The Strategic Defence and Security Review was conducted over a period of five months. Relatively early on during the Review, the National Security Strategy provided a policy baseline against which to plan future force structures. The Review was conducted in parallel with the Spending Review and the likely level of funding was only agreed at the end of the process. The Ministry of Defence therefore had to identify, cost and prioritise alternative capability options in an environment of considerable uncertainty. In our view, this is not an ideal situation in which to have to take strategic decisions - including those relating to Carrier Strike.
The outcome of the Strategic Defence and Security Review affects Carrier Strike in two ways, both of which could adversely affect the achievement of value for money. First, the Review is unaffordable unless there is a real terms increase in defence funding in the latter half of the decade. We are worried that the continuing difficulties the Ministry of Defence is facing in balancing its budget leaves Carrier Strike vulnerable to further changes in strategic direction as a result of broader corporate decisions taken to address this generic problem.
Second, the Review decision radically changed the Carrier Strike concept and introduced a decade long capability gap. The Carrier Strike decision was part of a wider set of strategic decisions on force structures and affordability. We do not question the merits of this policy judgement and note that it was taken on an informed basis which could have given Accounting Officer for defence confidence that the overall strategic direction was sound and could offer value for money.
As we look forward, taking these two elements together, we are deeply concerned, however, about the risks to the achievement of value for money on what were previously relatively mature projects with understood risks and funded mitigation plans. The Strategic Defence and Security Review decision introduced significant levels of technical, cost and schedule uncertainty, thinking on the way the carriers will be used in operation is still evolving and there are major risks reconstituting Carrier Strike capability after a decade without it. We note that the Ministry of Defence will not have matured its understanding of the consequences of implementing the Review decision until two years after it was taken. At that point, it will more fully understand whether it has been able to develop delivery plans which will enable it to achieve value for money from an investment in Carrier Strike which will significantly exceed £10 billion.
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