Forty-Eighth Report - MoD Equipment Plan 2022–2032

Select Committee
Public Accounts Committee HC 731 19 April 2023
Report Status Government responded
Conclusions & Recommendations 24 items (7 recs)
Source View on Parliament website
Government Response (AI assessment · 24 of 24 classified)
Accepted 7
Acknowledged 16
Rejected 1
Government response
Treasury minutes: Government response to the Committee of Public Accounts on the Forty-eighth report from Session 2022-23 · published 21 Jul 2023
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Recommendations & Conclusions

16 results
4 Recommendation Acknowledged
The Department’s assessment of the Equipment Plan’s affordability still relies on over-optimistic assumptions about the...
Recommendation
The Department’s assessment of the Equipment Plan’s affordability still relies on over-optimistic assumptions about the cost of programmes and the efficiencies and cost reductions it will achieve. Although the Department assesses that the Equipment Plan is affordable over ten years, … Read more
Government Response Summary
The government states that the department carries out a rigorous annual process to review and challenge delivery teams’ costings and will provide an assessment of the key sources of uncertainty and risk in the forward plan in the next update to the committee.
HM Treasury
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6 Recommendation Acknowledged
We are concerned that the Department has not yet developed a supply chain that can...
Recommendation
We are concerned that the Department has not yet developed a supply chain that can reliably and quickly deliver the capabilities and stockpiles it needs. The Department has started to replenish stocks gifted to Ukraine, the cost of which HM … Read more
Government Response Summary
The government agrees and says it has published a Defence Supply Chain Strategy last year and is implementing initiatives including a MOD Supply Chain Development Programme, a Supply Chain Contingency Fund, and a tool to manage supply chain issues. It recognises collaboration with the defence industry is vital.
HM Treasury
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9 Conclusion Acknowledged
The Department has been slow to implement the capabilities set out in the March 2021...
Conclusion
The Department has been slow to implement the capabilities set out in the March 2021 Integrated Review, several of which it has not fully funded despite publishing two Equipment Plan reports since then.23 Furthermore, as part of the Integrated Review, … Read more
Government Response Summary
The government agrees with the committee's observation and commits to providing updates on its plans for the Integrated Review Refresh and equipment plan by Summer/Winter 2023, while continuing to develop its strategy with HM Treasury.
HM Treasury
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10 Conclusion Acknowledged
The Ukraine conflict has demonstrated the renewed importance of land capabilities, but the Department acknowledged...
Conclusion
The Ukraine conflict has demonstrated the renewed importance of land capabilities, but the Department acknowledged that there has been slippage in several major programmes.25 We are unconvinced by the Department’s assertion that it is doing all it can to speed … Read more
Government Response Summary
The government recognizes the need to balance risk with speed and will write to the Committee with more detail on the department’s approach, including the scope to increase the pace of delivery to the front line, and provide an update on the implications for the Army’s forward equipment programme.
HM Treasury
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11 Conclusion Acknowledged
In the meantime, the Department’s struggles to deliver projects to modernise land capabilities leaves the...
Conclusion
In the meantime, the Department’s struggles to deliver projects to modernise land capabilities leaves the Army reliant on out-dated vehicles.27 Although the first Boxer armoured fighting vehicle is due to be delivered in 2023, it will not achieve initial operating … Read more
Government Response Summary
The government agrees with the committee's recommendation and will provide an update on the implications for the Army's forward equipment programme and more detail on the department’s approach to balance risk with the speed of capability delivery.
HM Treasury
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12 Conclusion Acknowledged
Even when Ajax is finally introduced, it will not operate to its full potential without...
Conclusion
Even when Ajax is finally introduced, it will not operate to its full potential without the Morpheus communications system. This will integrate Ajax across the land, air and sea domains, allowing real-time information-sharing and connectivity with other capabilities, such as … Read more
Government Response Summary
The government recognizes the need to balance risk with speed and will write to the Committee with more detail on the department’s approach, including the scope to increase the pace of delivery to the front line, and provide an update on the implications for the Army’s forward equipment programme.
HM Treasury
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13 Conclusion Acknowledged
Furthermore, the Department acknowledged that even if all the Army equipment in the Plan was...
Conclusion
Furthermore, the Department acknowledged that even if all the Army equipment in the Plan was delivered, that would not guarantee it could provide an operational division. This is because the current Plan does not address some risks, such as the … Read more
Government Response Summary
The government agrees with the committee's recommendation and will provide an update on the implications for the Army's forward equipment programme and more detail on the department’s approach to balance risk with the speed of capability delivery.
HM Treasury
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14 Conclusion Acknowledged
The Department told us that its 2022–2032 Equipment Plan is affordable, as the equipment budget...
