Government letter gives defence suppliers 36 hours to find ways to cut costs, reports say
A letter sent by defence chiefs to industry suppliers has given the firms 36 hours to find ways they can cut costs, according to reports.
The letter, which was first reported by the i newspaper, is said to have called for "high-level headline ideas" to reduce spending and "hard choices".
The Financial Times also reported the Ministry of Defence asked all the main industry suppliers to see where costs could be cut to allow for immediate budget cuts.
According to the newspaper, there was no list of demands, but the officials were keen to hear about areas where "duplication and waste to our mutual benefit" could be cut out.
Running the military is costly at the best of times, let alone when threat levels around the globe are increasing.
But, there are two specific issues facing the MOD, which could have triggered this apparent call for savings from defence suppliers.
Firstly, the MOD's equipment plan for 2023 to 2033 is deemed to be unaffordable by the National Audit Office (NAO).
Its report in December last year said forecast costs exceed the current budget by £16.9bn. Secondly comes the pay rise for military personnel.
Defence Secretary John Healey confirmed to Parliament the 6% rise for all ranks, and a 7.5% increase for recruits, must come from existing budgets.
That could amount to £406m coming from the MOD's budget to pay for the increases.
Steve Prest, a former commodore and Forces News opinion writer, said in a post on X there was a "real problem" with asking for potential cuts.
"The more we aim for fixed/firm price contracts, and thus expect industry to carry more risk, the more the MOD's responsibilities are to pay the bills when they come due," he said.
"In a cost+ model, there is more scope to turn the wick up and down.
"If you expect a company to carry the risk, it's much harder to ask them to find efficiencies for your own benefit (rather than to increase their margins) without undermining the whole basis of the commercial deal!" he added.
An MOD spokesperson told BFBS Forces News: "As the Chancellor has said, the Government has inherited public finances which are much worse than expected.
"The NAO has also confirmed the largest-ever deficit in the defence equipment plan.
"This Government will secure Britain's defences for the future and increase defence spending to 2.5% of GDP as soon as possible."
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