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A short thread on MoDs EP 2020-30.
It's unaffordable at the moment, it may become more unaffordable, and even if all opportunities materialise, it's still unaffordable. Did I mention it's missing loads of projects?
It gets even worse when you look at the Top Level Budgets
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It's unaffordable at the moment, it may become more unaffordable, and even if all opportunities materialise, it's still unaffordable. Did I mention it's missing loads of projects?
It gets even worse when you look at the Top Level Budgets
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EP20 helps MoD invest in the kit it wants to buy over the next 10 yrs.
But not all the kit. You'll be as struck by what is missing as what is in it.
This is a problem.
Because there's not a penny in EP20 for more projects, because the current ones are already unaffordable
But not all the kit. You'll be as struck by what is missing as what is in it.
This is a problem.
Because there's not a penny in EP20 for more projects, because the current ones are already unaffordable
Starting at the top - MoD thinks EP20 will cost £197.4bn over the next 10 years. MoD forecasts it will have £190bn to spend.
An immediate £7.3bn shortfall.
But that shortfall isn't the whole picture.
£197.4bn isn't the overall cost of the kit. It's actually £212.8bn...
An immediate £7.3bn shortfall.
But that shortfall isn't the whole picture.
£197.4bn isn't the overall cost of the kit. It's actually £212.8bn...
...to get to £197.4bn the MoD (well, rather TLBs, but we'll come to that) has stripped out £16.9bn in efficiency savings, which is on top of £8.2bn already taken off to get to £212.8bn ("embedded savings"). So actually, the starting point for EP20 is £221bn. Following?!
Anyway, so after stripping all that away, we still have an EP which has a funding shortfall of £7.3bn. IF all the savings I just mention happen. And the wind blows in the right direction. If it doesn't, the shortfall could be £17.4bn. But, actually, it might be a LOT more...
...because @NAOorguk isn't entirely convinced by how the MoD / TLBs etc are working those risks out.
It get's scarier.
There's the £7.4bn overall 10 yr shortfall, BUT the books don't balance for the first 5 years of the EP. There's an £8.3bn shortfall in the first 5 yrs...
It get's scarier.
There's the £7.4bn overall 10 yr shortfall, BUT the books don't balance for the first 5 years of the EP. There's an £8.3bn shortfall in the first 5 yrs...
BUT WORSE! Bear with me.
The individual TLB project costs, when you add them up, cost more than they have budget over 10 years. Even after they've stripped out the £16.9bn of costs I mention above. This graph shows that. So...
The individual TLB project costs, when you add them up, cost more than they have budget over 10 years. Even after they've stripped out the £16.9bn of costs I mention above. This graph shows that. So...
not only is EP20 unaffordable in the aggregate, each TLBs EP is unaffordable. How is this supposed to work?
Well the MoD does some "central adjustments" and it holds a £5.4bn contingency which the TLBs can get their hands on. But if you look at the blue in the graph above...
Well the MoD does some "central adjustments" and it holds a £5.4bn contingency which the TLBs can get their hands on. But if you look at the blue in the graph above...
...there's a problem. The blue (variance) is more than the central contingency. Both Army and Navy Command have big shortfalls and there's not enough ££ in the central coffers to cover both... So there's scope here for tribalism and bun fighting. Again, IT GETS WORSE!...
...worse because once again, whilst there's a shortfall over the 10 yrs, there's a bigger shortfall against needed resourcing in the next 5 years. Against their plans, TLBs have a £10.2bn shortfall in the next five years. How on earth is this managed?...
...read this great thread by Ed https://twitter.com/EdOBrien/status/1357475965140672519?s=20
Air Command has one of the most "committed" profiles, meaning that whilst that might be a risk for the MoD EP as it can't shift money from Air to other TLBs, it's a good thing for Air because it will more likely get its kit
Air Command has one of the most "committed" profiles, meaning that whilst that might be a risk for the MoD EP as it can't shift money from Air to other TLBs, it's a good thing for Air because it will more likely get its kit
In fairness, the EP is enormously complex, it is a management tool rather than intended to be a complete list of kit investment, and there's going to be changes to budget and costs. But the NAO is clear they still think the MoD can do better.
If you simply bung the £16.5bn of the extra funding announced in the CSR on top of all the efficiency savings and cost stripping, you can see how things will just go wrong again if they don't materialise. The basis for the forecasts must be strong, and the NAO has doubts it is
So we have an EP that is unaffordable in aggregate, even in favourable winds. Is unaffordable at TLB level. Even more unaffordable over next 5 yrs. The nature of the spend commitments means scope for tribalism, & all this is based on sums the NAO isn't entirely convinced by. END
