Welcome to the Public Accounts Committee on Monday 23 March 2026. In 2024-25, the MOD’s total expenditure was £60.2 billion. The strategic defence review published last summer set out plans to increase defence expenditure to 2.5% of GDP by 2027, with an ambition to increase it to 3% of GDP in the 2030s. Worryingly, however, the C&AG qualified his audit opinion of the MOD annual report and accounts for 2024-25 for two separate issues, which we will examine in today’s session. Last year, the MOD committed to setting out its detailed spending plans in the defence investment plan by autumn 2025, but it has not yet done so. Following the Annington Homes deal, which totalled £6 billion, the MOD also committed to a further £1.5 billion to improve the condition of service accommodation, some examples of which the Committee saw recently on its visit to RAF Marham in Norfolk. This investment is part of the MOD’s £9 billion defence housing strategy. The recruitment and retention of military personnel was also recognised as a priority in the SDR, yet 1,140 more people left the regular forces than joined in 2024-25. This session will be an opportunity to understand the C&AG’s qualified audit opinion, examine the impact of the delay of the DIP and inquire about progress in boosting the number of military personnel. I extend a very warm welcome to all our witnesses today, who are all very busy people. May I ask each of you to introduce yourselves and to say when you were appointed to your present post?

I am Jeremy Pocklington, the permanent secretary. I became principal accounting officer on 1 December last year.

I am Rupert Pearce, the National Armaments Director, which is the new post created in defence reform, basically to run procurement, delivery, innovation and supply-chain management. I was appointed to the post in mid-October last year.

You are very welcome. It is your first appearance, so I hope you will find it interesting. Aneen Blackmore: I am Aneen Blackmore, the director general of finance in the MOD. I joined the MOD in June 2024.

I am Anna-Lee Reilly, the director general of core delivery in Defence Equipment & Support, in the NAD Group. I came into post in August 2025.

And finally, but by no means least, Air Marshal.

Good afternoon. I am Air Marshal Tim Jones. I am Deputy Chief of the Defence Staff for force development—a post formerly known as Deputy Chief of the Defence Staff for military capability—and I was appointed on 1 September last year.

Anna-Lee and Tim, it is your first time before the Committee, so we welcome you especially. If I may, Permanent Secretary, I will start by asking you a few questions about nuclear. I have forewarned you about this, but I am afraid not with as much notice as I hoped. The reason for asking about this is that the PAC originally made a recommendation that Parliament should set up a sensitive scrutiny committee over two years ago. Normally, the Committee would expect and get Treasury minute responses within six weeks, so not to have one for two years was not particularly good management, I would suggest, but I gather that there has been some movement on that committee in the last few days. If that is true, that is welcome, but there has not been any real scrutiny of nuclear matters for the last two years, so I am going to ask a few questions today, as you have been warned. First, we know that DNO out-turn for 2024-25 was around £11 billion, but what is the latest 10-year forecast for the DNO?

Can I answer in two parts? First, can I make a distinction between the DNO and the DNE? You asked a question about the Defence Nuclear Organisation, but actually the Department focuses on the Defence Nuclear Enterprise. The ringfence for nuclear applies to the Defence Nuclear Enterprise, which comprises the Defence Nuclear Organisation, which includes the Submarine Delivery Agency and the Atomic Weapons Establishment, but also aspects of spending at the Military Strategic Headquarters, particularly the Royal Navy spend. We need to focus on all the costs, and are trying to manage the enterprise as a whole. For the same year in question for the DNE, I think, expenditure was £10.9 billion, which is a little higher than the number that you had and which is 18% of our budget. In 2025-26, the current year, we think it will be about 20% of the budget. The 10-year forecast is a matter for the defence investment plan, I am afraid. That is an issue that I suspect we will come back to several times during the hearing, but that is the right moment at which to set out the 10-year expenditure plan for the Defence Nuclear Enterprise. I can talk a little more about what is happening, to give you a sense of the shape of that work.

The next question was going to be, “Can you explain the reasons behind any cost growth?” Perhaps you could include that.

