Background to the report

The Ministry of Defence (the Department) publishes its Equipment Plan (the Plan) report each year, setting out its spending plans on equipment procurement and support projects over the next 10 years. The Department introduced the Equipment Plan in 2012. Its aim was – and remains – to produce a reliable assessment of the affordability of its equipment programme.

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Each year the National Audit Office has published a report examining the Department’s assessment of the Plan’s affordability and its response to the financial challenges it faces. The latest Plan covers the period from 2022 to 2032. It includes the projects the Department has chosen to fund in response to the 2021 Integrated Review of security, defence, development and foreign policy.

The Department must manage expenditure effectively to ensure the Armed Forces get the equipment they need to meet their military objectives. It makes choices about the funding available for equipment projects and assesses which capabilities it should fund. The latest Plan is based on financial data at 31 March 2022. The Plan does not therefore reflect the current pressures and uncertainty facing the Department, most notably the Ukraine conflict and external economic environment, which will affect future spending plans.

Scope of the report

This report examines:

  • the Department’s assessment of affordability in its 2022–2032 Plan (Part One); and
  • how the Department has reflected and is managing the risks to the affordability of its equipment programme (Part Two).

Report conclusions

The Department has assessed that the Plan is affordable over the period 2022–2032. This is based on financial data from March 2022 and reflects ongoing improvements to its affordability assessment. However, its assessment continues to be based on optimistic assumptions that it will achieve all planned savings. It will also take some important decisions that affect the Plan’s costs in the next financial planning round.

While the Plan continues to serve a useful purpose in reporting to Parliament on planned expenditure, the volatile external environment means this year’s Plan is already out of date.

The Department faces significant and growing cost pressures which will have an immediate impact on its spending plans. The Department believes it can manage these pressures but has left itself limited flexibility to absorb any cost increases on equipment projects, or across other budgets. It needs to address the financial challenges promptly to avoid falling back into old habits of short-term cost management, which do not support longer-term value for money.

The cost pressures are also likely to undermine the pace at which it can modernise the Armed Forces. The Department will need to make difficult prioritisation decisions to live within its means and retain enough flexibility in its Plan to respond promptly to changing threats.


Publication details

Press release

View press release (29 Nov 2022)

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