News story

Defence Secretary responds to Major Projects Report

The cost of 10 of MOD's 11 biggest equipment programmes fell by almost £50 million in the last year, according to an independent audit.

• From: Ministry of Defence, Defence Equipment and Support, and The Rt Hon Philip Hammond
• Published: 13 February 2014

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Defence Secretary Philip Hammond

The National Audit Office (NAO) Major Projects Report 2013 says better financial management, renegotiations with industry and an improved procurement strategy have prevented the programmes getting badly delayed and going significantly over budget.

During 2012/13 there was an 88% reduction in the overall delays compared with the year before and the Queen Elizabeth Class carrier programme was the only major project to experience a significant cost increase.

The £754 million rise in the cost of the carriers was announced by the Defence Secretary last year. The NAO acknowledges that better planning meant that the department not only budgeted for the anticipated rise but also robustly renegotiated the terms of the contract to prevent further increases.

Graphic summarising the improved situation as regards MOD's biggest equipment programmes [Picture: Crown copyright]

Defence Secretary Philip Hammond said:

The NAO’s report is clear evidence that better financial discipline across MOD is having a positive effect on the way we procure equipment for our armed forces.

Unlike the past, we do not have to make short-term cuts that delay programmes to simply live within our means.

Balancing the budget and providing a clearer and more accurate forecast of our future requirements and resources has put MOD in a stronger position to respond to unforeseen changes and negotiate a better deal with industry.

MOD has today published its second equipment plan which sets out how the department will spend its £164 billion equipment and support budget over the next 10 years.

Mr Hammond said:

There is more work to be done to better define defence requirements and challenge industry to deliver best value for the taxpayer.

I am confident that we can build upon the huge progress that has been made in the last 12 months to undo years of mismanagement and ensure we deliver equipment on time and on budget.

Published 13 February 2014