I am happy to do that. The Committee should be aware that, as a proportion of our budget, the Defence Nuclear Enterprise has been increasing and will continue to increase over the next period, as we have stated, to between about 20% and 25% of the MOD’s overall budget. What is going on there? It is important to realise that the Defence Nuclear Enterprise is a very large, complicated portfolio, and new programmes are being added and growing as part of that portfolio. For example, the Department is re-establishing the capability to produce nuclear fuel, which was not in older forecasts around the programme, and there have been changes in scope, for example due to the AUKUS programme. Inflation is also a factor. There are a range of causes for that. I would emphasise that this is a large programme. There are nine programmes with a whole-life cost of over £10 billion in the Defence Nuclear Enterprise. It is at a large and significant scale. That includes, of course, three submarine programmes, two of which are in build: Dreadnought and Astute. It is about maintaining the existing warhead, designing a replacement, complex infrastructure facilities at Barrow for Dreadnought, naval bases at Clyde and Devonport, and fuel—just to give you a sense of the scale. Over the last few years, those programmes have been maturing.

Can you be a bit more candid? This budget is rising very fast and costing a great deal of money. Are there components within it that are rising faster than you would expect?

Of course, inflation has been a factor in defence, but the thing to reassure the Committee about is the specific programme that gets a lot of focus: Dreadnought, which is the replacement submarine. To give a bit of history, in 2015 the Government said that the real-terms construction cost—the active cost—of the four submarines would be £31 billion plus £10 billion contingency. Today, our latest forecast remains within that range: for Dreadnought, we are still within the range that the Department stated to Parliament. Of course, if that changes, we will update Parliament.

You have actually fallen into my question, because if Dreadnought costs are within expectations, there are other bits that are not.

Correct. As I have explained, those are the other programmes that in many cases did not exist a few years ago. They have been added as the portfolio has grown.

You are not answering the question.

I am genuinely trying to, Sir Geoffrey—

Well, there are components within it—there must be—that are rising more than had been budgeted for. If Dreadnought itself is largely within the budget, there must be other bits that are rising quite fast that had not been budgeted for.

They include scope changes related to AUKUS and the nuclear fuels programme for defence purposes. That was a programme that we did not have in this way a few years ago, so it is a new programme creating new cost. Does that make sense?

Not totally, but I think we may have to take it offline. What is the MOD’s latest forecast of the in-service and lifetime costs?

I am afraid that that will have to await the defence investment plan. The figure that we have used is £41 billion: £31 billion plus £10 billion. As I say, we remain within that range for the core Dreadnought programme.

How much of that £10 billion contingency has been drawn down so far?

The contingency is now managed by the Department. I do not have the latest number on how much of that contingency has been drawn down.

I was going to ask about the nuclear costs, but you have given us that. Can you give us a date when the first Dreadnought submarine is likely to enter service?

There is no change in our position on that. The programme remains on track for the first of the Dreadnought class to enter service in the early 2030s. There is no change in that.

Early 2030s?

Early 2030s.

It makes a huge difference which part of the early 2030s, because the longer it takes for the new Dreadnoughts to come into service, the longer the existing programme has to limp on. That is a very important in-service date.

The importance of the programme is well understood, and the need to progress as quickly as we possibly can is the Department’s highest priority, as the Committee would expect. I know that the Chief of Defence Nuclear would emphasise that point if she were here.

We will probably come back to that, not least because of the length of tours that some people are having to undergo because of maintenance of some of the other submarines. Let us move on to accounts. Why has the MOD failed to maintain basic accounting records, as is set out amply in the annual report and accounts and the C&AG’s opinion?

There are two qualifications, and I think the best way to approach that question might be to explore each of them, because they arose for two different reasons. Perhaps I can give the outline myself and then invite Aneen to explain in more detail.

We do not want to go into huge detail on this—you went into it with the Defence Committee last week, and I have seen the transcript—but I am anxious to explore the basics.

I will give the basics. The first is a true and fair qualification. Please correct me if I get this wrong, but that relates to Aldermaston, so AWE and assets under construction. Of course, those assets now sit on our balance sheet because we are the legal owner of AWE. The issue is that historic expenditure, dating back as far as 2007, was misclassified as capital expenditure. It did not meet the capital recognition criteria. That relates to several major programmes in AWE, including the Future Materials Campus and the Mensa facility, which is connected with assembly and disassembly of warheads. A lot of this relates to early-stage feasibility work. We think that was the vast majority—about 85%—of the overstatement. I need to stress that it does not relate to the operational assets or to nuclear material. It is really important that we have that on the record. There is complexity, particularly because AWE was brought into MOD only in about 2020. Aneen can correct me if I have got that wrong. Aneen Blackmore: 2021.

