Critique of defence spending raises more questions

ust days after news that the Ministry of Defence could not account for some £6.3 billion of military hardware and components comes an altogether more serious if not devastating report today from the National Audit Office (NAO). It expresses “deep concern” about risks to value for money from the changes to the aircraft carrier programme and associated joint strike fighter aircraft that formed the core of the government’s 2010 Strategic Defence and Security Review (SDSR).

Huge sums are involved. The initial decision in 2007 to build the two carriers estimated the cost of both at £3.65bn. Post-SDSR that has risen to £6.24bn for one carrier, while in- service dates have been pushed from 2014-15 for two carriers to 2020 for an amended one.

The NAO report is a blistering critique that challenges two key justifications of the SDSR. The first is the concern it raises over Britain’s defence capability up to 2020. The second is whether it really offers, as the government claims, value for money. It looked into the complex factors involved in the decision to build two carriers but operate only one, and this only after modifications to enable it to fly a different version of the joint strike fighter. By choosing this route, the NAO notes, the carrier will be at sea for just 150 to 200 days a year, and fewer of the new version of the JSF will operate from the carrier, reducing the number of possible daily sorties by two-thirds.

“From the papers it saw”, the NAO summary reveals, “it could not understand how those factors were brought together to enable the MoD to reach a judgment on value for money”. That begs the obvious question: if there is such lack of transparency that the NAO cannot understand it, who else can?

The report also cites major risks in reconstituting carrier strike capability after a decade without it.

“The risks to the delivery of the new carriers”, it says, “are compounded by more generic problems with defence acquisition, notably the MoD’s continuing difficulties in balancing its budget.”

The MoD refuses to recognise the report – if nothing else, a measure of the gulf between the NAO and the MoD high command. Defence Secretary Liam Fox has expressed disappointment over its findings, pointing to the £1.6bn MoD budget over-run inherited from Labour and savings of £3.4bn that have been achieved. But the report appears to indicate a deeper problem with the government’s desperate attempt to fill a gaping hole with a patchwork compromise that, as the NAO warns, fails to convince operationally or financially. Cancelling the carriers altogether – an option the government rejected – would have involved the loss of thousands of shipbuilding jobs. Clearly, the report points, at the least, to a failing of transparency, which is a prime requirement for all government departments. This is meat and bone to the public accounts committee, which meets next Monday. It should insist on clear answers.