The Secretary of State for Defence (Mr Philip Hammond)
I am today placing in the Library of the House a summary of the Ministry of Defence’s core equipment plan as promised in my statement of 14 May 2012, Official Report, column 261, together with an update on the current analysis of risk in the programme by the Department’s independent Cost Assessment and Assurance Service (CAAS). The equipment plan represents the position as at the conclusion of planning round 2012, and shows the budget for equipment procurement and equipment support for the next 10 years. It also provides details of how the core equipment plan breaks down between different capability areas.
This report covers a budget for new equipment, data systems and equipment support totalling around £160 billion over the next decade. It is, for the first time in recent memory, a plan which is affordable over the whole of that decade.
We have a central contingency provision of £4.8 billion over and above the provisions for risk within individual project budgets, something we have never had before. The report also shows that, in addition to the core equipment plan, we have around £8 billion of additional headroom in the later years of the decade. This will allow us to fund, incrementally and flexibly, a number of additional programmes that are a high priority for defence, as soon as we can be sure that they are affordable. We will do so only at the point when commitment is required to meet the operational requirement and only in accordance with the military assessment of priority at the time, an order defined by operational need, rather than short-term financial pressure.
Today, the National Audit Office (NAO) is also publishing its assessment of the affordability of the MOD’s equipment plan. This independent assessment is something that has never been done before. The report recognises the difficult decisions we have had to take to bring the defence budget into balance and the positive steps we have taken to lay the foundations for continuing stability in the equipment plan. From a culture of endemic over-programming, the NAO report makes it clear that we are now managing our equipment on a more prudent basis.
This first assessment is a foundation on which we intend to build. The assessment of the equipment plan will take place annually so that Parliament will gain ever greater levels of confidence that the MOD equipment plan is affordable and will fulfil our capability requirements.