reforms.
Committee chair James Arbuthnot stressed that the logistical issues faced by the department were not ‘some abstract problem existing only on paper’.
He said: ‘Equipment is needed by troops in the field and proper logistics are an essential part of effective military operations. The MoD's inability to manage existing resources makes it harder for them to request additional funding.’
The NAO qualification also highlighted the MoD’s failure to adhere to the accounting standards required of government departments. Auditors found that the department had failed to meet International Financial Reporting Standards.
The MoD said that it had been deemed ‘too costly’ to review existing contracts to meet the standards in the 2009/10 accounts, but the committee said that the department should develop a clear timetable to achieve compliance.
Responding to the report, Defence Secretary Liam Fox admitted that the Ministry of Defence had ‘not managed its resources well for many years’.
He added: ‘While there are specific difficulties in managing assets in war zones across the globe, we must have better systems in place to accurately track what resources are held and where.
‘I announced major defence reforms last week to deliver clearer structures and financial responsibility across the department. This will be implemented at pace and I wish to see demonstrable improvement in the MoD’s inventory management.’
The committee said that it would study the outcomes of the Defence Reform Unit proposals published last week. This report calls for a ‘greater focus on affordability’ in the department, as well as a smaller Defence Board that will take major decisions and hold the department to account.
The committee will look to ensure that the MoD retains the right skills after the reforms, saying there was a need to ensure that any redundancies did not leave the MoD ‘without the right skills and experience required for effective performance’.
