Central departmental decisions by the Ministry of Defence to try to balance the defence budget have reduced its cash-flow requirements in the short-term but at a long-term cost that represents poor value for money for the taxpayer. Not making realistic budgetary provision for all likely project outcomes and slowing down projects has resulted in a £3.3 billion increase in a single year, 2009-10, in the total cost of the 15 largest defence equipment projects. For the second successive year the cost performance on the majority of projects has been broadly stable and the rate of timescale slippage has also reduced significantly since last year and 98 per cent of Key Performance Indicators are expected to be met. The MOD did not make realistic budgetary provision for all potential costs, for example, on the Typhoon combat aircraft where the Department decided that it needed to spend £2.7 billion on the programme including the purchase of 16 additional aircraft to meet contractual agreements. It has slowed down projects such as the Queen Elizabeth Class aircraft carriers, leading to further project cost growth of £650 million. And, to address cost overruns, the Department has also reduced the number of items, and therefore capability, to be procured. The MOD recently undertook to report annually to Parliament on the affordability of its ten-year equipment plan, which should help deter the corporate practices which have adverse value for money implications.

This report examines the Ministry of Defence's progress in meeting cost, time and performance targets for its 15 top-spending military equipment projects. The Committee has reported before that the defence equipment programme is unaffordable with commitments exceeding forecast budgets over a ten year period by £36 billion. The MoD's short term decisions to keep in year expenditure within voted limits and the need to understand the full cost implications of these decisions have damaging consequences. In this year alone the cost of the major projects rose by £3.3 billion and nearly £5 billion was lost by late cancellations. The scale of problems created by this financial imbalance masks the improved performance of the majority of projects against cost and budget. The Strategic Defence and Security Review (SDSR) offered the Department an opportunity to bring its plans into balance with the expenditure limits set in the Comprehensive Spending Review. Projects such as the Nimrod MRA4 and Sentinel aircraft have been cancelled, accepting greater operational risks in some areas and writing off nearly £5 billion of taxpayer's money. But implementing the SDSR will require further decisions and the renegotiation or cancellation of a significant number of existing contracts to make the programme affordable. The Department has a poor track record in taking such decisions on the well informed basis necessary to optimise value for money. Other projects examined in detail include the Queen Elizabeth Class aircraft carriers and the Typhoon aircraft.

This is a companion volume to the main report (HC 1520-I, ISBN 9780102976786)

In respect of its largest defence projects there are early signs that the Ministry of Defence has begun to make realistic trade-offs between cost, time, technical requirements and the amount of equipment to be purchased. Nevertheless, the continuing variances to cost and time show the MOD needs to do consistently better. This report, which gives a progress review of the 16 largest defence projects, shows that in the last year there has been a total forecast slippage of 139 months and increase in costs of £468 million. This means that, since the projects were approved, costs have increased by £6.6 billion (around 12 per cent more than the planned cost) and the projects have been delayed by 468 months, taking almost a third longer than originally expected. It would be unrealistic to expect MOD and industry to identify every risk at the start of technically challenging projects. However, the continuing problems indicate that MOD has more to learn from historic. The MOD is accepting the capability risk and some wider costs resulting from these project delays and is having to make difficult decisions about long-term capabilities. The MOD has made a significant investment in new and upgraded helicopters to address the shortfall identified in the NAO's 2004 report. The MOD has also spent £787 million on air transport and air-to-air refuelling aircraft to support current operations and address capability gaps, such as those caused by the previously reported delays to the A400M transport aircraft. However, capability gaps remain

This is a companion volume to the main report (HCP 85-I, ISBN 9780102963342)

There has been little analysis of the constitutional framework for management of the UK economy, either in constitutional law or regulatory studies. This is in contrast to many other countries where the concept of an 'economic constitution' is well established, as it is in the law of the European Union. Given the extensive role of the state in attempting to resolve recent financial crises in the UK and elsewhere in Europe, it is particularly important to develop such an analysis. This book sets out different meanings of an economic constitution, and applies them to key areas of economic management, including taxation and public borrowing, the management of public spending, (including the Spending Review), monetary policy, financial services regulation, industrial policy (including state shareholdings) and government contracting. It analyses the key institutions involved such as the Treasury and the Bank of England, also including a number of less well-known bodies such as the Office for Budget Responsibility. There is also coverage of the international context in which these institutions operate especially the European Union and the World Trade Organisation. It thus provides an account of the public law applying to economic management in the UK. This book also adopts a critical approach, assessing the degree to which there is coherence in the arrangements for economic management, the degree to which economic policy-making is constrained by constitutional norms, and the degree to which economic management is subject to deliberation and accountability through Parliament, the courts and other institutions.

