Ministry of Defence 'living beyond means'

The Ministry of Defence must learn to stop "living beyond its means" and start budgeting more realistically, the Whitehall spending watchdog said today.

The National Audit Office (NAO) accused the MoD of failing to place enough importance on financial management and racking up further costs for the taxpayer.

Repeatedly over-committing its budget had created shortfalls of hundreds of millions of pounds a year and a black hole of up to £36 billion over the next decade.

The new Government is conducting a Strategic Defence and Security Review, which is intended to rebalance spending.

But the NAO said ministers faced a "challenge" to ensure plans remained in balance in the longer-term.

Amyas Morse, Auditor General and head of the NAO, said: "A crucial question for the Ministry of Defence is whether it can use strategic financial management to stop living beyond its means.

"The current Strategic Defence and Security Review will provide an opportunity for the MoD to balance its books in the short-term.

"The greater challenge will be to keep spending plans affordable in the longer term. The department is not at present placing enough emphasis on financial management to be able to do this."

Tory MP Richard Bacon, a member of the influential Commons Public Accounts Committee, accused the MoD of being "financially incontinent".

"There are very difficult and painful choices ahead and the MoD's fancy financial footwork has long ceased to impress," he said.

"The Ministry of Defence needs to face reality and stop living beyond its means."

The NAO highlighted the MoD's tendency to revise upwards its annual budget within the year

It said the forecast deficit for 2011/12 had increased from £185 million to £500 million after it reassessed its planning assumptions.

Dealing with the over-commitments later created further costs for taxpayers - including via the renegotiation of contracts - and was "destabilising".

"Delaying projects leads to significant increases in costs," the NAO said in its report.

The watchdog acknowledged that the MoD was not solely responsible for some of the increases in costs. For example, inflation in the defence sector was higher than elsewhere.

But it insisted that the department could do better with what was within its control, and needed to make financial management more central to its decision-making.

It warned: "Perpetuating the cycle of over-committed plans, short term cuts and re-profiling of expenditure, would mean the continuation of poor value for money for the taxpayer on the projects affected and a reduction in the funds available to support front line activities."

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Operations Manager

competitive: Progressive Recruitment: I am currently recruiting for an Operati...

Project Coordinator/Order Entry, Security Cleared

£100 - £110 per day + competitive: Orgtel: Project Coordinator/Order Entry Ham...

Senior Digital Marketing Executive

£35000 - £45000 Per Annum: Clearwater People Solutions Ltd: Our client based i...

Junior Developer- CSS, HMTL, Bootstrap

competitive: Progressive Recruitment: A leading company within the healthcare ...

Day In a Page

Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
How live cinema screenings can boost arts audiences

How live cinema screenings can boost arts audiences

Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
Shipping container hotels: Pop-up hotels filling a niche

Pop-up hotels filling a niche

Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
Native American headdresses are not fashion accessories

Feather dust-up

A Canadian festival has banned Native American headwear. Haven't we been here before?
Boris Johnson's war on diesel

Boris Johnson's war on diesel

11m cars here run on diesel. It's seen as a greener alternative to unleaded petrol. So why is London's mayor on a crusade against the black pump?
5 best waterproof cameras

Splash and flash: 5 best waterproof cameras

Don't let water stop you taking snaps with one of these machines that will take you from the sand to meters deep
Louis van Gaal interview: Manchester United manager discusses tactics and rebuilding after the David Moyes era

Louis van Gaal interview

Manchester United manager discusses tactics and rebuilding after the David Moyes era
Will Gore: The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series

Will Gore: Outside Edge

The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series
The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz