£7bn hole in finance for forces ‘will mean huge cuts’

THE ARMED forces equipment budget is facing a £7bn black hole that could double and will force the Ministry of Defence to make “immediate” cuts, the Whitehall spending watchdog has warned.

The National Audit Office (NAO) said the rolling 10-year plan – covering the period 2018 to 2028 – remains “unaffordable”.

The MoD is currently considering whether to delay or defer some projects as part of the Modernising Defence Programme (MDP) launched in January.

However, the NAO said that with 84 per cent of the shortfall falling in the first four years of the plan, urgent action was needed.

“This means the department needs to make immediate savings decisions rather than relying on longer-term cuts or efficiencies,” it said.

The MoD currently estimates the plan – which includes the development of four new submarines to carry the UK’s Trident nuclear deterrent – will cost £193.3bn against a budget of £186.4bn, a shortfall of £7bn.

However, it acknowledges that under a worst-case scenario that could rise to £14.8bn – a figure which the NAO said “could still be optimistic”.

It warned the MoD was in danger of repeating past mistakes focusing on “short-term affordability rather than longer-term value for money”.

The Commons Public Accounts Committee chair Meg Hillier said: “The ministry still does not have enough money to buy all the equipment it says it needs and is in real danger of wasting taxpayers’ money through shortterm decision making.

“With the ongoing financial pressures, the MoD need to be clear about what equipment they will or will not be funding.”

The head of the NAO Sir Amyas Morse said: “The equipment plan 2018-28 shows that the MoD has a clearer understanding of the affordability issues that it faces, but it equally shows how urgently it needs to get on and tackle them.”

Chancellor Philip Hammond announced an extra £1bn for the MoD in the Budget which added to an extra £800m earlier in the year, although critics warned the cash would not go far enough.

An MoD spokesman said: “We are confident that we will deliver the equipment plan within budget this year, as we did last year, as we strive to ensure our military have the very best ships, aircraft and vehicles through our £186 billion plan.

“We recognise the financial challenges that these ambitious, complex programmes pose, and are addressing these after securing a £1.8bn financial boost for defence and reducing forecast costs by £9.5bn through efficiency savings.”