Capita sign outside offices in Bournemouth. The company has seen its shares plunge to a 15-year low after a warning over profits, January 31, 2018. Andrew Matthews/ Press Association. All rights reserved.What a week. On Tuesday (30 Jan) the UK parliament’s independent financial watchdog described in a withering report how the Ministry of Defence was up to £4.2bn worse off by selling married quarters to the private company, Annington Property.
The National Audit Office said the MoD seriously underestimated the likely rise in house prices when it made the sale and leaseback deal with the company managed by Guy Hands’ Guernsey-based Terra Firma group. It added that the MoD was paying rent on more than 7,000 empty houses at a cost of more than £30m a year and some homes had been receiving “the minimum acceptable level of maintenance”.
The MoD has an appalling record of “outsourcing” work to private companies. On Wednesday, it emerged that one of those companies, Capita, was in serious trouble and its share price plummeted.
The MoD hired Capita to manage recruitment to the army. It has repeatedly failed to meet savings targets and its performance has been sharply criticised by senior army officers worried about the shortfall in the number of recruits. After a damning report by the audit office, at least the MoD last year ended its contract with Capita to manage the country’s defence infrastructure, including airfields and training bases.
On Thursday the National Audit Office published another damning report on the MoD. The ministry, it said, faced a shortfall of more than £20bn in an equipment programme it simply could not afford. It disclosed that an extra £575m was needed for the four “Dreadnought” nuclear weapons submarines, already estimated to cost £31bn, that are due to replace the existing Trident fleet.
Here are a few examples of the MoD’s recent record. In 2010, the coalition government was warned it would cost more to cancel plans to build a second large aircraft carrier, HMS Prince of Wales, a sister ship to HMS Queen Elizabeth, than to go ahead with it. That year a fleet of half-completed Nimrod reconnaissance and maritime defence aircraft was scrapped because of delays and cost overruns wasting £4bn of taxpayers’ money.
A fleet of Chinook helicopters the MoD bought from the US company, Boeing, for the SAS could only fly in clear weather because they did not meet British safety standards.
A fleet of nuclear-powered Astute submarines, the navy’s new Type 45 destroyers, and a secure communications system for the army, have all been delayed or faced expensive technical problems at huge and avoidable cost as armed forces chiefs and weapons companies seduced star-struck ministers and civil servants into agreeing to over-ambitious, ill-planned, or unnecessary projects. I recall a memo by a senior but unidentified MoD official buried in the Chilcot report. He wrote: “MoD is good at identifying lessons, but less good at learning them”.
On the day last week when we saw television footage of the horrendous pressure placed on staff at NHS hospitals and the lack of resources for both emergency care and long-term social care, the head of the army, General Sir Nicholas Carter, pleaded for more money for the armed forces. He suggested that the army needed extra cash to deploy more tanks and long-range guns in Germany.
A few days later, Gavin Williamson, upped the ante claiming in an interview with the Telegraph that Moscow could cause “thousands and thousands and thousands” of deaths in Britain in attacks that would cripple the country’s infrastructure and energy supply – a possibility that even if true could not be stopped by the two most expensive items in the MoD’s equipment budget – nuclear weapons and aircraft carriers.
Armed forces chiefs are desperate to persuade the Treasury and Theresa May that they need more money. Yet the MoD does not deny estimates that a new nuclear weapons arsenal and its new fleet of four submarines will cost at least £200bn over its planned 30-year lifetime.
Meanwhile, more than £6bn is being spent on the navy’s two carriers, though the MoD cannot afford more than a handful of the ever more expensive F35 strike aircraft to fly from them. Britain’s nuclear weapons arsenal is eating up a huge slice of the defence budget.
Britain’s nuclear weapons are not a credible deterrent. The aircraft carriers will be increasingly vulnerable to long-range missiles being developed by Russia and China.
The real threat facing Britain’s security, apart from terrorism, is from cyber attacks, as Williamson suggested albeit with the help of hyped-up rhetoric. Carter’s army is facing an existential crisis. That is why he speaks about the need for more tanks and guns, and “boots on the ground”, warning of a pre-emptive Russian attack across the borderlands of the Baltic and the Balkans, if not the plains of northern Europe.
The MoD of course has a vested interest in exaggerating threats, in promoting concerns about a new cold war, in order to persuade the government, MPs, and the public to give it extra money.
The armed forces do not need it. Its existing budget is badly skewed in favour of expensive weapons systems and platforms irrelevant to the real threats facing Britain. It would be perverse to spend money so desperately needed elsewhere – for the NHS, and for education, for example. The MoD, as its persistent mishandling of its budget has demonstrated, and this week’s reports by the audit office only confirms, is simply not fit for purpose.