The report says that without a fundamentally different financial settlement, the MoD would have to ‘de-scope, defer or delete’ projects. Its preference would be to do the latter, given that delaying programmes often increased costs and complexity.
Although the Department confirmed it would have to stop some projects it was unwilling to give specific examples.
Currently, the MoD forecasts £193.3 billion of equipment and support costs between 1 April 2018 and 31 March 2028. This exceeds its £186.4 billion budget, which includes a £6.2 billion contingency, by £7 billion.
The Department estimates that, should all identified risks materialise, the budget and cost difference for the Plan would widen to £14.8 billion, although this could still be optimistic.
Meg Hillier, chair of the Public Accounts Committee said: “In terms of poor financial planning, the Ministry of Defence is a repeat offender. The Department’s progress with addressing the concerns set out in our last report on the Defence Equipment Plan has been woeful.
“The MoD simply cannot afford everything it says it needs and it is not acceptable for officials to continue deferring decisions that have a bearing on its current affordability gap and longer-term risks.
“A department that is unwilling or unable to take the action required to help it live within its means is failing taxpayers, who rightly expect Government to deliver the best possible value for their money.
“We urge the MoD to act on our recommendations now, work with the Treasury to ensure its funding and planning models are fit for purpose, and bring some much-needed clarity to its priorities and costs.”