NAO Report.

[Chinny Crewman]

Following on from The Times reports on defence expenditure (See old thread) Deborah Haynes reporting on the NAO report in The Times 1 Feb;
'Military faces £21B funding gap'
'Plan unaffordable and unrealistic’
'The MoD simply does not have enough money to buy all the equipment it says it needs'

Pretty uncomfortable reading for Hammond who claimed to have sorted the budget and Fallon who 'increased spending'. I'm not sure where this leaves us? Defence hasn't made the savings and the Govt has cooked the books. More salami slicing or capability gaps? I'm going for gaps, kick as much into the long grass as possible. P8 delayed, F35 delayed?

[Chinny Crewman]

The article will be behind the paywall but the gist is here and will be reported by others no doubt:

https://twitter.com/haynesdeborah/status/958778957112934401

[skua]

"A military plan to buy warships, jets and submarines is unaffordable and unrealistic, with a funding hole of up to £21 billion over ten years, the UK’s spending watchdog said yesterday.


The Ministry of Defence omitted even to include the £1.3 billion price for a fleet of five new frigates in its equipment plan, the National Audit Office revealed. The NAO also identified a £576 million rise in the cost to build four replacement nuclear-armed Trident submarines.


The watchdog took a veiled swipe at Philip Hammond, the chancellor, and Sir Michael Fallon, who succeeded him as defence secretary, suggesting that the MoD was reverting back to before 2012 when its budget was consistently overheated. “The department risks returning to the situation it was in before the equipment plan was first introduced [in 2012],” the watchdog said in a report on the ten-year, £180 billion programme.
After cuts to personnel and kit, Mr Hammond declared six years ago that he had balanced the MoD books, eliminating what he claimed had been a £38 billion funding hole under Labour. This boast was repeated by Sir Michael during his time as defence secretary.


That is no longer the case, according to the spending watchdog.


“The department’s equipment plan is not affordable,” said Amyas Morse, head of the NAO. “At present the affordability gap ranges from a minimum of £4.9 billion to £20.8 billion if financial risks materialise and ambitious savings are not achieved.”
Financial risks include over-optimism in the cost to buy and maintain kit, the impact of a weak pound and a failure to meet efficiency saving targets.


Highlights from the report include:
•A failure to include £9.6 billion in forecast costs for equipment on top of the £1.3 billion omission related to the Type 31e frigates. This appears to have been caused by a failure by the MoD last year to make politically difficult decisions on which ship, aircraft and vehicle programmes to cut or delay to balance the books.
•Uncertainty over how to achieve at least £8.1 billion in efficiency savings out of a £16 billion target.
•A question over whether there is money to fund the last in a fleet of seven Astute-class attack submarines after the cost of the programme grew by £365 million.
•A lack of “reliable data” to forecast the cost to support next generation F-35 jets and a query over assumed savings in the support plan for two new aircraft carriers “at a time when the department was still to finalise the relevant contracts”.
•No budget to fund increasing costs to keep an older fleet of Type 23 frigates running because of delays in ordering replacement ships.
The watchdog called on the MoD to take “urgent action” to fix the funding gap or be forced to reduce or delay acquisition programmes.


Guto Bebb, the defence procurement minister, conceded in a foreword to the MoD’s equipment plan, which was also released yesterday, that there was “a high level of financial risk and an imbalance between cost and budget”. But he said that ensuring a sustainable and affordable armed forces would be part of a “modernising defence programme”.


The NAO also flagged up past work in which it identified a £8.5 billion shortfall in funding for barracks and other aspects of the defence estate over the next three decades. The MoD is also well short of a target to reduce civil servants by 30 per cent to 41,000 within two years to save £150 million a year."

[pr00ne]

Er, just how can it range from a probable low of £4.9B to a probable high of £20.8B?

Surely it is there or it isn't?

[glad rag]

Try reading the article again.

[MPN11]

•A failure to include £9.6 billion in forecast costs for equipment on top of the £1.3 billion omission related to the Type 31e frigates. This appears to have been caused by a failure by the MoD last year to make politically difficult decisions on which ship, aircraft and vehicle programmes to cut or delay to balance the books.

So £10.9bn slipped down the back of the sofa? How incompetent can you get?

[Melchett01]

Er, just how can it range from a probable low of £4.9B to a probable high of £20.8B?

Surely it is there or it isn't?

It's the difference between the most likely and most dangerous outcomes. The £20Bn figure represents the absolute worst case scenario if all risk factors were to transpire simultaneously. Because of that the £20Bn is probably a bit of an extreme figure, but getting it out now is probably prudent softening in case it did happen.

Interestingly, it's also classic corporate behaviour - new CEO arrives in a company and often the first thing to do is to open the books and get all the bad news out. Do it early enough it makes your predecessor look bad and gives you a good solid base for claiming you're great when 12 months later things aren't quite so bad. But I can't possibly think why a new SoS would want to make his predecessor who is now Chancellor look bad.

