Ministry of Defence mandarins have been criticised by an influential group of MPs for failing to stop Labour ministers building up a £36 billion black hole in spending plans.
A “dangerous culture of optimism” at the department meant budget commitments were allowed to get out of control, according to the influential Public Accounts Committee (PAC).
The damning verdict came in a report into the way the MoD has managed its spending and estate over recent years.
David Cameron has blamed the previous government for leaving the £42 billion-a-year defence budget in a “complete mess”, forcing him into drastic cuts to balance the books.
The cross-party committee of MPs said there had been a failure to match future plans to a “realistic assessment of the resources available”.
It was “astonishing” that the department did not have a proper financial strategy that linked funding to its priorities, and when savings had to be made they were often “ad hoc” and actually increased costs in the longer term.
The committee highlighted the controversial contract for two huge aircraft carriers as a prime example. And it made clear it held the MoD’s accounting officer – which between 2005 and this autumn was permanent secretary Sir Bill Jeffrey – responsible for not heading off the problems.
“The Accounting Officer has not discharged his responsibility to ensure that planned and committed expenditure across the defence budget represents value for money,” the report said. “For example, in 2008 the department signed a contract to buy new aircraft carriers which was unaffordable, without having identified compensating savings. Because these savings were not subsequently found, it was necessary within a year to delay the project, resulting in an enormous cost increase and poor value for money.”
The committee concluded: “The department’s senior officials did not seek ministerial directions to proceed when they had major concerns about decisions threatening the value for money of defence spending.”
The MPs also raised questions about the MoD’s management of the defence estate, saying it was not even collecting information necessary to decide whether it was too large.