"The total cost of the 15 largest defence projects continued to rise in 2010-11, by almost £500 million.
Decisions to delay or cut programmes to save money in the short term continue to lead to increased costs in the longer term and do not represent good value for money.
We welcome the fact that there are signs of improvement. Projects approved since 2002 have shown significantly lower cost increases and, since 2008, technical issues have not driven up costs.
Cancelling the Nimrod aircraft at such a late stage has resulted in £3.4 billion of taxpayers’ money being wasted and delaying the Astute submarines has increased the cost to the taxpayer by almost £2 billion.
Much of the cost increase over the last decade has been down to the fact that the estimates for large programmes significantly underestimated the real cost.
Rather than the over-optimism which has held sway at the start of major projects, what is needed is realism: about the complexities of projects, the long-term costs of decisions taken today and the implications down the line of short-term budget cuts.
We are also concerned that the Department remains unable to set out openly the extent of the gap between its income and expenditure, and how and by when it will balance this year’s budget. The Department must publish that information urgently. Parliament is also still waiting for the Department’s promised 10-year Equipment Plan so that we can assess whether the Department will live within its means over time.
We think that it is unrealistic for the Department to plan its budget on the basis of a 1% increase in its equipment budget from 2015, in light of current economic conditions."