MPs say MoD’s £7.3bn savings target under ‘serious doubt’

20 Dec 17

The Ministry of Defence will be left unable to complete its shopping list of new ships, aircraft and combat vehicles because of its inability to achieve efficiency savings, according to MPs.

A report by the Defence Select Committee said there were serious doubts that the MoD would hit a £7.3bn savings target in order to pay for a range of military equipment and support, including eight frigates and nine aircraft.

Under the Strategic Defence and Security Review 2015, the government pledged to spend £178bn on equipment over 10 years.

The report, released over the weekend, said the MoD had “proven incapable” of making saving in previous years.

In 2015, it only reached 65% of planned efficiency savings.

Committee chair, Conservative MP Julian Lewis, said: “It is extremely doubtful that the MoD can generate even more efficiencies from within its already stretched budget on the scale required to deliver its equipment plan.

“This will inevitably lead either to a reduction in the numbers of ships, aircraft and vehicles or to even greater delays in their acquisition.”

The report also said MoD permanent secretary Stephen Lovegrove appeared to have been confused over an “inconsistent set of targets”.

The committee called on the MoD to review its efficiency plans and set up an “efficiency tracker” to detail when, where and how efficiencies are to be made.

An MoD report issued on 14 December revealed the value of new contracts placed during 2016/17 decreased 45% to £6.4bn compared with the previous year.

In October, a report by the National Audit Office said regulations governing the non-competitive procurement of defence equipment could deliver significant savings, but are being resisted by some suppliers.

The UK has committed to meeting a NATO target to spend 2% of GDP on defence. According to the World Bank, the UK hit 1.8% in 2016.

A number of MPs, including former defence secretary Michael Fallon, have called for spending to increase above the 2% limit.

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