Canny bloke this new SoS.

[Arclite01]

I am starting to think that maybe the Independent Nuclear Deterrent in it's current form is not the best use of money.

The launch platform is expensive and the delivery system is not guaranteed to get the warheads on Target and the ongoing costs are high. I fully recognise that the IND gives us a seat at the top table in Global Terms but more and more this is of limited value since the future is likely to be decided by economic muscle and not necessarily military in view of this a lower spec nuclear platform might still fit the bill, since a single suicide bomber with a small suitcase bomb is most likely to be the threat in the immediate future could we not consider an alternative ??

That might just fill this black hole.................

Arc

[EAP86]

The NAO report is here: https://www.nao.org.uk/report/ministry-of-defence-the-equipment-plan-2017-to-2027/

“The Department’s Equipment Plan is not affordable. At present the affordability gap ranges from a minimum of £4.9bn to £20.8bn if financial risks materialise and ambitious savings are not achieved.”

Amyas Morse, head of the National Audit Office, 31 January 2018

EAP

[MPN11]

My major Staff College paper in 86 advocated dropping Trident (for mainly fiscal reasons) in favour of (then) SLCM.

It may have been the fault of my exposition, but the paper went down like a lead Zeppelin.

Can UK really afford/justify such a massive expenditure, on top of .... QE2s, F-35, Frigates, soldiers, sailors, airmen etc etc etc ....

[Melchett01]

My major Staff College paper in 86 advocated dropping Trident (for mainly fiscal reasons) in favour of (then) SLCM.

It may have been the fault of my exposition, but the paper went down like a lead Zeppelin.

Can UK really afford/justify such a massive expenditure, on top of .... QE2s, F-35, Frigates, soldiers, sailors, airmen etc etc etc ....

If Trident is viewed solely as a weapon system, then you can make the argument for sending the bill to the MOD. However, if viewed in a broader sense as a strategic political asset for gaining national leverage rather than a weapon you’ll probably never use, then it should probably be funded by a n other mechanism than the Defence budget. Just a thought.

[glad rag]

My major Staff College paper in 86 advocated dropping Trident (for mainly fiscal reasons) in favour of (then) SLCM.

It may have been the fault of my exposition, but the paper went down like a lead Zeppelin.

Can UK really afford/justify such a massive expenditure, on top of .... QE2s, F-35, Frigates, soldiers, sailors, airmen etc etc etc ....

Prioritise what gives the greatest deterrent effect.
F35b/QE2 or boomers....

[MPN11]

No argument about 'greatest deterrent effect', but the other capabilities are required and used on a regular basis.

[glad rag]

Well perhaps it's time we cut our coat to suit our cloth...time to decide, politically, what our priorities really are.

[Not_a_boffin]

I am starting to think that maybe the Independent Nuclear Deterrent in it's current form is not the best use of money.

The launch platform is expensive and the delivery system is not guaranteed to get the warheads on Target and the ongoing costs are high. I fully recognise that the IND gives us a seat at the top table in Global Terms but more and more this is of limited value since the future is likely to be decided by economic muscle and not necessarily military in view of this a lower spec nuclear platform might still fit the bill, since a single suicide bomber with a small suitcase bomb is most likely to be the threat in the immediate future could we not consider an alternative ??

That might just fill this black hole.................

Arc


FFS not again! This has been done to death, not least in the LibDem-led review.


1. You don't have an IND to deter Achmed the Awful and his suitcase. You deter him (insofar as you can) with a big tub of lard / pile of bacon butties.
2. That is not the threat the deterrent is aimed at. The deterrent is aimed at the threat that never really went away and is now re-emerging.
3. The alternative that people think exist - yes, you, TLAM types - actually doesn't and is non-trivial to create, operate and support.
4. Any money saved on IND will go straight to the gaping maw of skools n ospiculs, innit. There is zero chance of it being reinvested in defence.

[Heathrow Harry]

You can see why the Treasury and No. 10 get p***** off with the MoD

you can't trust a single number they produce in a forecast

[Just This Once...]

Not the case Harry as MoD has surprisingly little financial authority. The Treasury has almost total control and are usually behind the most outrageous financial moves with zero responsibility for any outcome. Somehow the media has never truly grasped that the Treasury controls everything above £250k and that the really big ticket items are, in turn, very much at the whim of the politicians.

[Roland Pulfrew]

FFS not again! This has been done to death, not least in the LibDem-led review.


1. You don't have an IND to deter Achmed the Awful and his suitcase. You deter him (insofar as you can) with a big tub of lard / pile of bacon butties. 2. That is not the threat the deterrent is aimed at. The deterrent is aimed at the threat that never really went away and is now re-emerging.
3. The alternative that people think exist - yes, you, TLAM types - actually doesn't and is non-trivial to create, operate and support.
4. Any money saved on IND will go straight to the gaping maw of skools n ospiculs, innit. There is zero chance of it being reinvested in defence.

