Page last updated at 21:28 GMT, Monday, 20 July 2009 22:28 UK

MoD accused of wasting millions

British soldiers in Afghanistan
The MoD's 36bn budget is under growing scrutiny

The Ministry of Defence has been accused of wasting millions of pounds by government auditors.

The National Audit Office said £155m of spending on radio systems used in Afghanistan could not be accounted for.

It also said its payroll system was inefficient and open to fraud, leading one senior Conservative MP to say the department must "get a grip".

Officials said that while central tracking of equipment was difficult it did not mean any items were missing.

With the debate over military equipment raging after the sharp increase in British deaths in Afghanistan, the BBC's political correspondent Jo Coburn said the criticism was damaging.

The National Audit Office, which scrutinises government expenditure, said the location of secure Bowman radios being used in Afghanistan could not be accounted for at the moment.

In its review of the MoD's accounts, published on Monday, it said it was vital for the MoD to have "accurate records" for all its assets due to current demands on the armed forces.

It noted that defence officials believed a significant proportion of the radio sets are currently being repaired.

The MoD needs to up its game and quickly
Edward Leigh, Public Accounts Committee

"This is an asset tracking issue and does not mean equipment is missing," an MoD spokesman said.

"Since December 2008, auditing has shown visibility of 90% of Bowman equipment but we continue to work to improve this."

The NAO said a quality system for managing the MoD's stocks and supplies around the world was vital for ensuring proper logistical support for troops in the frontline.

But it said there was evidence of discrepancies between physical and electronic records at the Defence Storage and Distribution Agency, which controls two-thirds of its inventory of supplies.

James Arbuthnot, chairman of the defence select committee, said the MoD needed to "get a grip" on its spending.

"There are real concerns, given the importance of what the armed forces are doing, and the sacrifices they are making on our behalf, that the Ministry of Defence is almost breaking apart."

Ministers say the armed forces are better equipped than ever before but senior commanders believe more troops and equipment are needed to ensure that progress in Nato's offensive against the Taliban in the south of the country is maintained.

'Not acceptable'

Tory MP Edward Leigh, the chairman of the Public Accounts Committee said the MoD must "up its game and quickly".

"In the current economic climate, it is simply not acceptable that its finances and inventory are in such a poor state," he said of the auditor's criticism.

The MoD also faces criticism that the system used to pay salary and allowances to 191,000 service personnel was "unfit for purpose".

The Joint Personnel Administration system was full of errors with nearly 15% of payments - worth an estimated £140m - either containing mistakes or unable to be substantiated.

At the same time, the NAO said there has been a growth in suspected fraud in expenses claims, which were subject to limited - and, in some cases, no - back-up checks.

"Although the MoD has made some improvements to its payroll and HR systems over the past year, I consider that there are important issues which have not been fully addressed," said Amyas Morse, the NAO's chief executive said.

"Further significant changes are required."

The MoD said errors in the payroll system were being addressed and its priority was to ensure that all serving personnel continued to be paid on time.

Separately, auditors have also questioned the accounts of two other government departments - the Treasury and the Department for Work and Pensions (DWP).

It found the Treasury overspent its authorized budget by £24bn, as a result of money poured into the asset protection scheme set up to support troubled banks during the financial crisis.

Due to the time pressures involved, the additional funding was not sanctioned by Parliament, the auditors found.

The Treasury said the auditor's move was "technical" and no concerns had been raised about the estimated cost of the banking measures given their importance to the economy.

In the case of the DWP, fraud and errors in benefit payments totalling an estimated £2.7bn led the auditors to give the accounts a health warning.

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