MoD burdened with £2.7 billion overspend bill

MoD burdened with £2.7 billion overspend bill

	Published : Sat, 26 Nov 2005 01:35 By : Phil Bateman Print this Story

LONDON - The Ministry of Defense is under the scanner after a National Audit Office report has revealed that it's projected budget limits have been crossed and are in the red by about £2.7 billion.

This overspend has happened even after the MoD trimmed its costs by £699 million over the last 12 months. These findings have emerged from the annual NAO report, which analyzes defense spending in the country. The report further states that the MoD had to make close to £1 billion of cuts in order to rein in the spending.

These cuts mostly affected the number and quality of the defense equipment that was to be procured. Plus the fact that existing equipment like the Jaguar and Sea Harrier fighter jets were sent into early retirement also played heavily on the cuts. The proposed outlay for the Type 45 destroyer project has also been culled by £145 million in an effort to control the costs.

The report also said that there had been some perplexing delays in the delivery of weapons systems extending to about 45 months. The National Audit Office also said that it had included the costs of the Eurofighter project into its report since it was commercially sensitive at the moment. The Eurofighter has now been dubbed as Typhoon.

"The decrease in the forecast costs is a positive sign that the MoD is starting to bring its equipment programme under control," said NAO chief Sir John Bourn. "However, it is too early to judge whether this is the start of a sustained improvement in the MoD’s project management."

However, the report meant that the focus is now back on the MoD since it will have to explain the overspend in Commons. Edward Leigh, the chairman of the public accounts committee in Commons looks in no mood to relent. He said that his committee had warned MoD of the need to cut back on spending.

"I sincerely hope that this year’s report is the beginning of a new direction for the MOD but there have already been too many false dawns - and congratulations or celebrations would be far too premature," Leigh commented.