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Watchdog warns of defence project delays and overspending Watchdog warns of defence project delays and overspending
(about 7 hours later)
Major defence projects are being hit by delays and overspend despite government promises to control costs, the Whitehall spending watchdog has warned.Major defence projects are being hit by delays and overspend despite government promises to control costs, the Whitehall spending watchdog has warned.
The National Audit Office found costs of the 16 largest projects had risen by £468m and slipped in timescale by 11 years, seven months in the past year.The National Audit Office found costs of the 16 largest projects had risen by £468m and slipped in timescale by 11 years, seven months in the past year.
Labour said "waste and delay" were characteristic of the coalition's equipment programme. Labour said "waste and delay" were characteristics of the coalition's equipment programme.
The government said it had got spending on big projects under control. Defence Secretary Philip Hammond said inefficiencies were being wiped out.
The overall costs of the projects have risen by a total of £6.6bn and commissions have been delayed overall by 39 years since being ordered, the National Audit Office (NAO)'s annual report on the Ministry of Defence's major equipment projects said. Mr Hammond told BBC Radio 4's Today programme that the culture at the Ministry of Defence was changing and "strong progress" had been made in the move to improve the handling of projects.
He said the National Audit Office's (NAO) report had been "fair" and had recognised that the MoD had made progress but likened improving efficiency at the MoD to "turning around a super tanker".
"There are years and years of financial mismanagement and poor management around MoD projects and it is going to take a while to turn it around and get the level of performance that we want. But we are determined to get it," he added.
'Critical shortfalls''Critical shortfalls'
The NAO's annual report on the MoD's major equipment projects said the overall costs of the department's projects have risen by a total of £6.6bn and commissions have been delayed overall by 39 years since being ordered.
The report warns that delays to new RAF transport and refuelling planes could lead to critical shortfalls until 2017.The report warns that delays to new RAF transport and refuelling planes could lead to critical shortfalls until 2017.
Last year Defence Secretary Philip Hammond claimed to have "balanced" the MoD's books. After wielding the axe on military personnel and kit, he said he had achieved an equipment programme that was "managed and affordable".Last year Defence Secretary Philip Hammond claimed to have "balanced" the MoD's books. After wielding the axe on military personnel and kit, he said he had achieved an equipment programme that was "managed and affordable".
Many saw that as an extremely brave statement, given the parlous state of the MoD's finances and the long list of past procurement nightmares. This report by the NAO also suggests it might have been rather premature.Many saw that as an extremely brave statement, given the parlous state of the MoD's finances and the long list of past procurement nightmares. This report by the NAO also suggests it might have been rather premature.
In fairness to Mr Hammond, the report highlights that he inherited problems with "big ticket" items. Some factors have been outside his control, such as higher fuel bills. The NAO also recognises "early signs" that the MoD has started to make realistic trade-offs between cost, time, technical requirements and the amount of equipment ordered.In fairness to Mr Hammond, the report highlights that he inherited problems with "big ticket" items. Some factors have been outside his control, such as higher fuel bills. The NAO also recognises "early signs" that the MoD has started to make realistic trade-offs between cost, time, technical requirements and the amount of equipment ordered.
But it also concludes the MoD needs to do "consistently better". Mr Hammond may have got a better grip on spending, but even he, the man known as "Forensic Phil", will find it hard to reverse a trend of big defence projects coming in late and over budget.But it also concludes the MoD needs to do "consistently better". Mr Hammond may have got a better grip on spending, but even he, the man known as "Forensic Phil", will find it hard to reverse a trend of big defence projects coming in late and over budget.
The MoD has already spent £787m in filling gaps caused by delays to the programmes to deliver new air-to-air refuelling and transport aircraft programmes.The MoD has already spent £787m in filling gaps caused by delays to the programmes to deliver new air-to-air refuelling and transport aircraft programmes.
It said that officials were considering extending the life of the RAF's VC10s - due to be retired from service in March - then using the Tristar, which goes out of service next year, to meet air-to-air refuelling needs until the new planes are ready to take over.It said that officials were considering extending the life of the RAF's VC10s - due to be retired from service in March - then using the Tristar, which goes out of service next year, to meet air-to-air refuelling needs until the new planes are ready to take over.