Conclusion
The Department told us that its 2022–2032 Equipment Plan is affordable, as the equipment budget exceeds forecast costs by £2.6 billion (1% of budget). However, we noted that the aggregate surplus obscures financial pressures in the short-term and in some … Read more
Government Response Summary
The department will provide an assessment of the key sources of uncertainty and risk in the forward plan in the next update to the committee; forecasting across ten-years is inherently uncertain, plans need to be flexible to adapt to change, and the equipment plan report includes an upper and lower cost estimate for the ten-year plan.
HM Treasury
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15 Conclusion Acknowledged
We also noted that the Plan is only affordable if the Department achieves intended £13.8...
Conclusion
We also noted that the Plan is only affordable if the Department achieves intended £13.8 billion of savings, £5 billion of which it has not yet developed plans to achieve.39 The Department may be over-optimistic in expecting to achieve all … Read more
Government Response Summary
The government agrees with the committee's recommendation and will provide an assessment of the key sources of uncertainty and risk in the forward plan in the next update to the committee.
HM Treasury
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16 Conclusion Acknowledged
The Department may be over-optimistic in its assessment of project costs.
Conclusion
The Department may be over-optimistic in its assessment of project costs. The Department’s Cost Assurance and Analysis Service estimates that project costs could be between £5.2 billion and £14 billion higher than those in the Plan. The Department told us … Read more
Government Response Summary
The government agrees with the committee's recommendation and will provide an assessment of the key sources of uncertainty and risk in the forward plan in the next update to the committee.
HM Treasury
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17 Conclusion Acknowledged
We are concerned that the Department seems reliant on delaying delivery of capabilities to keep...
Conclusion
We are concerned that the Department seems reliant on delaying delivery of capabilities to keep the Plan affordable.44 The Department told us that the £13.2 billion management adjustment for realism represented a small amount of over-programming, and was based on … Read more
Government Response Summary
The department will provide an assessment of the key sources of uncertainty and risk in the forward plan in the next update to the committee; forecasting across ten-years is inherently uncertain, plans need to be flexible to adapt to change, and the equipment plan report includes an upper and lower cost estimate for the ten-year plan.
HM Treasury
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18 Conclusion Acknowledged
The affordability of the Plan is also under pressure from external economic factors, including rising...
Conclusion
The affordability of the Plan is also under pressure from external economic factors, including rising inflation and unfavourable exchange rate movements. In March 2022 the Office of Budget Responsibility forecast that inflation would reach 8.7% by the end of 2022.47 … Read more
Government Response Summary
The department continuously updates its forecast of the cost of the equipment plan and reviews its affordability through the annual financial planning process. The government announced an additional £5 billion for defence in the remaining two years of the 2020 Spending Review settlement at the 2023 Spring Budget, but the department still faces financial pressures.
HM Treasury
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19 Conclusion Acknowledged
Economic factors such as inflation and exchange rates will cause significant risks to the plan’s...
Conclusion
Economic factors such as inflation and exchange rates will cause significant risks to the plan’s affordability. The Department told us that it has £25 billion of risks that are not included in its forecast costs because it deems these unlikely … Read more
Government Response Summary
The department continuously updates its forecast of the cost of the equipment plan and reviews its affordability through the annual financial planning process. The government announced an additional £5 billion for defence in the remaining two years of the 2020 Spending Review settlement at the 2023 Spring Budget, but the department still faces financial pressures.
HM Treasury
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20 Conclusion Acknowledged
We are also concerned about the impact of inflation on the Plan’s delivery, particularly the...
Conclusion
We are also concerned about the impact of inflation on the Plan’s delivery, particularly the Department’s ability to obtain the skills required. The Department told us that it and its suppliers do not have enough data scientists, software engineers or … Read more
Government Response Summary
The department continuously updates its forecast of the cost of the equipment plan and reviews its affordability through the annual financial planning process. The government announced an additional £5 billion for defence in the remaining two years of the 2020 Spending Review settlement at the 2023 Spring Budget, but the department still faces financial pressures.
HM Treasury
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21 Conclusion Acknowledged
The Department acknowledged that inflation also makes it difficult for suppliers to deliver due to...
Conclusion
The Department acknowledged that inflation also makes it difficult for suppliers to deliver due to rising staff and material costs.55 As a result, the Department is changing its contractual approach to take account of the inflation risk and avoid suppliers … Read more
Government Response Summary
The government agrees with the committee's recommendation and states that the department continuously updates its forecast of the cost of the equipment plan and reviews its affordability through the annual financial planning process.
HM Treasury
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24 Conclusion Acknowledged
HM Treasury has provided the Department with £560 million to restart production lines in UK...
Conclusion
HM Treasury has provided the Department with £560 million to restart production lines in UK companies.62 The Department told us that it is working closely with key suppliers in the UK, including BAE Systems, MBDA and Thales, to invest in … Read more
Government Response Summary
The government agrees with the committee's recommendation and outlines actions being taken in relation to defence supply chain strategy, including the creation of a MOD Supply Chain Development Programme, a Supply Chain Contingency Fund, and implementation of a tool to proactively manage supply chain issues.
HM Treasury
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