"A cynic is a man who knows the price of everything but the value of nothing." Oscar Wilde
The MOD has been accused of wasting some £13bn of taxpayers money since 2010. This serious charge, levied by the main UK political opposition party, is at the core of a ‘
dossier’ which suggests that there has been serious and profligate mismanagement in Defence, with enormous amounts of public money wasted, which could have been spent elsewhere. Is this a fair and reasonable accusation to make?
From the outset, it is important to be clear that this blog article is not taking a subjective view on the political party in question, nor is it taking political sides. This blog is, and always has been apolitical in its approach, and has not, and will not, express any views on the political views or policies of Political parties. This blog should be seen as an impartial attempt to understand the charges, and present an alternative perspective on some parts of them.
Waste is an enormously emotive word, and one that brings to mind images of inept public sector workers intentionally taking decisions that knowingly are poor value for money, or which represent decisions that will hurt the front line, because they simply don’t care.
Speak to anyone who has dealt with the public sector and they will all provide similar stories of how this organisation seems bloated and inefficient, or another seems far too profligate with the cash. There is a strong sense among some that the MOD is not an organisation fit for purpose, and in turn it is wasteful with vast sums of public money.
There is a counter view here, which is that the MOD is a department which is charged with handling perhaps the most diverse spending portfolio of any Governmental department. It must handle responsibility for everything from nuclear missiles to educational facilities and housing estates – over a quarter of a million people on practically every continent of the planet are in some way linked to Defence.
Defence has to both be a strategic department of state, taking a long term perspective on developments that may not come to pass for decades to come, and make assumptions on costs, capabilities and threats that may never materialise. An example of this is the Type 23 frigate, which has its genesis in the late 1970s and early 1980s, and whose procurement was a key part of the Knott 1981 Defence Review, 41 years ago, and will be in service in the UK until the mid 2030s.
Intended for a design life of 18 years in the North Atlantic, the Type 23 force will have been in UK service for almost 50 years by the time the last UK hull finally pays off in the middle of the next decade. From concept to disposal, this is a life cycle of roughly 60 years.
To ask the Royal Navy of 1980, led by WW2 veterans like Admiral Sir Henry Leach, who fought in big gun actions against the Scharnhorst to imagine the role of a vessel design that would still be in service almost 100 years after he joined the Royal Navy is a sign of how significant the passage of time is in Defence. This matters because when financial decisions are taken, they can have effects that may be felt for many years to come in a variety of ways and means.
To look at the arguments for waste, there appear to be several core themes. Firstly that the MOD paid off equipment early, thus incurring a waste against its net asset value. There is also an argument that cost overruns, procurement delay and extensions to keeping equipment in service longer also helped incur ‘waste’ by requiring spending that could have saved money and been used elsewhere.
The report highlights the sums of money that could be saved and how many types of equipment could have been bought with this if it had been spent differently. This is perhaps somewhat disingenuous as it supposes that there is a central pool of money and that all the funding could be reallocated to a new project.
In reality cost changes can sit across multiple budget areas, meaning that while on paper a decision to do something may save £1bn, in reality this may break down into penny packets of cash, split into different budgets and over many years – there is not a lump sum of £1bn magically available.
www.forces.net
