|UK News : Watchdog warns of defence project delays and overspending|
10 January 2013
Major defence projects are being hit by delays and overspend despite government promises to control costs, the Whitehall spending watchdog has warned.
The National Audit Office found costs of the 16 largest projects had risen by £468m and slipped in timescale by 11 years, seven months in the past year.
Labour said "waste and delay" were characteristic of the coalition's equipment programme.
The government said it had got spending on big projects under control.
The overall costs of the projects have risen by a total of £6.6bn and commissions have been delayed overall by 39 years since being ordered, the National Audit Office (NAO)'s annual report on the Ministry of Defence's major equipment projects said.
The report warns that delays to new RAF transport and refuelling planes could lead to critical shortfalls until 2017.
The MoD has already spent £787m in filling gaps caused by delays to the programmes to deliver new air-to-air refuelling and transport aircraft programmes.
It said that officials were considering extending the life of the RAF's VC10s - due to be retired from service in March - then using the Tristar, which goes out of service next year, to meet air-to-air refuelling needs until the new planes are ready to take over.
Delays to the transport aircraft, the A400M, which is due to enter service in March 2015, six years later than planned, have meant the MoD has had to acquire extra aircraft to ease pressure on the RAF's transport fleet.
Meanwhile, delays to a £32m Falcon communications system for Afghanistan mean it will not now be ready until after British troops have withdrawn in 2014.
The spending watchdog did acknowledge early signs of progress in controlling spending, but overall it concludes the MoD needs to do better.
NAO head Amyas Morse said: "The Ministry of Defence faces a difficult task striking a balance between delivering the capabilities it wants and those it can afford.
"There will always be factors over which the department has limited control, but it must do more to learn from previous projects."
Margaret Hodge, chairman of the Commons public accounts committee, which oversees the NAO's work, said: "Yet again, the MoD's annual report card on its 16 largest defence projects has found unacceptable cost increases and delays, making it harder for the ministry to deliver today's capability needs and close tomorrow's capability gaps."
Shadow defence secretary Jim Murphy said: "Less than a year after [Defence Secretary] Philip Hammond claimed to have balanced the budget, waste and delay are characteristics of his equipment programme."
Mr Hammond said: "Thanks to rigorous financial management, this government has dramatically reduced the annual cost growth of the biggest equipment projects from more than £3bn under the last year of the previous administration, to under half a billion pounds.
"The 0.8% growth in programme cost represents much less than the rate of inflation for the year.
"Unlike the previous government, who let spending spiral out of control, we have taken the tough decisions necessary to get the equipment plan under control."
Mr Hammond said that fuel inflation and other factors outside of the department's control were responsible for three-quarters of the cost increase over the past year.
"It will take time to rectify years of mismanagement of the programme, but the work this government has done to balance the budget and address fundamental project management problems is paying off," he said.
"We can now make more accurate cost projections and invest in the best equipment for our Armed Forces with more confidence than ever before."
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