£74m Sunk On New Aircraft Due To Basic Accounting Errors

£74m of taxpayers’ money was wasted through “basic accounting errors” on plans to change the fighter planes on new aircraft carriers.

Ministry of Defence (MoD) officials have been accused of rushing into a decision to change the type of aircraft on the carriers before the defence spending review in 2010. The government opted to ditch the “jump jet” version of the F35 Joint Strike Fighter in favour of the carrier variant due to cost and operational grounds; it was deemed to have a longer range and to carry more weapons. However, the MoD had to reverse its decision due to spiralling costs in modifying the carriers to be able to accommodate the aircraft. The original estimate of £500m-£800m was set to increase to £2bn.

The defence secretary Philip Hammond tried to defend the MoD’s position by having the audacity to say they had acted “swiftly” to revert to the jump jets to save taxpayers’s money: “We did incur some costs, but we did so in order to save £1.2 billion, a clear demonstration of our commitment to safeguard taxpayers’ money.”

The decline of the Civil Service?

MPs on the Public Accounts Committee claimed the cause of this gross misjudgement of cost was because the officials thought VAT would not apply, and they forgot about the effects of inflation. The reversal led to accusations of government incompetence and questions of whether the Civil Service was really up to the task of running the country. It does make one wonder whether the government is able to look after and spend taxpayers’ money, especially as this follows the news that National Audit Office failed the government’s accountants again recently. A further nail in the coffin for the Civil Service’s reputation was hammered in by Iain Duncan Smith, the work and pensions secretary, after claiming he had “lost faith” in Whitehall. This is because he had to turn to outside experts to clean up the mess formed by the flagship Universal Credit Scheme.

Don’t make the same mistakes

This news does highlight the fact that it is essential to thoroughly check through the finances when deciding to alter both tangible and intangible assets. If you have assets that you are thinking of making modifications too, regardless of whether they are tangible or intangible, it’s vital that you take into consideration every aspect that could affect your financial position. It’s important to seek sound financial advice to ensure you don’t end up having to make a costly reversal like the MoD has had to do.

If you would like any help or advice then please contact Robert Marsden by email atrobert.marsden@myersclark.co.uk, or phone him on 01923 224411.