The UK has no “credible” plan to buy all the weapons it needs after a huge jump in the cost of the nuclear deterrent helped to create a record funding gap, a group of MPs has warned.
Inflation and a weak pound also contributed to the hole of at least £16.9bn in a rolling, 10-year plan to procure equipment for the Army, Royal Navy and Royal Air Force, the Public Accounts Committee said in a scathing report.
The actual deficit is likely to be closer to £30bn if all the capabilities required by the Army – rather than only those it can afford – are included in the costs, the MPs said on Friday.
The committee accused the Ministry of Defence (MoD) of putting off painful decisions about what equipment programmes would have to be cancelled for the plan to be affordable.
Instead, defence chiefs were found to have been basing their sums around the optimistic belief that the government would boost defence spending to 2.5% of national income from around 2.1% – even though there is no guarantee when this will happen.
The findings came after MPs and military experts expressed dismay at a failure by the Treasury to increase defence spending in the Spring Budget despite mounting security threats and at a time when friends and foes are ramping up their own military investments.
Dame Meg Hillier, the chair of the Public Accounts Committee, said: “In an increasingly volatile world, the Ministry of Defence’s lack of a credible plan to deliver fully funded military capability as desired by government leaves us in an alarming place.”
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She said this was not a new problem, with defence procurement characterised by ballooning costs and delays.
‘Clear deterioration in affordability’
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“We’re disappointed that not only are the same problems we’re used to seeing on display here, but they also appear to be getting worse,” Dame Hillier said.
“Despite a budget increase, this year’s plan shows a clear deterioration in affordability. The MoD must get a better grip, or it won’t be able to deliver the military capabilities our country needs.”
The committee said the £16.9bn gap in affordability was the largest since the MoD started publishing its rolling 10-year equipment plan in 2012.
It came despite the government increasing planned spending on military equipment over the ten years to 2033 – the period that the MPs were examining – by £46.3bn to £288.6bn from 12 months earlier.
However, any hope of balancing the books was then sunk by a £38.2bn rise in funding over the same period for the Defence Nuclear Organisation – which is charged with renewing a fleet of nuclear-armed submarines and the missiles and warheads it carries.
The MPs voiced concern the spiralling costs for what is the UK’s top defence priority could further squeeze the budget for its conventional military capabilities.
Adding to the pressure, the MoD said inflation would push up costs for the equipment programme by £10.9bn over the decade, while unfavourable foreign exchange rates – such as when buying equipment from US companies when the pound is weak against the dollar – would add a further £2.2bn.
“The MoD, however, is unwilling to address this deficit by making major decisions about cancelling programmes,” the report said.
“It asserts that such decisions should wait until after the next Spending Review, which is expected in 2024 but might conceivably be delayed by the forthcoming general election, the timing of which is also uncertain.”
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There was also a shortage of skilled officials to oversee the delivery of complex procurement programmes – the equipment plan covers some 1,800 different projects to buy everything from communications gear to warships.
In a sign of strain, only two out of 46 projects included in the Government Major Projects Portfolio – so the most important equipment programmes – are ranked as being highly likely to be delivered to time, budget and quality.
By contrast the successful delivery of five other big projects – including new communications technology, nuclear submarine reactors and missiles – are rated as unachievable.
Asked about the findings of the report, a Ministry of Defence spokesperson said: “Our Armed Forces stand ready to protect the UK and as a leading contributor to NATO, we continue to defend our national interests and those of our allies.
“We are delivering the capabilities our forces need – significantly increasing spending on defence equipment to £288.6 billion over the next decade, introducing a new procurement model to improve acquisition, and confirming our aspiration to spend 2.5% GDP on defence.
“By maintaining part of our equipment plan as uncommitted spend, we have the flexibility to better adapt to changing technology and emerging threats.”
Sir Keir Starmer has insisted the “vast majority of farmers” will not be affected by changes to Inheritance Tax (IHT) ahead of a protest outside parliament on Tuesday.
It follows Chancellor Rachel Reeves announcing a 20% inheritance tax that will apply to farms worth more than £1m from April 2026, where they were previously exempt.
But the prime minister looked to quell fears as he resisted calls to change course.
Speaking from the G20 summit in Brazil, he said: “If you take a typical case of a couple wanting to pass a family farm down to one of their children, which would be a very typical example, with all of the thresholds in place, that’s £3m before any inheritance tax is paid.”
The comments come as thousands of farmers, including celebrity farmer Jeremy Clarkson, are due to descend on Whitehall on Tuesday to protest the change.