2021—forgive me. There is a trading contract arrangement, which creates complexity in the accounting, but, of course, this should not have happened. We should have got this. Can I bring in Aneen to say a bit about the history on this and what we have done about it, or would you like me to go on to the second qualification?

Very briefly—I mean, £6.1 billion is an awful lot of money. I am curious as to why this was not properly quantified before these accounts were compiled. Why didn’t your internal auditors, for example, pick this up? Aneen Blackmore: Just for specificity, on the £6.1 billion, the finding was that we were not able to provide sufficient audit evidence in the time available. As the Committee would expect, what we have done at pace is work through all those balances to provide evidence. As Jeremy has stated, the majority of that balance is subject to audit. We now have evidence, which should be in our 2025-26 account. It was our ability to provide the evidence in the time available rather than the totality of the balance not being justifiable. As the Committee will know, the MOD is very large and complex. We are never complacent about our controls. If controls are working one year, we still need to keep testing them, because they may be less effective the following year. We have a layered approach to our controls. In this instance, we have further controls once assets are complete before they move on to our operational asset register. Once they are on the operational asset register, we check for completeness and check that there was no audit finding against those assets. We layer our controls up. As you alluded to, Chair, we have three lines of defence. We have a regular review through internal audits of our key controls to assess their effectiveness, the NAO’s annual audit, and its value-for-money audits, which are another opportunity for us to scrutinise whether our controls and processes are working as effectively as we would like them to. I will not go into detail, because I am conscious of your time, but we moved very quickly not just to address the issue, but to look holistically across the process and the controls we have in place. As Jeremy alluded to, it is a more complex part of the MOD enterprise because of the interface with AWE, but we have worked at pace not just to assure the balance, but to strengthen the controls that we have in place there.

I understand all of what you are saying. The permanent secretary said that it did not come into your accounts for 2020. Nevertheless, between 2020 and 2024-25—the latest year’s figures—I am amazed that you have not got these balances right. It seems extraordinary. I gather that you will make a provision in next year’s accounts, but is it likely that some of this money will be written off? If so, how much? Aneen Blackmore: Yes, we are likely to write off some of the balance, predominantly in relation to the capitalisation treatment of some of the early design work and early feasibility studies that did not meet MOD’s accounting policies. Additionally, we had some legacy balances that, due to their age, have now become obsolete costs and so would no longer be appropriate to record under the assets under construction. That work is going through audit now. The majority has been supported. As for why it was not noted earlier, I think it was a consequence of AWE moving back into the MOD boundary in 2021 with some complex financial interfaces and some historic processes that were not sufficiently tested for control effectiveness. That is what we did at pace, and we are now confident that we will have a more robust system.

I think the annual report and accounts indicate that there was a legacy balance of £1.5 million that went back to 2007. Aneen Blackmore: There are some balances going back to 2007.

That makes it even more extraordinary, doesn’t it, that it wasn’t really notified? It should have been written off or whatever; it should have been taken out of the accounts so that it didn’t become a recurring annual theme, surely. Aneen Blackmore: I would note that in AWE in particular there are some very long programmes that we would expect to take many years to complete, but your challenge is the challenge we have set ourselves. What are not just the accounting policies and the assurance that we want to put in place—like sampling—but the red flags in the systems that we can have in place to say, “This suggests that you need to do further work here”? We then have a broader programme of work, as we look ahead, about how we can digitalise more of our controls. That will ensure that those sorts of red flags are picked up as a matter of course.

I do not want to dwell too long on this. The important thing is that you are putting it right, but can you absolutely assure the Committee that no other, similar disparities are lurking around the Ministry of Defence anywhere? Aneen Blackmore: What I would say is that the MOD is very large and very complex and controls that are working one year, as I said, may, for a variety of reasons, become tested or ineffective the following year. I am never complacent on that. We have had, I think, really positive progression on how we have been approaching our accounting in the MOD and have had a clean set of accounts for a couple of years. This was very disappointing for me and my team. We take it incredibly seriously and are really focused on ensuring that it does not happen again.

