Savings figures 'massaged' by Ministry of Defence, MPs allege

By staff writers
September 11, 2007

The Ministry of Defence is accused by MPs today of massaging figures to claim it is saving hundreds of millions of pounds on the cost of major new weapons systems, casting doubt on its ability to plan for the new £19bn successor to the UK's Trident nuclear system.

The MoD says it has saved nearly £800m on 20 big projects, including the Eurofighter/Typhoon aircraft.

In a report published today, the Commons public accounts committee says £448m of the cuts were not the result of savings but were simply "transferred to other budgets". A further £242m was cut merely by reducing the number of weapons involved.

The contracts are still projected to cost £27bn, which is 11 per cent over their original budget.

Edward Leigh, the committee's Tory chairman, accused the MoD of "massaging figures", and raised doubts over its ability to achieve the projected savings as its record of handling major hardware projects was "pretty dire".

The committee, which criticised the Ministry's poor quality of forecasting the cost of defence contracts, found that between them the projects were running late by 433 months – 36 years – late.

Its report said the £781m savings in projected spending claimed by the MoD included £448m re-classified or transferred to other budgets, £91m in tax rebates and exemptions and just £242m in "real savings" from greater cost-effectiveness.

Referring to the £448m figure, the MPs warned: "The Department will have to forgo other ... activities which might otherwise have been financed from those budgets."

Mr Leigh said: "If the MoD is to keep the costs and delivery timetable of future large projects firmly under control, then it must learn from its mistakes in respect of some of the biggest current projects."

He said the Ministry would face a particular challenge in its planning for the £19bn successor to the UK's Trident nuclear system.

In their opposition to a replacement for Trident, churches have repeatedly pointed out that the cost of a new nuclear system is four times the amount of the UK's annual Overseas Aid budget.

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