MPs alarmed by 'missing' £6.3bn defence assets

MPs say an auditor's report which found the Ministry of Defence lost track of assets worth £6.3bn is "alarming".

The defence select committee said it was "worrying" that in its efforts to find out more information the MoD had just found more problems.

The MoD was accused of losing track of assets which included £184m worth of Bowman battlefield radios.

Defence Secretary Liam Fox said he had set out plans for clearer structures and financial responsibility.

The defence committee was commenting on the findings of an National Audit Office (NAO) report last year - when the spending watchdog refused to sign off the MoD's budgets for a fourth year - this time due to the department's "failure to adhere to the accounting standards required of government departments".

The NAO flagged up a lack of evidence about the existence and value of some £6.3bn of assets - including £752m of military equipment, which includes firearms and £184m of Bowman radios.

The MPs noted that back in 2008-9, auditors had raised concerns about inventory accounts and warehouse systems and checks had been improved, but they had found that the inventory recorded did not match the stock count at 29% of locations.

There were also "significant levels both of stock recorded on the system that could not be found on the shelves, and stock on the shelves that was unrecorded".

"The more digging that is done the more significant and intractable the problem appears to be," the defence committee said.

The MoD's director general of finance, Jon Thompson, told the committee it could be some years before the problem was resolved because of the scale of the MoD's "845,000 lines of stock, spread across 78 IT systems, covering anywhere in the world we currently have bases".

The report notes that the findings did not mean that the equipment did not exist or was not "being used usefully somewhere" - as it could be difficult keeping track of assets being used in war zones.

But the committee said it was "unacceptable, despite the difficulty of tracking assets in theatre, that the MoD cannot, at a given time, account for the whereabouts of radios worth £184m."

The MPs said there were security, as well as financial implications and added: "It is alarming that the department should be unaware of the location, usability or indeed the continued existence, of assets to a total value of £6.3 billion, including radios worth £184m."

They said it would make it harder for the MoD to ask for additional funding if it could not manage its existing assets - and said it was "wholly unsatisfactory" that the MoD expected it to take another two to four years to sort out.

Defence Secretary Liam Fox, said he had repeatedly pointed out that the MoD had not managed its resources well for years.

"We inherited a multi-billion pound deficit in defence from the previous government that was characterised by waste and inefficiency under Labour. That must change.

"While there are specific difficulties in managing assets in war zones across the globe, we must have better systems in place to accurately track what resources are held and where.

"I announced major defence reforms last week to deliver clearer structures and financial responsibility across the department. This will be implemented at pace and I wish to see demonstrable improvement in the MoD's inventory management."

At the time of the NAO report, the department said the issues had no impact on the provision of essential equipment to frontline troops.