NAB - Spot on. It is worth comparing the French military and our own, as well as population size, GDP etc. They don't have all the capabilities we have, but they do seem to be able to deliver the ones we keep bleating about not being able to afford.

And here, almost hidden away, such an apparently inconsequential thing

"and a failure to meet efficiency saving targets".



is most of the issue with the Defence budget. When you make a plan based on an assumption of meeting, what are nowadays, with no low-hanging fruit or "savings" left to be had, £10 billion of "savings or efficiencies" (for which read cuts to capability) you are scuppered from the very start.

[Heathrow Harry]

Not the case Harry as MoD has surprisingly little financial authority. The Treasury has almost total control and are usually behind the most outrageous financial moves with zero responsibility for any outcome. Somehow the media has never truly grasped that the Treasury controls everything above £250k and that the really big ticket items are, in turn, very much at the whim of the politicians.


I understand that but how on God's earth can a Ministry produce a forecast that hasn't addressed the points listed by Skua:-

•A failure to include £9.6 billion in forecast costs for equipment on top of the £1.3 billion omission related to the Type 31e frigates.

•A question over whether there is money to fund the last in a fleet of seven Astute-class attack submarines after the cost of the programme grew by £365 million.

•A lack of “reliable data” to forecast the cost to support next generation F-35 jets and a query over assumed savings in the support plan for two new aircraft carriers “at a time when the department was still to finalise the relevant contracts”.

•No budget to fund increasing costs to keep an older fleet of Type 23 frigates running because of delays in ordering replacement ships.

That is NOT the Treasury's responsibility - they are clearly gross omissions by people who know (or should know) what is going on. If they don't know what is going on is there any point in their existence???

[Buster15]

No argument about 'greatest deterrent effect', but the other capabilities are required and used on a regular basis.

Exactly. If we look back at the last decade (because the MoD are clearly unable to accurately forecast, ref successive SDSR's) the RAF have probably been the most active. No doubt that this is likely to continue as we reject soldiers on the ground.
That being the case, I have repeatedly asked why are we retiring our most capable attack and recce fast jet the GR4 ?.
It is also relatively cheap to operate due to the RTP programme. How can it not be possible to maintain a couple of squadrond while a decision is taken on the future F35 acquisition, one based on affordability as well as capabilities.
I am sure people will shoot me down saying that it is old and needs to be retired. To that my response is - are the B52 and A10. The former may well be re-engined and the latter re-winged.

[NutLoose]

The deterrent is aimed at the threat that never really went away and is now re-emerging. The Ukraine proved that, do you think Russia would have walked into Crimea if the Ukraine had not given away that deterrent on a few false promise from the good old USA and UK PLC. And that started with him calling the Wests bluff and sounding us out over Georgia.. the fact we stood by and did nothing meant he could advance his aims.

[Heathrow Harry]

which, of course, is why N Korea is developing its nuclear strike capacity as fast as it can

It makes sense ............................

And if I was Iranian I'd be doing the same

[Chinny Crewman]

FFS not again! This has been done to death, not least in the LibDem-led review.


1. You don't have an IND to deter Achmed the Awful and his suitcase. You deter him (insofar as you can) with a big tub of lard / pile of bacon butties.
2. That is not the threat the deterrent is aimed at. The deterrent is aimed at the threat that never really went away and is now re-emerging.
3. The alternative that people think exist - yes, you, TLAM types - actually doesn't and is non-trivial to create, operate and support.
4. Any money saved on IND will go straight to the gaping maw of skools n ospiculs, innit. There is zero chance of it being reinvested in defence.

You are confusing the argument NAB, Arclite wasn’t advocating unilateral disarmament only a cheaper form of deterrent. The problem with the Cabinet Office review you refer to is that it was predicated on the current nuclear posture adopted by HMG. The question is do we still need the ability to inflict mass losses and maintain a second strike ability? Des Browne stated in 2007 that the re-emergence of a nuclear threat could outstrip our ability to regenerate a deterrent if we mothball it. This suggests that back then HMG didn’t consider the UK to be at threat of a nuclear attack. Does it still consider this to be the case? (I understand the need for ambiguity as a part of the deterrent but saying nothing feeds into the ‘waste of money’ argument). I appreciate your post was rather flippant however:

1. Apparently we do not have sufficient funds to purchase enough lard/bacon. So what do we spend the money on Successor or butties?
2. Did the threat never go away, is it re-emerging? (see Des Browne comments above). The Ukraine argument from others doesn’t really add up as they unilaterally disarmed and that is not being argued for here.
3. You are correct however change the nuclear posture and several other delivery systems become cheaper to create, operate and support.
4. Quite possibly but HMG has committed to 2% of GDP for defence and the IND is funded out of the defence budget so we would hope savings would remain within the budget. We have little choice other than take politicians at their word and hold them to account at the ballot box.

For what it’s worth I think we should maintain the current posture and continue developing Successor but I’m not sure what to get rid of to fund it?