Nuclear deterrent facing a £2.9 billion black hole, watchdog warns
The National Audit Office says the failure to address the ‘affordability gap’ could destabilise the entire MoD equipment budget.
The Ministry of Defence is facing a £2.9 billion black hole in its programme to maintain and renew Britain’s Trident nuclear deterrent, the Whitehall spending watchdog has warned.
The National Audit Office (NAO) said the MoD is set to spend £50.9 billion over the next 10 years on designing, producing and maintaining the submarines which carry the Trident missiles and their nuclear warheads.
With the programmes, referred to collectively as the Nuclear Estate, accounting for around a quarter of all defence equipment spending over that period, the NAO warned it could “destabilise” the entire equipment plan unless the “affordability gap” was addressed.
The MoD has already had to commit find to £3 billion in efficiency savings over the next 10 years in order make the £31 billion Trident renewal programme, replacing the ageing Vanguard-class submarines with four new Dreadnought-class boats, affordable.
It has also had to obtain permission from the Treasury to draw £600 million from a £10 billion contingency fund for the programme as well as delaying work on a replacement for the Astute-class attack submarines by two years.
The NAO said that the MoD may be forced to make further inroads into the contingency fund, if it is to cover the additional £2.9 billion which it needs to find by 2028.
The budget pressures on the MoD’s nuclear programme are significant Meg Hillier
“Problems with the affordability of the Enterprise could destabilise the department’s overall equipment plan given that around a quarter of its planned spend on equipment relates to nuclear programmes,” the NAO said.
In the current financial year alone, the MoD is forecast to spend £5.2 billion across the Nuclear Enterprise, accounting for 14% of the MoD’s total budget.
It includes £1.8 billion on procuring and supporting submarines, £1.4 billion on missiles and warheads, £790 million on propulsion systems, and £220 million on managing the Enterprise.
The NAO said the MoD has introduced new ways of working with its main contractors on the Dreadnought programme, BAE Systems and Rolls-Royce, in an attempt to address its past record of “poor performance”.
However it now faces skills shortages, lacking 337 skilled personnel across seven military nuclear specialisms.
Meg Hillier, the chair of the Commons Public Accounts Committee, said: “The budget pressures on the MoD’s nuclear programme are significant.
“The department will need to make some critical decisions to get the programme on track financially.”
Sir Amyas Morse, the head of the NAO, said: “The coming years are crucial.
“As the department invests heavily in the Dreadnought-class submarines and more widely across the Enterprise, it needs to ensure that the new structures, processes and workforce operate effectively together to manage the £2.9 billion affordability gap across the Enterprise.”
A MoD spokesman said: “Not only is the nuclear deterrent our ultimate defence from the world’s most extreme threats, but it is a true national endeavour which supports thousands of British jobs.
“The Dreadnought programme is one of the most complex engineering programmes ever undertaken by the UK and the NAO’s report highlights our position that it is on track to be delivered on schedule and within the original estimated cost.”