Spiralling costs of MoD projects could 'leave troops short of equipment', MPs warn

Frontline troops could run short of vital kit and ammunition because of spiralling costs on flagship defence projects, MPs have warned.

A scathing report by Parliamentary spending watchdogs today accuses the Ministry of Defence of concealing £1billion of soaring costs from scrutiny.

In a damning assessment, they say the MoD is resorting to accountancy tricks to shift spending away from high-profile projects - without making real savings.

The influential Public Accounts Committee condemns what it calls a 'conspiracy of optimism' between the MoD and its major suppliers.

This has lead to unrealistically low cost figures which then spiral out of control.

They say the much criticised department has failed dismally to improve the slow, cumbersome and wasteful way it buys new equipment.

The committee found the 19 biggest equipment projects are currently set to cost £28billion in total - 11 per cent higher than their originally budgets.

The MoD's re-equipment programme has been criticised for letting new aircraft, ships and weapons systems slipping behind schedule while going billions over budget.

In the meantime, frontline troops have paid for their lives because of shortages of essential kit.

Their withering assessment came as it emerged that the MoD expects soaring fuel costs to add £500million to the cost of running the military this year, and that training is expected to be cut back dramatically to try to keep budgets under control.

Today's report exposes the MoD's new method of moving £1billion of spending away from its major projects - which come under closer scrutiny from watchdogs - to other budgets, making massive deals look far cheaper.

One example is the precision artillery weapon known as the Multi-Launch Rocket System.

The MoD has 'reallocated' £165million of spending on guided rockets for the MLRS into another budget.

But the spending has been switched into a development project which is still unapproved and may be ditched, so that 'there is a risk that frontline troops will go short of equipment.'

MPs angrily accuse the MoD of 'not providing Parliament with the full picture' on its major projects, of 'masking' £1billion of spending in a way which could force significant cuts elsewhere.

MPs highlighted the culture of delays and slow decision making which tends to drive costs upwards, citing the Royal Navy's two new giant aircraft carriers which Ministers discussed for 10 years before finally signing contracts earlier this month.

Despite repeated attempts, the MoD appears 'unable to bring about lasting improvements' in the way it orders and buys new equipment.

Insiders say much of the blame lies with the system of military officers working for two years on equipment projects before moving on -  often demanding expensive changes to 'make their mark' but leaving before the costs have to be faced.

Committee chairman Edward Leigh MP said: 'The MoD is trying to persuade Parliament that the forecast costs of major defence equipment projects are under control - by moving expenditure from those projects to other defence budgets.

'This is not acceptable.'

Matthew Elliott, chief executive of the TaxPayers' Alliance, said: 'The MoD is notorious for poorly-managed equipment projects that cost taxpayers billions and threaten soldiers' lives on the front line.

'A delay of a few years here or an over-run of a few hundred million there might seem forgivable in a plush MoD office, but in Iraq and Afghanistan these things mean the difference between life and death.'

Rising oil prices are hitting the MoD hard, according to leaked documents, driving fuel costs up 20 per cent to an estimated £2.9billion this year.

Training budgets will have to be slashed, critics warn, with major exercises being scrapped or scaled back.

Service chiefs already admit the forces would be unable to fight a major war for several years due to training shortfalls, and further cuts could make it even harder to recover fading skills.