MTB
What you describe (very accurately) resulted in an unholy uproar between those in MoD(PE) who disagreed with the waste and SMBs, in particular a certain AVM, who insisted on the waste. Only the instruction was to DESTROY the spares, not retain them elsewhere, which meant that, by definition, demands could not be met for 12-18 months (the production lead time).
This DELIBERATE waste soon got into 9 figures, and the auditors were called in by PE and, unsurprisingly, supported PE. However, as I said, the people who called in the auditors were crucified, the auditors were ignored by 2* and above (leading to the rulings I mentioned earlier) and the upshot is that the waste continues - although I believe the base policy which started it has been changed and it's not as bad these days. Still hundreds of millions though.
For my part, I refused the order to destroy kit (not just detail parts spares, but modules and LRUs) on my projects and was threatened with the sack by above AVM. Some of us lied, and said we scrapped the kit, but actually hid it away at air stations. When others saw what happened to us, they just signed away the waste and walked away.