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MPs probe MoD accountancy shenanigans

'The arms industry are your masters, aren't they?'

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Analysis The UK Ministry of Defence has taken yet another lengthy roasting from the House of Commons Public Accounts Committee, PAC, which has been examining its recently audited accounts. The MoD is accused of "masking" the costs of its biggest and most expensive equipment projects by creative accounting, and responds by pointing out that some of these costs are not of its own making but result from political meddling.

The arguments in question centre around the annual Major Equipment Projects report into big MoD purchases, which is prepared every year by the beancounters of the National Audit Office in cooperation with the MoD. In essence, the projected total cost of all the big kit projects in the MoD has been brought down by about £1bn this year, because the ministry has put some costs which would previously have been listed under these projects in other parts of its accounts.

One big shift comes in the Type 45 destroyer costs, which are £78m less this year. The MoD now reports the missing £78m under "Measures in line with the Defence Industrial Strategy ... a move of ship build from Barrow to the Clyde". In other words, the Labour government ordered that work be given to the Clyde shipyards under the fig-leaf of "preserving sovereign military manufacturing capability", and this decision cost the MoD £78m.

As the Type 45s' weapons and electronics are largely French and Italian, and it appears that Barrow could have done the work perfectly well, the idea that British sovereignty is at stake here looks rather thin. It could be that Labour's serious political difficulties in Glasgow - indeed, in Scotland as a whole - had more to do with this part of the Defence Industrial Strategy, and indeed with the decision to place much of the work on the navy's new aircraft carriers in Scottish yards too.

The MoD has also refused to put £227m of projected spend under the heading of the new Astute class submarines. This money will be paid in the closing stages of the project, not for work to be done on the Astutes, but simply so that BAE Systems won't fire employees and offload plant at the Barrow submarine yard as the project winds down. The MoD will pay (at least) a quarter of a billion pounds just to keep Barrow open until it next wants some submarines, which will be when the Trident replacement boats are ordered.

These two cases seem fair enough. If politicians order the MoD to keep certain factories and shipyards alive regardless of whether this is a defence priority, they can hardly complain when the MoD discloses the resulting costs. And indeed the PAC MPs seemed surprised at this arguably rather wasteful and expensive aspect of the Defence Industrial Strategy (some of us have been banging on about it for years):

The Department does not have measures in place to assess whether it is getting value for money from these payments ... or, if in applying the principles of the Defence Industrial Strategy, it is maximising economic benefit to the UK...

There were other funding shifts which looked a lot more like MoD coverups, however. The headline cost of the major projects went down by another £67m as the MoD shifted the costs of fitting out its strike jets with new smart bomb targeting pods: out of "Precision Guided Bomb" and into various planes' ongoing budgets. The planes didn't show in the "Major Projects" report as not enough money was spent on any given one to make the high rankings. (One does note that the Eurofighter will be back up in the top twenty next year, as its long-dreaded "Future Capabilities Programme" begins to cost money.)

When one reflects that the RAF's bomber force was already supposed to have proper smart bomb targeting one can see why the MoD might want to minimise the visibility of the "Precision Guided Bomb" project, in which the rubbish TIALD pod's problems are being sorted out, and the Eurofighter's total lack of air-to-ground capability also addressed. Similarly, moving some £64m for replacement four-ton trucks from "procurement" to "in-service support" also looks like jiggery-pokery.

Then there's an interesting one. It appears that the Royal Artillery have decided to stop buying their new GPS-guided bombardment rocket (GMLRS) and use the cash planned for that to get "loitering munition" flying prowler-bombs instead - to the tune of £165m.

The artillery claims to love GMLRS, which has only just come in. It's essentially a modernised, guided variant of the old-school Multiple Launch Rocket System. This was a twenty-ton tracked vehicle intended to ripple off its whole load of massive rockets in one go, totally devastating a huge area of land far away (and incidentally leaving the scorched and cratered earth sown with very dangerous unexploded bomblet submunitions).

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