NAO highlights £20bn shortfall in MOD new equipment budget

The Ministry of Defence’s (MOD) equipment budget could fall short by more than £20 billion over the next ten years.

This is according to a report from the National Audit Office (NAO), which labelled the MoD’s financial plan for equipment as ‘not affordable’.

It added that the budget did not provide a realistic forecast because the government has failed to take a string of costs into account such as the extra £1.3 billion required for five Navy frigates.

The NAO explains that even after assuming the contingency will be used, there would be a minimum affordability gap of £4.9 billion.

Amyas Morse, head of the National Audit Office, commented: “At present, the affordability gap ranges from a minimum of £4.9 billion to £20.8 billion if financial risks materialise and ambitious savings are not achieved.”

Meg Hillier, the chair of the public accounts committee, added that unless the MOD devised a realistic funding plan for new equipment it would end up scrapping or delaying projects haphazardly.

“This is not a sensible way of looking after our national defence,” she said.