SW1 wrote:If the NAO report didn’t wake people up to how overspent the budget is nothing will. I’m amazed people still think the lpds survive that long if the two carrier do come on stream. At best both are mothballed. Would suspect the bays are being relieved from there presence duties to either be scrapped or used in littoral role one hopes it’s the latter.
From a quick read through the NAO report, it seems that the "best case" is an underspend of £1.2b and the "worst case" is an overspend of $13b , with the most likely being an overspend of £2.9b over the next 10 years, spread across both equipment and support budgets for all three services (so approximately £1b per service, or £100m per service per year - worst case is closer to £430m per service per year). For the last two or three years the Treasury has been putting in an extra "one off" £1-1.2b to cover the shortfall. The additional 0.5% over inflation will gradually compensate, but it seems to me that, for what are relatively small amounts in national budget terms, that the "most likely" scenario could easily be accomodated. It still keeps the pressure on the MOD to manage its projects more efficiently, but might remove the pressure for cuts.
Interestingly, one of the NAO's major criticisms (amongst many others) is that the MOD remains focussed on in-year budgets, when taking a multi-year approach to budgets might generate significant savings (something that has been repeatedly stated on here, of course) - I thought that that was something that the Treasury insisted upon, so is this an indirect criticism of the Treasury?
The “best case” is what the service budget holders think will happen, there departments own internal audit doesn’t even think that is the case. I would suggest it’s likely they have somewhere between the 1.2b and 13b. But you also need to factor in they intend to make a further 7b off efficiency saving over the same period. Also Not to mention things that aren’t even budgeted for like f35 numbers beyond 48, mcm, littoral strike, or any of the fancy new things that they want. Also worth remembering that pay and pension contributions will also rise going fwd
That one off payment was in part a pull fwd from future budgets to keep successor on track.
There criticism of the in year budgets is two fold one the mod has yet again got to the point were it has to many programs running at the same time and not meeting it’s in year budgets which was exactly what the 10 year budget equipment program was supposed to avoid. It give them a 10
Year horizon were they could see were spend was coming and stagger replacements of equipment to smooth out the budget and not get into a situation we’re in year bubbles appear a financial management tool if you like they’ve failed miserably.
The second being the mod are back again to delaying or scaling back numbers programs rather than stopping which makes the problem worse. This isn’t new it’s precisely what all the smart procurement initiatives ect ect were brought in to change and what mod insisted had changed when the nao said we remain to be convinced it had and they were right.