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Committee publication · Report · 7 June 2026 · HC 95

Fifth Report - MoD follow-up Spring 2026

From: Public Accounts Committee

Inquiry: Ministry of Defence Annual Report and Accounts 2024-25

Government response deadline: 7 August 2026

Summary

The Public Accounts Committee's fifth report scrutinises the Ministry of Defence's Spring 2026 accounts and operations. It finds the three-year delay in publishing the Defence Investment Plan seriously undermines modernisation efforts and damages the UK defence industrial base, particularly for SMEs. The Committee criticises the Department's £6.1 billion in inadequately supported assets, increasing nuclear enterprise spending (now 18–25% of budget) without sufficient parliamentary oversight, persistent Ajax vehicle safety problems, and notes recent recruitment improvements despite the Department's inability to identify which initiatives drove them.

Key findings

  • The Defence Investment Plan remains unpublished after three years, delaying Armed Forces modernisation, raising procurement costs due to supplier price increases, and damaging credibility with defence industry partners, especially smaller companies.
  • The Department failed to maintain accounting records for £6.1 billion of assets in its 2024–25 accounts; misclassified historic Atomic Weapons Establishment spending dating back to 2007, with 85% of overstatement due to capitalised feasibility work.
  • Defence Nuclear Enterprise spending rose to £10.9 billion (18% of defence budget) in 2024–25, forecast to reach 20–25% by 2026 onwards, but Parliament lacks adequate transparency and detailed cost information for nine programmes costing over £10 billion each.
  • November 2025 Exercise TITAN STORM injured 33 soldiers operating Ajax armoured vehicles due to unresolved noise and vibration issues; the Department's solution of maintenance checks every vehicle stop is impractical for combat use.
  • Recruitment and retention showed improvement (intake increased 7–38% across services; application-to-training time fell from 496 to 290 days), but the Department has not analysed which initiatives drove improvement or whether trends are sustainable.

Recommendations

  • Once published, the Department must write to the Committee within three months explaining how it will use the Defence Investment Plan flexibly to account for changing international context in ongoing expenditure decisions.
  • The Department must set out: (a) additional checks and processes ensuring balances in 2025–26 financial statements are supported by proper accounting records; (b) how these checks will continue working in future years; (c) written confirmation of costs written off once agreed.
  • The Ministry of Defence must set out how and when it will routinely provide Parliament with detailed cost and performance information for nuclear enterprise programmes so Parliament can assure taxpayers money is spent wisely.
  • The Department must write urgently (within two weeks) to explain how it is mitigating delays' impact on suppliers, particularly smaller defence companies.
  • The Department must explain why current Ajax operating parameters are realistic given expected battlefield tasks, and provide a detailed memorandum setting out: total Ajax costs; manufacturer liability for delivery delays; cost of Ajax 2 modifications and manufacturer's contribution; why Ajax can be made fit for purpose.
  • The Department must develop robust evidence about factors affecting Armed Forces personnel inflow and outflow; identify which recruitment and retention initiatives are cost-effective; apply successful initiatives more widely.

Tone

Critical

Topics

public-financedefence-procurementarmed-forcesnuclear-enterpriseaccountability

Key actors

Sir Geoffrey Clifton-Brown (Committee Chair), Jeremy Pocklington (MoD Permanent Secretary), Ministry of Defence, Comptroller and Auditor General, Atomic Weapons Establishment, Dreadnought submarine programme, UK defence industry / SMEs

Notable line

“It is completely unacceptable that the Department failed to maintain accounting records to support more than £6 billion of assets included in its 2024–25 …”

Key Quotes

“It is completely unacceptable that the Department failed to maintain accounting records to support more than £6 billion of assets included in its 2024–25 Annual Report and Accounts.”
— Committee of Public Accounts · Qualification of the Department's annual accounts due to misclassified Atomic Weapons Establishment expenditure
“The continuing lack of a deliverable long-term Defence Investment Plan is seriously undermining the Department's efforts to modernise the Armed Forces and achieve value for money for the taxpayer.”
— Committee of Public Accounts · Main conclusion regarding three-year delay in publishing the Plan
“It is astounding, therefore, that in November 2025 Exercise TITAN STORM was stopped when 33 soldiers reported symptoms from noise and vibration after operating in Ajax armoured vehicles.”
— Committee of Public Accounts · Assessment of continued Ajax safety failures years after initial concerns
“The Department is placing unrealistic expectations on how soldiers operate Ajax vehicles safely when it has still not resolved the underlying noise and vibration issues.”
— Committee of Public Accounts · Criticism of the Department's requirement for maintenance checks every vehicle stop
“In 2024–25, the Department spent 18% (£10.9 billion) of the defence budget on the Defence Nuclear Enterprise (DNE), a figure expected to rise to 20% for 2025–26, once its accounts have been finalised.”
— Committee of Public Accounts · Finding on Defence Nuclear Enterprise spending and lack of parliamentary scrutiny
“… time is money in procurement, and suppliers are increasing their prices to take account of the international situation's continued deterioration.”
— Ministry of Defence · Department's explanation of cost pressures from delayed Defence Investment Plan
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Source · parliament.uk record ↗

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