Defence cuts lead to cost rises

The BBC reports that defence cuts ‘led to MoD project cost rise’. In the article, the head of the National Audit Office is quoted as saying that, “These circumstances were largely, however, of the department’s making and the resulting cuts and delays to capability are not value for money.”

This is a classic case where plumping directly for cost-cutting measures in the short term has caused costs to go up in the medium to long term.

If we are to avoid more of this kind of occurrence happening across the public sector we need to realise that the only sustainable way to cut costs is to improve services.

Delaying the delivery of defence equipment won’t save money because there is a cost to changing the course of procurement and production, then the cost of interim measures and finally the cost of restarting the delayed projects. Add to that the cost of getting ever more out of date equipment and materials and the loss of value in addition to the obvious loss of funds is clear.

Finding better ways to deliver the equipment our armed forces need would be a much more fruitful endeavour. Procurement exercises that were tasked with giving just what was needed, when it was required with much shorter turnaround times between identifying the need and the arrival of new capability on the battlefield is the way to cut budgets. And we shouldn’t get sidetracked that this is a procurement problem. More procurement with more checks, “better” specifications and tighter controls will only make things worse. Instead, it is the value that is brought to our defensive capability by what we obtain and how to shorten the time to bring it into service which will lead to less money being spent.



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