Analysis: Balanced books renew UK MoD's confidence but challenges remain

The UK Ministry of Defence (MoD) has emerged from governmental purdah after balancing its 10-year budget plan and rebuilding trust with the Treasury after years of wasteful equipment spending.

That was the conclusion of Peter Luff, minister for defence equipment and support, who said on 15 May that no further capability cuts will be needed on top of massive personnel and programme reductions already announced, unless unforeseen economic factors or new threats force the MoD's hand.

Speaking the day after Defence Secretary Philip Hammond announced that his department had finally closed the GBP38 billion (USD61 billion) defence 'black hole' inherited from Labour, Luff said the MoD's expected GBP160 billion equipment spend over the next decade promises new certainty to industry after a series of radical programme cuts since 2010.

According to Luff, the 10-year GBP160 billion budget is far more flexible than its predecessors, incorporating a GBP4 billion contingency for cost overruns - which should enable the MoD to meet commitments on one programme without delaying another - and further "headroom" of GBP8 billion for a "priority list of equipment not in the core programme".

But challenges remain, not least in defining the UK's future technology needs in its upcoming equipment plan.