And 1,800 more will take part in a “mass lobby” where members of the National Farmers’ Union (NFU) will meet their MPs in parliament to urge them to ask Ms Reeves to reconsider the policy.
Speaking to broadcasters, Sir Keir insisted the government is supportive of farmers, pointing to a £5bn investment announced for them in the budget.
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He said: “I’m confident that the vast majority of farms and farmers will not be affected at all by that aspect of the budget.
“They will be affected by the £5bn that we’re putting into farming. And I’m very happy to work with farmers on that.”
Sir Keir’s spokesman made a similar argument earlier on Monday, saying the government expects 73% of farms to not be affected by the change.
Environment, Farming and Rural Affairs Secretary Steve Reed said only about 500 out of the UK’s 209,000 farms would be affected, according to Treasury calculations.
However, that number has been questioned by several farming groups and the Conservatives.
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2:28
Farming industry is feeling ‘betrayed’ – NFU boss
Government figures ‘misleading’
The NFU said the real number is about two-thirds, with its president Tom Bradshaw calling the government’s figures “misleading” and accusing it of not understanding the sector.
The Country Land and Business Association (CLA) said the policy could affect 70,000 farms.
Conservative shadow farming minister Robbie Moore accused the government last week of “regurgitating” figures that represent “past claimants of agricultural property relief, not combined with business property relief” because he said the Treasury does not have that data.
Agricultural property relief (APR) currently provides farmers 100% relief from paying inheritance tax on agricultural land or pasture used for rearing livestock or fish, and can include woodland and buildings, such as farmhouses, if they are necessary for that land to function.
Farmers can also claim business property relief (BPR), providing 50% or 100% relief on assets used by a trading business, which for farmers could include land, buildings, plant or machinery used by the business, farm shops and holiday cottages.
APR and BPR can often apply to the same asset, especially farmed land, but APR should be the priority, however BPR can be claimed in addition if APR does not cover the full value (e.g. if the land has development value above its agricultural value).
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Mr Moore said the Department for the Environment, Farming and Rural Affairs (DEFRA) and the Treasury have disagreed on how many farms will be impacted “by as much as 40%” due to the lack of data on farmers using BPR.
Lib Dem MP Tim Farron said last week1,400 farmers in Cumbria, where he is an MP, will be affected and will not be able to afford to pay the tax as many are on less than the minimum wage despite being asset rich.
A split is emerging in the cabinet, with Education Secretary Bridget Phillipson revealing she will join several of her colleagues and vote against the bill to legalise assisted dying.
Ms Phillipson told Sky News she will vote against the proposed legislation at the end of this month, which would give terminally ill people with six months to live the option to end their lives.
She voted against assisted dying in 2015 and said: “I haven’t changed my mind.
“I continue to think about this deeply. But my position hasn’t changed since 2015.”
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2:41
Details of end of life bill released
MPs will be given a free vote on the bill, so they will not be told how to vote by their party.
The topic has seen a split in the cabinet – however, Prime Minister Sir Keir Starmer has yet to reveal how he will vote on 29 November.
Ms Phillipson joins some other big names who have publicly said they are voting against the bill
These include Deputy PM Angela Rayner, Health Secretary Wes Streeting, Justice Secretary Shabana Mahmood and Business Secretary Jonathan Reynolds.
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Border security minister Angela Eagle is also voting against the bill.
Senior cabinet members voting in favour of assisted dying include Energy Secretary Ed Miliband, Science Secretary Peter Kyle, Work and Pensions Secretary Liz Kendall, Culture Secretary Lisa Nandy, Northern Ireland Secretary Hilary Benn, Transport Secretary Louise Haigh and Welsh Secretary Jo Stevens.
The split over the issue is said to be causing friction within government, with Sir Keir rebuking the health secretary for repeatedly saying he is against the bill and for ordering officials to review the costs of implementing any changes in the law.
Sky News’ deputy political editor Sam Coates has been told Morgan McSweeney, the PM’s chief of staff, is concerned about the politics of the bill passing.
He is understood to be worried the issue will dominate the agenda next year and, while he is not taking a view on the bill, he can see it taking over the national conversation and distracting from core government priorities like the economy and borders.
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Details of the bill were published last week and include people wanting to end their life having to self-administer the medicine.
It would only be allowed for terminally ill people who have been given six months to live.
Two independent doctors would have to confirm a patient is eligible for assisted dying and a High Court judge would have to give their approval before it could go ahead.