Liam Fox in Ministry of Defence costs crackdown

(GETTY IMAGES)

Defence Secretary Liam Fox will launch a crackdown on ballooning costs at the Ministry of Defence (MoD) this week as figures show projects are running £8.8 billion over budget.

In a speech to the Civitas think-tank tomorrow, Dr Fox will criticise the "conspiracy of optimism" at the MoD and in industry which is "based on poor cost-estimation" and "unrealistic time-scales".

He will warn: "These practices in the MoD would simply not be tolerated in the private sector, and they will no longer be tolerated in the MoD."

And he will call for a "new, frank and honest relationship between government and industry."

The speech comes with the Public Accounts Committee set to announce a report on the MoD's major projects.

The top 15 major procurement projects are £8.8 billion over budget and delayed by a total of 32 years.

This includes the Carrier and Typhoon projects which increased in cost by £3.3 billion last year alone and the A400M aircraft programme which is £603 million over budget and delayed by more than six years.

The Type 45 Destroyer programme is £1.46 billion over budget and delayed by more than three years and aircraft carriers are more than £1.8 billion over budget.

The MoD has had a long track-record of projects running over budget and over time, with the department forced to shoulder the extra costs.

The Government's Strategic Defence and Security Review (SDSR) last October outlined cuts of £4.7 billion over four years, with defence spending to fall 8%.

Matthew Knowles, spokesman for ADS - the UK's aerospace, defence and security trade organisation - said: "The 300,000 people across the country working in the UK defence industry remain proud and committed to delivering the best possible equipment to our Armed Forces at best value to the taxpayer.

"Our partnership with the Government is crucial to ensuring the best for our troops, security for our country and prosperity for our economy.

"Industry looks forward to continuing this partnership with Dr Fox to deliver on these shared aims.