Counter-productive: MoD cost cutting prompts £500m price rise
By Tony Hudson
Ministry of Defence cost-cutting efforts have actually resulted in a £500 million increase in the 15 largest defence projects, according to a new report.
The report by the National Audit Office (NAO) claimed that decisions made in order to save money in the short term, like slowing the production of the Successor nuclear submarine, added an extra £200 million to the overall cost of the project.
Also as a result of these cost cutting measures, the total delay on all 15 projects has been increased to 26.8 years.
"The Ministry of Defence has been hampered by a legacy of poor planning and performance on some past projects, and the resulting cuts and delays are not value for money," NAO head Amyas Morse said.
"But it is welcome news that the department has finally accepted that the financial position it is in is serious and is actively working towards balancing its books in the longer term."
Some measures taken by the MoD has helped, however. According to NAO analysis, by reducing the amount of equipment purchased, the increase in cost has been 11.4% as opposed to the approximately 20% it could have been.
