Book Description
The Ministry of Defence (the Department) is responsible for over £42 billion of annual expenditure. It has failed to exercise the robust financial management necessary to control its resources effectively in the long term, and there is a shortfall in planned expenditure against likely funding of up to £36 billion over the next ten years. The Department's consistent pattern of planned overspend demonstrates serious organisational failings and a dangerous culture of optimism. There are systemic failings: a tendency towards financial over-commitment, weaknesses in the financial planning processes and a division in responsibilities and accountability for financial stewardship. The Accounting Officer has not discharged his responsibility to ensure that expenditure represents value for money, and there is no explicit financial strategy linking funding to priorities. When financial savings have to be found there is then no clear basis for determining where cuts should be made. The appointment of a professionally qualified Finance Director is welcomed. The defence estate is valued at over £20 billion, and costs an estimated £2.9 billion per year to run. The built estate in the UK has been reduced by 4.3% between 1998 and 2008, achieving £3.4 billion in sale receipts. But more of the estate should have been released. The Department does not assess its estate against clear objective criteria. The Department does not collect centrally the information and data that would allow it to manage its estate in an effective way. It appears to lack urgency in its plans to improve its information base.
