MoD must find over £1bn in savings

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The National Audit Office (NAO) expressed "disappointment" that some of the Government's biggest defence programmes were continuing to incur significant extra costs.

The disclosure comes amid growing disquiet about military funding, with Prime Minister Gordon Brown coming under fire from former chiefs of the defence staff last week over his treatment of the armed forces.

While the total projected overrun on the MoD's 20 most expensive projects remained almost static over the last year at £2.5 billion, the NAO said this had only been achieved by shifting £609 million to different budgets in 2006/7.

The same arrangement had removed another £448 million from the major projects budget in 2005/6.

The "re-allocated" costs, totalling £1.057 billion, are being addressed through efficiency savings and reductions in the quantities of orders.

The figures came in the NAO's annual Major Projects Report, which also said there had been additional delays to projects totalling 38 months, compared to 33 months last year.

Edward Leigh, the Tory chairman of the Commons Public Accounts Committee, accused the MoD of "slipping costs from one budget to the next".

"It has moved more than £1 billion between internal budgets over the last two years," he said.

"We need to be clear: these are not savings. This juggling act must not happen again next year. The MoD should focus its creative efforts more on effective project management and less on shuffling figures around on balance sheets."