Can we move on to the next bit of qualification—well, the next bit, which is the excess vote of £2.56 billion? Do you want to deal with that, Permanent Secretary, or do you want to deal with it, Aneen? Aneen Blackmore: I am happy to. Apologies: I couldn’t quite hear the question.

The excess vote of £2.56 billion: can you just explain what that was made up of and how it occurred? Aneen Blackmore: Yes, if the Committee can bear with me, because it gets a bit complicated from an accounting perspective. It relates to provisions in relation to legal cases and resettlement schemes. Provisions are an accounting construct to recognise financial liabilities in future years, so it is not a finding of in-year expenditure. We made an update to our provision in ’24-25. We had sufficient budget cover to update our provision for that year, but we did not have sufficient budget cover to update our provision for the prior year. So that was the NAO finding, which meant we had a regulatory qualification because we did not have sufficient budget cover for the prior year period. Why did it occur? Let me break that down into two parts—briefly—because there is a resettlement scheme aspect and a complex legal scheme aspect. The MOD historically did not hold a provision for our resettlement schemes. We recorded them as the expenditure was incurred. That was for all our resettlement schemes. Following additional work that we undertook, having disclosed the data breach, and in conversation with the NAO, we decided it would be appropriate to hold a provision for the resettlement schemes where we could accurately estimate future costs, so we put that in place. For complex legal cases, we ran a completeness-of-provisions exercise in 2024 and determined that we thought the provision being held was too low. We found, as part of that exercise, that while the financial accounting judgment was sound with the information that we had, we did not have sufficient visibility of all potential provisions that may be being incurred from the MOD’s activities. So we felt, from the finance team’s perspective, that we needed to improve the visibility of activities, and we made a number of control changes to address that. We have also taken the opportunity, given that this is a complex area of financial judgment, to write a very detailed accounting paper setting out our approach for all our claims, which we have shared with the NAO to support their work for the ’25-26 audit.

Two quick questions arise from that, and then I want to move on. We are told that you have revised your estimate of the number of people who became eligible for the ARR as a direct result of the data breach from 7,355, which we reported in September, to 4,926, which will bring down the cost of the data breach. Can you comment on that? Aneen Blackmore: I am not familiar with those numbers, so I can’t, no.

I might call on Elaine, if I may.

Helen?

In the Report that we published last week, on Afghan resettlement schemes, some of the numbers that related to the Afghanistan response route specifically had been moved into the ARAP scheme, so that brought down the numbers that had been through the ARR breach. That probably will have an impact on the ultimate cost.

The permanent secretary is nodding. Do you want to add something?

I can have a go at answering this. There is a challenge with the different Afghan resettlement schemes in that there is a risk of double counting—people can move between schemes—which risks getting us into management accounting if we are not careful. Obviously we also recognise that we are talking about human lives. The estimated cost for the Department as a whole for the Afghan resettlement programmes, including the various sub-schemes, remains the same, at between £5.5 billion and £6 billion, so we have not changed our estimate. The specific estimate for the scheme that was introduced following the data breach remains low. I cannot remember whether it was £750 million or £850 million—I am hoping that perhaps someone can pass me a note during the hearing.

At the time of the statement, your boss the Secretary of State said it was £850 million.

I think that remains our working estimate in the Department, but it is difficult because there is some movement between the different schemes.

Okay. I am really anxious to go into the legal, other bit of that £2.65 billion. Can you separate out the two—the Afghan scheme and the legal bit? What are the two figures? If you can’t now, give us a note. I do not mind, but I would like to know what the separation is, because the next question is whether this is going to become a bigger and bigger item in future years. I gather that you have had several legal cases that have said that the MOD will be liable on the basis of noise and vibration, and that is what has triggered this provision, because it has transferred from a possible to a probable, if not certain, liability if there is a claim. Is this likely to become a bigger and bigger item, Permanent Secretary?

We have seen an increase in the number of personal injury claims, in particular around noise-induced hearing loss, where obviously we have an important role in the Department. We need to compensate those who have served, but we also need to manage spending consistently with “Managing Public Money” in the way this Committee would expect. Also, we need to fix systems for the future, and the health and safety of the military is something that we care about, and rightly so. Talking about numbers, though, is difficult, because there are court cases and that makes it very hard to talk about individual—

This is a past event. It is something that has actually been put in the accounts, so there must be a number for the separation between the Afghan schemes and the legal liability for that year.

