Page last updated at 03:43 GMT, Tuesday, 22 July 2008 04:43 UK

Defence spending 'masked' by MoD

British soldiers
The report says the MoD has masked its military costs

The Ministry of Defence has been accused by MPs of masking the true costs of military spending.

The cross-party Public Accounts Committee says transferring costs of major projects between budgets makes it impossible to assess value for money.

The MoD moved 1 billion off the bill for major equipment projects over the past two years by reallocating the sums on to other budgets, the report found.

The government said it was "determined" forces got the equipment they needed.

The Public Accounts Committee said that as a result of the practice, parliament was not being given a full picture of the expense incurred by massive purchases.

This, it said, may force other defence areas to cut back on their activities to balance their books.

The MPs also said the MoD was "juggling its budgets" because it is struggling to afford all the equipment it wants to buy.

And the report also stated that over-optimism among defence chiefs and the defence industry led to unrealistically low estimates of the cost of major pieces of equipment, which later have to be revised upwards during production.

Committee chairman Edward Leigh said the moving of expenditure was "not acceptable".

He said: "The Ministry of Defence is trying to persuade parliament that the forecast costs of major defence equipment projects are under control - by moving expenditure from those projects to other defence budgets.

It is a well-established principle that delaying major equipment projects leads to higher costs in the long run

Edward Leigh, MP

"This is not acceptable. It diminishes parliamentary accountability, and the transferred costs will doubtless have resulted in those budget holders who have taken them on having to cut their own defence activities.

"It is a well-established principle that delaying major equipment projects leads to higher costs in the long run.

"The department must address the systemic weaknesses underlying cost increases and time delays."

Minister for Defence Equipment and Support Baroness Taylor said: "Over the last three years, we have delivered over 300 Urgent Operational Requirements (UORs) from Mastiff to Osprey body armour, meeting the immediate needs of the troops on the ground - as well as more than 10bn of new equipment, including Panther vehicles and more C17 transport aircraft.

"It is not just UORs providing crucial support to operations, long-term equipment programmes like the Harrier GR9s are giving our troops a vital asset in the air.

"This is incontrovertible evidence of our determination to ensure our armed forces get the equipment they need."

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