This book explores the process by which defence policy is made in contemporary Britain and the institutions, actors and conflicting interests which interact in its inception and continuous reformulation. Rather than dealing with the substance of defence policy, this study focuses upon the institutional actors involved in this process. This is a subject which has commanded far more interest from public, Parliament, government and the armed forces since the protracted, bloody and ultimately unsuccessful British military involvement in Iraq and Afghanistan. The work begins with a discussion of two contextual factors shaping policy. The first relates to the impact of Britain’s ‘special relationship’ with the United States over defence and intelligence matters, while the second considers the impact of Britain’s relatively disappointing economic performance upon the funding of British defence since 1945. It then goes on to explore the role and impact of all the key policy actors, from the Prime Minister, Cabinet and core executive, to the Ministry of Defence and its relations with the broader ‘Whitehall village’, and the Foreign Office and Treasury in particular. The work concludes by examining the increasing influence of external policy actors and forces, such as Parliament, the courts, political parties, pressure groups and public opinion. This book will be of much interest to students of British defence policy, security studies, and contemporary military history.

The Major Projects Report 2007 covers cost, time and performance data for military equipment projects in the year ended 31 March 2008. 20 of the largest projects are examined where the main investment decision has been taken by the Ministry of Defence (the MoD) along with ten projects still in the Assessment Phase. Six projects are new to this report: future lynx; modernised target acquisition designation sight/pilots night vision sensor; naval extrememly high frequency/super high frequency satellite communication terminals; Typhoon future capability programme; advanced jet trainer project and project Eagle

In May 2010, the Government announced the formation of the Efficiency and Reform Group within the Cabinet Office. The Group brings many of the functions of a typical corporate headquarters together in one place in the centre of government. Its priorities are improving efficiency in central government, and wider reform of the way public services are provided, in order to make the spending reductions required by the 2010 Spending Review. The Group is responsible for various new initiatives which are designed to increase efficiency, make savings and improve value for money. These include renegotiating contracts with major suppliers; implementation of a centralised procurement process; a review of major government projects; and a new Property Unit. The NAO's review details various challenges that the Group faces. It is too soon for the NAO to reach a judgment on its success in improving the value for money of government overall. The review is intended to provide an objective baseline against which progress made by the Group can be assessed by the NAO and the Public Accounts Committee.

This report examines the past decisions taken on the Typhoon fighter aircraft and looks at improvements that the Department can make to its delivery model to get more from industry in terms of reduced costs and better performance in the future. The Department originally planned to buy 232 aircraft. However, in light of changed operational requirements and significant funding constraints arising from the pressures of the defence budget, it is now ordering 160 aircraft and will retire the 53 oldest aircraft by 2019, leaving a long-term fleet of 107 aircraft. Overall, it is costing the Department £20.2 billion, £3.5 billion more than it first expected, to buy a third fewer aircraft. This is equivalent to the purchase cost of each aircraft rising by 75%, from £72 million to £126 million. Problems with the availability of spares mean that Typhoons are not flying the hours required and the Department is forced to cannibalise parts from other aircraft to maximise the number of aircraft available on a given day. As a result, it is not fully training all its pilots. Support costs are budgeted at £13.1 billion, but could be as high as £16.6 billion across the life of the aircraft. The Department has identified potential savings of £3.5 billion to keep support costs within budget. The Department will need to both reduce the cost and increase the timeliness of future collaborative spares and repairs contracts. At present, the contracts do little to incentivise better industry performance and to penalise failure.