The MOD releases its latest Defence Equipment Plan

Land March 2, 2020

The Ministry of Defence (MOD) has published the Defence Equipment Plan 2019 setting out its plans for ten years to deliver and support the equipment required by the armed forces.

The release details the MOD’s equipment and support programmes to determine affordability and sets out its expected expenditure on projects to equip the Armed Forces.

Over the next ten years, the MOD estimates the total defence spend on equipment to be around £183.6 billion. This includes investment in submarines; information systems and services; land equipment; ships; air support; combat air; weapons; and helicopters.

The report states that the Modernising Defence Programme (MDP) has recognised that the challenges facing Britain have become more complex and dangerous, developing more quickly than initially anticipated.

The MDP has identified the need to deliver across three priority areas: mobilise, modernise, and transform.

The report states that although the budget for the Equipment Plan in 2019/20, there still ‘remains risk to affordability longer term’.

In April 2019, the shortfall between available spending and expected costs reduced to £2.9 billion, or 1.6% of budget, over ten years. This is down from £7 billion in April 2018. The Department started 2019/20 with forecast costs aligned to budget following the commitment of £1 billion additional spending in Budget 2018.

The MOD reduced forecast costs over the longer term through continued emphasis on identifying and delivering efficiency initiatives and investment in improving forecast accuracy.

The risk to long term affordability comes with forecast costs with £5.8 billion over the available budget for the four years from 2019/20.

This is around the same shortfall over the same period at April 2018 because there was no commitment to longer term funding in the 2018 Budget and the Department chose not to substantially revise plans ahead of a multi-year spending review originally anticipated in 2019.

The Government announced in its 2019 Spending Round an additional £2.2 billion investment in Defence over 2019/20 and 2020/21. This impact of this further investment on the Equipment Plan will be resolved through the MOD’s annual planning process which will conclude this winter.

The report says that risks to longer-term affordability will be managed carefully until the next review of the Department’s financial settlement, currently anticipated to be a Spending Review in 2020.

Writing in his foreword of the summary, the Defence Secretary, Ben Wallace, said: “We will need to create the financial headroom in our Equipment Plan to harness emerging technologies and develop the battle-winning capabilities of tomorrow.

“We know that to get this right, we must accelerate our work to mobilise, modernise and transform so that we deliver more effectively and efficiently over the long term. Reviewing our acquisition process will be an important part of this work.”

The MDP outlined the MOD’s commitment to transform Defence to improve productivity, reduce costs, and deliver next generation military capabilities.

The summary says the MOD is making good progress on its efficiency savings targets, including those for the Equipment Plan – with 60% are already being delivered.

However, it believes the remaining 40% will only be achieved through upfront investment and a significant cultural shift. This will see Head Office’s role will be bolstered to push through the ongoing business transformation

There is also a commitment to greater transparency with improved clarity and accessibility of the Executive Plan in line with recommendations made by the National Audit Office last year.

There was good news for businesses operating in the defence marketplace, with confirmation from the Defence Secretary that the government will continue its investment into Britain’s defence and security.

Mr Wallace said: “The Government remains committed to meeting the NATO target of spending at least 2% of GDP on defence and at least 20% of that spending will be on equipment. During 2018/19, the Government committed £1.6 billion additional spending for Defence and a further £2.2 billion was committed in Spending Round 2019. The detailed implications of this most recent settlement on the Equipment Plan are being reviewed and will be reported in due course.”

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Equipment Plan Ministry of Defence