MOD to freeze spending amid spiralling budget

Soaring costs throw long-planned upgrade projects across all three services into doubt

THE MINISTRY of Defence has frozen new capital spending for two months as it struggles with the impact of soaring prices on its budget, The Telegraph can reveal.

The ban on spending started in early February and will last to the end of March, throwing into doubt longplanned projects which were due for approval before the next financial year.

Inflation has pushed up the prices of defence contracts since budgets were set. Last autumn’s Armed Forces pay rise had to be funded from the MOD capital budget and both factors are understood to have contributed to a freeze.

It comes after The Telegraph revealed at the weekend that the Army proposed relaxing security checks for recruits from overseas to boost diversity, prompting a review by Grant Shapps, the Defence Secretary.

The Telegraph can also reveal that, amid a recruitment crisis in the Royal Navy, the next generation of frigates will be crewed by as few as 50 sailors.

The decision to freeze capital spending has caused alarm in parts of the department. A defence source told The Telegraph: “There is an almighty scramble going on. It is absolute chaos.”

One area potentially which may be scaled back is the UK’S involvement in Project Convergence, a gathering of allied nations in California this spring to test military innovations.

Research projects on artificial intelligence and cyber technology now also face an uncertain future.

Sources who have worked inside the MOD at various points over the last decade said they could not remember any similar freeze on new capital spending.

Former defence secretaries have raised concerns about the freeze and called for more defence spending.

Jeremy Hunt, the Chancellor, will announce his spending plans at the Budget on Mar 6, but there has been no indication of more defence spending.

Last spring, he announced a substantial increase, with an extra £5 billion in defence spending over two years and a further £2 billion per year until 2027. Three former Tory defence secretaries – Sir Gavin Williamson, Sir Michael Fallon and Ben Wallace – raised their concerns with The Telegraph.

Sir Gavin said: “Britain’s adversaries are watching. This is a constraint at exactly the worst possible time.”

Mr Wallace added: “All the warning lights are flashing red across the world as the prospect of conflict is increasing. Now is not the time for the Treasury to be dancing around this most vital duty of leadership.”

An MOD spokesman said: “We do not recognise these claims. We continue to review capital-related activity for the remainder of the financial year as part of effective financial management to ensure the department lives within its allocated funding.”

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