MoD paid pounds 80,000 for ship party to reward efficiency

PAYMENTS of pounds 1.2m under a Ministry of Defence incentive scheme - including an pounds 80,000 party, pounds 5,000 spent on theatre tickets, the purchase of go-karts, bicycles, a holiday caravan, department store gift vouchers and a tropical fish tank - were accepted to be 'indefensible' yesterday by Sir Christopher France, the MoD's Permanent Secretary.

Sir Christopher told the Public Accounts Committee during a two-hour grilling over the misspent million that 'institutional failure' from top to bottom at the MoD had produced 'totally unacceptable forms of expenditure' under the pounds 10m scheme intended to reward service units for contributing to the MoD's pounds 2.3bn of efficiency savings.

Items that Sir John Bourn, the Comptroller and Auditor General, has condemned as 'irregular' included an pounds 80,000 party on the Royal Fleet Auxiliary Argus, in which an 'extravagant' pounds 28,000 was spent on sound and lighting for part of the Royal Navy Supply and Transport Service's 25th anniversary celebrations.

Thousands of pounds were also spent making the ship safe for the party. Sir Christopher said the organisers had allowed the attraction of holding it on board to 'dazzle their judgement'.

Money was spent on furnishing a golf club ( pounds 16,000), refurbishing a skittle alley ( pounds 11,000) and buying a hairdryer when the scheme guidelines stressed projects should benefit the defence community as a whole and contribute to efficiency.

Michael Ancram, Conservative MP for Devizes, said it was as though those spending the money had thought 'Christmas had come early'. Purchases included pounds 28,000 on televisions and videos, barbecue equipment, Trivial Pursuit, and membership of health and sports clubs.

Sir Christopher, who became Permanent Secretary after the scheme ended, made it clear he was before the committee 'to be rebuked' as the department's accounting officer. But he said 87 per cent of the money under the incentive scheme had been spent properly - including pounds 3m on computer and similar equipment.

However, MPs questioned why the only disciplinary action had been to rebuke one under-secretary and a line manager, and attempts to recover the money had been ruled out because of 'administrative complexity'.

Sir Christopher told the committee there had been 'error, not fraud'. 'Ambiguity' in the guidance had led unit commanders to interpret it in a way MoD headquarters had not intended.