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Equipment Plan and Major Projects Report

Volume 590: debated on Tuesday 13 January 2015

I am today placing in the Library of the House the third annual summary of the Defence equipment plan. The equipment plan represents the position at the end of March 2014 and sets out our plans to spend around £163 billion on new equipment and equipment support over the next 10 years. For the third successive year, this plan is realistic and affordable over the whole of the decade. It includes a central contingency provision of £4.6 billion over and above the provisions for risk within individual project budgets, and around £8 billion of additional headroom in the later years of the decade. Together these provide flexibility to address any cost growth within the core equipment plan while allowing us to fund, incrementally and flexibly, a number of additional programmes that are a high priority for Defence, as soon as we can be sure that they are affordable.

Today, the National Audit Office (NAO) will publish its third assessment of the affordability of the Ministry of Defence (MOD) equipment plan, which this year has been merged into one document with the MOD’s Major Projects Report for the first time. The report recognises the progress we are continuing to make, including the relative stability of forecast project costs, as well as highlighting areas where we must continue to improve and refine our processes.

Of the 11 projects within the MPR sample of 17 projects that have passed the main investment decision point, we have delivered 99% of requirements, the forecast cost of the projects has reduced by £397 million and the in-service dates have had a small increase of 14 months. This is the MOD’s best cost performance since 2005 and the best time performance since at least 2001, with delivery of military requirements routinely good over the period.