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| MoD drafts in City experts to tackle military budget | MoD drafts in City experts to tackle military budget |
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| The Ministry of Defence has such a "worrying lack of financial" expertise among its team of 1,000 qualified accountants that it has had to draft in dozens of specialists from a top City firm to help run the notoriously chaotic military budget, according to a report. | The Ministry of Defence has such a "worrying lack of financial" expertise among its team of 1,000 qualified accountants that it has had to draft in dozens of specialists from a top City firm to help run the notoriously chaotic military budget, according to a report. |
| The lack of people with the right skills was one of the reasons why the MoD delayed the publication of last year's annual report by five months – a failure criticised by the Commons defence select committee, which has refused to "sign off" the ministry's accounts for a sixth year in a row. | The lack of people with the right skills was one of the reasons why the MoD delayed the publication of last year's annual report by five months – a failure criticised by the Commons defence select committee, which has refused to "sign off" the ministry's accounts for a sixth year in a row. |
| In a 40-page report, MPs also condemned the department for failing to seek approval for the salary and expenses of one of the department's chief civil servants, Bernard Gray. He is on a salary of £245,000, not including a car and driver, and the MoD also agreed to pay him £2,000 a month so he could rent a flat in London. This should have been declared to and scrutinised by the Cabinet Office and the Treasury, but the agreement was kept in-house. | In a 40-page report, MPs also condemned the department for failing to seek approval for the salary and expenses of one of the department's chief civil servants, Bernard Gray. He is on a salary of £245,000, not including a car and driver, and the MoD also agreed to pay him £2,000 a month so he could rent a flat in London. This should have been declared to and scrutinised by the Cabinet Office and the Treasury, but the agreement was kept in-house. |
| "The failure to obtain approval for the full remuneration package of the chief of defence materiel (COR) is regrettable and the situation should be remedied as soon as possible," the report says. | "The failure to obtain approval for the full remuneration package of the chief of defence materiel (COR) is regrettable and the situation should be remedied as soon as possible," the report says. |
| The committee questioned why the MoD was still refusing to estimate the full costs of fighting in Afghanistan, Iraq and Libya. "Surely, as part of any lessons-learned exercise, the MoD should understand the total costs of operations," the report says. | The committee questioned why the MoD was still refusing to estimate the full costs of fighting in Afghanistan, Iraq and Libya. "Surely, as part of any lessons-learned exercise, the MoD should understand the total costs of operations," the report says. |
| But it was the MoD's admissions about the problems with accounting that worried MPs most. | But it was the MoD's admissions about the problems with accounting that worried MPs most. |
| In evidence to the committee, the department's chief civil servant, Jon Thompson, admitted he had hired 100 accountants from the City auditors KPMG to help sort out problems with the budget. These experts had helped to address "potentially material errors" in the MoD's accounts "that had come out of the blue". | In evidence to the committee, the department's chief civil servant, Jon Thompson, admitted he had hired 100 accountants from the City auditors KPMG to help sort out problems with the budget. These experts had helped to address "potentially material errors" in the MoD's accounts "that had come out of the blue". |
| Thompson, the permanent under-secretary, said the MoD may not have the right in-house expertise for at least another year. He said running the MoD was "equivalent to a FTSE top five company" and that the department "had not yet reached a satisfactory level of financial control". | Thompson, the permanent under-secretary, said the MoD may not have the right in-house expertise for at least another year. He said running the MoD was "equivalent to a FTSE top five company" and that the department "had not yet reached a satisfactory level of financial control". |
| MPs said the delays in producing last year's accounts revealed "a worrying lack of financial expertise" within the MoD. | MPs said the delays in producing last year's accounts revealed "a worrying lack of financial expertise" within the MoD. |
| "While bringing in external accountants may have been the only way to sort out the problems, the MoD should ensure that the employment of such an expensive resource is for the shortest period possible," the report says. | "While bringing in external accountants may have been the only way to sort out the problems, the MoD should ensure that the employment of such an expensive resource is for the shortest period possible," the report says. |
| Philip Hammond, the defence secretary, said: "For the first time in a generation, we have a balanced budget. The committee ignores the independent National Audit Office endorsement of the huge strides MoD has made to improve the department's financial management. More needs to be done to fix the deep-rooted problems we inherited from the previous administration." | Philip Hammond, the defence secretary, said: "For the first time in a generation, we have a balanced budget. The committee ignores the independent National Audit Office endorsement of the huge strides MoD has made to improve the department's financial management. More needs to be done to fix the deep-rooted problems we inherited from the previous administration." |
| Jim Murphy, the shadow defence secretary, said the report was a stark warning for ministers. | Jim Murphy, the shadow defence secretary, said the report was a stark warning for ministers. |
| "As the budget approaches and a cabinet row over further defence cuts deepens, the country will want real reassurances that international commitments will be met," he said. "The defence secretary is presiding over decline. There are real concerns about our national capacity to project force around the world and meet our ambitions. | "As the budget approaches and a cabinet row over further defence cuts deepens, the country will want real reassurances that international commitments will be met," he said. "The defence secretary is presiding over decline. There are real concerns about our national capacity to project force around the world and meet our ambitions. |
| "We welcome any progress on budgeting and, in particular, flexibility in unspent budgets. This shows, however, that reporting problems persist, MoD redundancies could limit output and government rhetoric does not meet reality." | "We welcome any progress on budgeting and, in particular, flexibility in unspent budgets. This shows, however, that reporting problems persist, MoD redundancies could limit output and government rhetoric does not meet reality." |
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