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The Ministry of Defence is buying more inventory than it uses and not consistently disposing of stock it no longer needs. Between the end of March 2009 and the end of December 2011 the total value of the inventory held by the armed forces and in central depots of non-explosives increased by 13 per cent, from £17.2 billion to £19.5 billion. The Department estimates that for raw material and consumable inventory, such as clothing or ammunition, it has spent £4 billion between April 2009 and March 2011, but did not use £1.5 billion (38 per cent) worth. The NAO estimates that the costs of storing and managing inventory were at least £277 million in 2010-11. Furthermore, over £4.2 billion of non-explosive inventory has not moved at all for at least two years and a further £2.4 billion of non-explosive inventory already held is sufficient to last for five years or more. During 2010 and 2011, the MOD identified inventory worth a total of £1.4 billion that could either be sold or destroyed, but it was unable to information on the value of the stock that had been destroyed. MOD has already introduced improvements but strategies and performance reporting do not yet focus on effective inventory management. There are also few targets for monitoring the efficiency of inventory management. The Department has commissioned a review to establish and sustain more cost effective inventory management and plans to implement its recommendations by March 2013
The Ministry of Defence (MoD) has an extensive and complex estate of some 24,000 hectares, and after the Forestry Commission, is the second largest landowner in the UK. The estate is valued at over £18 billion and costs some £3.3 billion to operate. The estate is seen as essential to the delivery of military capability and the welfare and morale of Service personnel. This report, from the Committee of Public Accounts, has taken evidence from the MoD on the standard of living accommodation, the Department's ability to prioritise estate projects effectively, and its response to staff shortages. It follows on from an NAO report (HCP 154, session 2006-7), Managing the Defence Estate: Quality and Sustainability (ISBN 9780102944679). It sets out 9 recommendations, including: more than half of single living accommodation and over 40% of family accommodation does not meet the Department's definition of high-quality accommodation and is therefore substandard; that poor accommodation has a negative impact on retention rates; there is no information on when poor accommodation is to be upgraded, with some military personnel and their families having to continue to live in substandard housing for the next 20 years; there are gaps in the Department's understanding of estate costs; the Department employs only 56% of safety works staff and 57% of quantity surveyors that it needs; that implementing energy saving measures at its' defence sites would bring environmental benefits and savings of more than £2 million annually.
This report assesses the Ministry of Defence's performance in managing the supply chain to front line troops. The MoD rightly puts a strong emphasis on ensuring troops get the supplies they need. Equally, providing an efficient supply chain would release resources for the front line. The Committee believes there should be greater emphasis on securing value for money and that there is room for it to find efficiencies in the supply chain without jeopardising operational effectiveness. Previous reports have identified persistent problems with late deliveries, unnecessary costs and missed targets. At present, the MoD does not have the information to identify where savings could be made. It does not know the full costs of its current activities or the cost of alternative supply options. The failure to collect basic data about where supplies are stored has directly contributed to the MoD accounts being qualified for three consecutive years. The MoD is now seeking to resolve these information problems through a major initiative known as the Future Logistics Information Services project, expected to be implemented by 2014. Until then, the Department will continue to store data in systems that are at critical risk of failure. It is vital that the MOD sustains its programme in order to secure value for money. Measures which could improve the efficiency of supply operations include putting more pressure on suppliers to deliver on time, keeping stocks at lower levels to reduce the risk of them deteriorating, and benchmarking performance against relevant comparators such as other armed forces.
his first volume in the Security and Defence Management Series focuses on practical aspects of democratic defence management through the eyes of practioners. Outlining in simple terms the key issues defence professionals must address to ensure good governance of the defence sector from within the defence establishment, the book provides an introduction to these issues for new defence professionals in transition democracies.
The National Audit Office report on this topic published as HC 190, session 2012-13 (ISBN 9780102975529)

Tax Avoidance

Great Britain: Parliament: House of Commons: Committee of Public Accounts

Published: 2013-04-26

Total Pages: 60


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Among those ranged against HMRC are the big four accountancy firms, Deloitte, Ernst and Young, KPMG, and PwC, which earn £2 billion each year from their tax work in the UK. They employ nearly 9,000 people just to provide tax advice aimed at minimizing the tax paid. Between them they boast 250 transfer pricing specialists whereas HMRC has only 65 people working in this area. The firms declare that their focus is now on acceptable tax planning and not aggressive tax avoidance however they continue to sell complex tax avoidance schemes with as little as 50 per cent chance of succeeding if challenged in court. The large accountancy firms are in a powerful position in the tax world and have an unhealthily cosy relationship with government. They second staff to the Treasury to advise on formulating tax legislation. When those staff return to their firms, they have the very inside knowledge and insight to be able to identify loopholes in the new legislation and advise their clients on how to take advantage of them. This is a clear conflict of interest which should be banned in a code of conduct for tax advisers. The UK must also take the lead in demanding urgent reform of international tax law, so that companies have to pay a fair share of tax where they actually do business and make profits. Furthermore, the job of simplifying our tax code needs to be taken seriously; yet the Office of Tax Simplification has just 6 people working in it

HM Treasury

Great Britain: Parliament: House of Commons: Committee of Public Accounts

Published: 2013-04-29

Total Pages: 44


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Infrastructure UK, an advisory unit within the Treasury, was established in 2010 with a remit to specify what economic infrastructure is needed in the UK, to identify the key barriers to achieving that investment and to mobilise systems and resources, both public and private to make it happen. The first National Infrastructure Plan was published in 2010. The latest update of the plan, published in December 2012, comprised over 500 prospective programmes and projects for new economic infrastructure expected to cost £310 billion. Some 64% of this amount is expected to be spent on infrastructure that will be wholly owned and financed by the private sector with households bearing the costs through higher bills or fares. Many of the investment proposals impact on energy supply and are therefore particularly time critical. The Committee believes that this will lead to higher costs which will be borne by consumers and are particularly concerned at the impact of higher energy bills on those with low incomes. Many of the programmes are broad categories and in total they include more than 200 individual projects. This does not suggest a properly targeted and prioritised infrastructure plan. Furthermore, the statutory framework provided by the Energy Bill is coming rather late in the day when the energy crunch is fast approaching. It is likely that the UK will buy ever more energy from overseas and at a higher price due to the failure to secure investment. In these circumstances greater transparency is needed over investors' costs, risks and rewards
Academies are funded directly by central government, directly accountable to the Department for Education, and outside local authority control. They have greater financial freedoms than maintained schools. By September 2012 the number of open academies had increased tenfold, from 203 to 2,309. Academies are the Department's chosen vehicle for school reform, but increasing schools' autonomy and removing them from local authority control gives the Department responsibility for ensuring value for money. The Department has incurred significant costs from the complex and inefficient system it has used for funding the Academies Programme and its oversight of academies has had to play catch-up with the rapid growth in academy numbers. In the two years from April 2010 to March 2012, the Department spent £8.3 billion on Academies; £1 billion of this was an additional cost to the Department not originally budgeted for this purpose, some of which was not recovered from local authorities. The Department must improve the efficiency of its funding mechanisms and stop the growth in other costs. Furthermore, the Department has yet to establish effective school-level financial accountability for academies operating within chains. What will determine whether the Department ultimately achieves value for money is academies' impact on educational performance relative to the investment from the taxpayer. If the Department is to be held properly to account for its spending on academies, it must insist that every Academy Trust provides it with data showing school-level expenditure, including per-pupil costs, and with a level of detail comparable to that available for maintained schools.