Delays to the transport aircraft, the A400M, which is due to enter service in March 2015, six years later than planned, have meant the MoD has had to acquire extra aircraft to ease pressure on the RAF's transport fleet.Delays to the transport aircraft, the A400M, which is due to enter service in March 2015, six years later than planned, have meant the MoD has had to acquire extra aircraft to ease pressure on the RAF's transport fleet.
Meanwhile, delays to a £32m Falcon communications system for Afghanistan mean it will not now be ready until after British troops have withdrawn in 2014.Meanwhile, delays to a £32m Falcon communications system for Afghanistan mean it will not now be ready until after British troops have withdrawn in 2014.
Tim Banfield, who wrote the NAO report, said there were "some early signs that the MoD is beginning to make some more sensible decisions about how it goes about buying defence equipment".
However, he said the MoD had some way to go and was "at the start of a long journey".
He told the BBC: "Defence projects are big, they're complex, they go on for a long while, but what we would hope to see is that the Ministry of Defence starts to make better decisions about when it invests and better information, about costs, risks and realistic timescales. And there is much less turbulence as they go forward.
"The one thing we want from the MoD is to be able to see consistency and certainty."
The spending watchdog did acknowledge early signs of progress in controlling spending, but overall it concludes the MoD needs to do better.The spending watchdog did acknowledge early signs of progress in controlling spending, but overall it concludes the MoD needs to do better.
NAO head Amyas Morse said: "The Ministry of Defence faces a difficult task striking a balance between delivering the capabilities it wants and those it can afford. NAO head Amyas Morse said the MoD "faces a difficult task striking a balance between delivering the capabilities it wants and those it can afford".
"There will always be factors over which the department has limited control, but it must do more to learn from previous projects." "There will always be factors over which the department has limited control, but it must do more to learn from previous projects," he said.
Margaret Hodge, chairman of the Commons public accounts committee, which oversees the NAO's work, said: "Yet again, the MoD's annual report card on its 16 largest defence projects has found unacceptable cost increases and delays, making it harder for the ministry to deliver today's capability needs and close tomorrow's capability gaps."
'Tough decisions''Tough decisions'
Shadow defence secretary Jim Murphy said: "Less than a year after [Defence Secretary] Philip Hammond claimed to have balanced the budget, waste and delay are characteristics of his equipment programme." Margaret Hodge, who chairs the Commons public accounts committee, which oversees the NAO's work, said: "Yet again, the MoD's annual report card on its 16 largest defence projects has found unacceptable cost increases and delays, making it harder for the ministry to deliver today's capability needs and close tomorrow's capability gaps."
Mr Hammond said: "Thanks to rigorous financial management, this government has dramatically reduced the annual cost growth of the biggest equipment projects from more than £3bn under the last year of the previous administration, to under half a billion pounds. And shadow defence secretary Jim Murphy said: "Less than a year after [Defence Secretary] Philip Hammond claimed to have balanced the budget, waste and delay are characteristics of his equipment programme."
"The 0.8% growth in programme cost represents much less than the rate of inflation for the year. But the defence secretary said that "thanks to rigorous financial management", the government had "dramatically reduced the annual cost growth of the biggest equipment projects from more than £3bn under the last year of the previous administration, to under half a billion pounds".
"Unlike the previous government, who let spending spiral out of control, we have taken the tough decisions necessary to get the equipment plan under control." "The 0.8% growth in programme cost represents much less than the rate of inflation for the year," said Mr Hammond.
Mr Hammond said that fuel inflation and other factors outside of the department's control were responsible for three-quarters of the cost increase over the past year. He said that fuel inflation and other factors outside of the department's control were responsible for three-quarters of the cost increase over the past year.
"It will take time to rectify years of mismanagement of the programme, but the work this government has done to balance the budget and address fundamental project management problems is paying off," he said. Mr Hammond told the BBC: "I'm confident that we are making strong progress but I recognise that we have a lot of work to do.
"We can now make more accurate cost projections and invest in the best equipment for our Armed Forces with more confidence than ever before." "We have tightened up procedures and we're confident that we're winning this battle."