The cost of building Britain’s biggest ever warships has risen by more than £200m in the past 12 months – one of several major military projects running late and over budget.
The National Audit Office says despite making efforts to curb over-spending on providing the Armed Forces with new equipment, Whitehall still needs to do more to rein in spending.
THE cost of building Britain’s biggest ever warships has risen by more than £200m in the past 12 months – one of several major military projects running late and over budget.
The National Audit Office says despite making efforts to curb over-spending on providing the Armed Forces with new equipment, Whitehall still needs to do more to rein in spending.
The auditors looked at 16 major MOD projects – such as the Astute-class submarines, Queen Elizabeth-class carriers, Type 45 destroyers, Lynx Wildcat for the Fleet Air Arm and Army Air Corps, and replacement tankers for the RAF.
When ordered these 16 ‘big ticket’ items cost the taxpayer £56.5bn and would take 159 years to complete.
Since the orders were placed by Whitehall, the cost has risen to £63.1bn, said the audit office, while delays to the projects had added 468 months – 36 years – to the completion time.
Over the past 12 months, the cost to the Royal Navy’s future carrier programme has risen by £217m – attributed to industry better understanding the risks involved in completing HMS Queen Elizabeth and Prince of Wales and the ships’ subsequent tests and trials – while introducing the Lynx Wildcat will cost an extra £19m.
Both will also enter service later than planned; Wildcat is running about seven months behind schedule, the carriers nine months.
When ordered back in 2008, the price tag for the two carriers was £3.5bn. The figure now stands at £5.3bn.
On the plus side, however, £62m was saved on the Astutes and £108m on the Type 45s, whose construction is now almost complete.
Wildcat touches down on the deck of HMS Lancaster during trials off the South Coast
Amyas Morse, head of the National Audit Office, said the MOD faced “a difficult task striking a balance between delivering the capabilities it wants and those it can afford. There will always be factors over which the Department has limited control, but it must do more to learn from previous projects.
“The continuing problems highlighted in my report show that, if it is to make the most of the money available, the Department has more to do to address its longstanding issues on project performance.”
Acknowledging the NAO’s report, Defence Secretary Philip Hammond said firm steps had been taken to keep the possible rising costs of major projects in-check.
“Unlike the previous Government, who let spending spiral out of control, we have taken the tough decisions necessary to get the equipment plan under control. Fuel inflation and other factors outside of the Department’s control are responsible for three-quarters of the cost increase over the past year.
“It will take time to rectify years of mismanagement of the programme, but the work this Government has done to balance the budget and address fundamental project management problems is paying off.
“We can now make more accurate cost projections and invest in the best equipment for our Armed Forces with more confidence than ever before.”
