Ministers have failed properly to understand the risks entailed in their decision to leave Britain without an aircraft carrier for almost a decade, the Whitehall spending watchdog warned today.
The National Audit Office (NAO) said changes to the carrier programme in the Government’s Strategic Defence and Security Review (SDSR) had created “significant levels of operational, technical, cost and schedule uncertainty”.
In a highly critical report, the NAO warned there were “major risks” surrounding its plans to reconstitute a carrier strike force from 2020 onwards.
It said the Ministry of Defence will not have “matured its understanding” of the consequences of its decisions for another two years, with the final cost of the programme now set to exceed £10 billion.
The NAO also disclosed that military chiefs had recommended axeing the carrier programme altogether in favour of keeping more surface ships, such as frigates and destroyers.
However they were overruled by the MoD on the grounds that it would have been “unaffordable” in the short-term due to the cancellation costs, even though it would have led to “significant” medium-term savings.
The release of the report provoked a furious row in Whitehall, with the MoD complaining that it had been published before they had agreed the final text - in contravention of normal practice.
The NAO, in turn, said that it had been denied access to crucial Cabinet Office papers which they needed to see in order to understand the decision-making process behind the SDSR.
Margaret Hodge, the chairman of the Commons Public Accounts Committee which oversees the work of the NAO, said the “lack of transparency” over such a costly and important programme was “not acceptable”.
However Defence Secretary Liam Fox insisted that the decisions in the SDSR had put the carrier programme “back on track” while cutting the overall costs by £3.4 billion.
Under the SDSR plans, announced by David Cameron last October, ministers agreed to go ahead with the construction of the two Queen Elizabeth class carriers ordered by the previous Labour government.
However, in order to cut costs, only one ship will become operational, while the second will be mothballed.
The operational carrier will be converted so it can operate the cheaper and more effective carrier variant of the US-built Joint Strike Fighter (JSF) rather than the short-take off, vertical-landing version planned by Labour.
However, the decision has added another two years to the programme, so that it will not now enter service until 2020. In the meantime, the existing Invincible class carriers and their Harrier jets have been axed.
The NAO said the way the SDSR was conducted - running for just five months while the comprehensive spending review (CSR) was also being carried out - was “not an ideal situation in which to have to take strategic decisions”.
The MoD still had an “incomplete understanding” of the costs of the changes to the carrier programme and was trying to mitigate the risks involved in adopting untried technology, it said.
It also warned that the MoD’s ambitious operating concept - known as carrier enabled power projection - would require a “level of flexibility not seen elsewhere in the world with comparable carriers”.
The NAO disclosed that when military chiefs initially feared they were facing even deeper cuts to the MoD budget, they said they would rather see the carriers cancelled in order to retain more destroyers and frigates.
Although the MoD agreed cancellation was “feasible”, it concluded that the short-term costs would have been “unaffordable” and that it would have led to the collapse of the UK warship-building industry.
Nevertheless the NAO said it was “worried” that the carrier programme could be “vulnerable” to further changes if promised increases in defence spending failed to materialise after 2015.
“We are deeply concerned about the risks to the achievement of value for money on what were previously relatively mature projects with understood risks and funded mitigation plans,” it said.
“The SDSR 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 department will not have matured its understanding of the consequences of implementing the review decision until two years after it was taken.”
Dr Fox however said the government had had to act to address the deficit it inherited from the former Labour government, including the carrier programme which was £1.6 billion over budget.
“The SDSR put this programme back on track and delivered £3.4 billion of overall savings to carrier strike,” he said.
“The NAO has noted that our decision to build the second new aircraft carrier makes financial sense, supports UK industry and the significant cost and capability advantages of the aircraft we now plan to fly from it.
“Converting one of the Queen Elizabeth Class aircraft carriers to operate the more capable and cost-effective carrier variant of the JSF fast jet will maximise our military capability and enhance interoperability with our allies.”