This is a provision about future claims, and we have made very careful judgments here. If we put out a specific estimate around future claims for a particular issue, type of injury or resettlement scheme that subdivides that number, that could be used as an assumption about what the Department is expecting to pay. There are very important and sensitive cases under way. On noise-induced hearing loss, there is a very important test trial in December, and we are awaiting the judgment in that trial. Once we have the judgment in that trial, we will then need to assess our response, as you would expect.

Does any of these claims relate to Ajax?

Not that I am aware of.

No.

Aneen Blackmore, in answer to previous questions, you have said a number of times, “But of course, the Ministry of Defence is so complicated.” That seems almost like an excuse for things having gone wrong in the past. Is it also an excuse for them not being right in the future? Aneen Blackmore: I do not think it is an excuse at all; I think it is setting the context, which is partly important because we are never complacent. We had a clean set of accounts last year, but I would never be complacent on that position. Because of the complexity and scale of spend, we are always alive to ensuring that we are testing our controls and processes to respond effectively. I do not think it is an excuse for the past, and I do not think it is an excuse for the future. It sets an understanding of the context in which we operate.

Plenty of Departments have complicated financial arrangements, and therefore their accounts are not qualified. Aneen Blackmore: I do not think it is an excuse, but I do think that the MOD’s financial proposition is a very complex organisation. As I said in relation to AWE, we had a complex financial interface where AWE records the expense and the MOD records the asset. That adds complexity into our processes, as well as greater opportunity for control failure, which is why we are not complacent, and why we are constantly testing to ensure that our controls are working as designed.

Have we now put that complication right? Aneen Blackmore: We have now put that right.

Is it fair to say—this is to the permanent secretary, as well as yourself—that you came into an organisation and inherited a system that was not fit for purpose? Aneen Blackmore: In my view, the financial processes and the financial control framework in the MOD are broadly effective. The NAO’s findings were really disappointing, and I think we responded quickly to resolve those. We have a whole programme of improvements to make the function even more robust.

But you were improving something that clearly was not working, weren’t you? You would not improve it if it had been working before. Aneen Blackmore: There was a particular failure with assets under construction in AWE, and I am not complacent about failures going forward.

It was not the only failure, was it? Aneen Blackmore: I do not think that means that the control framework across the MOD is not broadly effective.

But it clearly was not. Otherwise, the accounts would not have qualified, would they? Aneen Blackmore: I suppose I am trying to reference the scale and complexity of the whole organisation.

I am looking at the amounts of money here that are not properly accounted for.

There are serious issues here, and they need to be addressed. We have plans in place, as Aneen has set out, to do that. This is in an environment where, overall, there is an effective control regime, as Aneen has said. There are also differences between the two qualifications, so a lot of this is about the real detail of the lessons that we need to draw. Ultimately, at times, when the same accountants come back to the same issues each year, the judgments can evolve over time. For example, the approach in how we best account for the prior year adjustment evolved over the last few years.

Are you saying that the NAO has therefore changed its position?

No, I am not saying that at all.

Basically, you are accepting that the situation you inherited—

I am saying that the issues we have identified need to be put right.

I want to move on to the issue of potential legal liabilities, which you referred to, Permanent Secretary. The problem is that you qualified it so heavily, in terms of future court cases. Can we then have any real confidence in the figures in here about potential future liabilities? Aneen Blackmore: We had a detailed programme of work with the NAO to look at our provisions and contingent liabilities in relation to legal claims. As I said, for this year’s audit, we have also set out a very detailed accounting paper with all our approaches, and it addresses why we have made that assessment. I think you can have confidence in the numbers being recorded in the accounts.

So these are the best estimates that you can do, with the information you have—maybe it is a fair assessment. Aneen Blackmore: That is the nature of provisions and contingent liabilities. It is our best financial judgment with the information that we have. We wanted to improve the visibility of the totality of information in the Department. That was the control weakness that we have resolved.

I am sorry to go back, but this is such an important point. I am hearing from the NAO that the assets we were talking about in relation to Aldermaston were always on the MOD balance sheet. They did not transfer across with AWE. Is that your interpretation of what happened? Aneen Blackmore: That is correct. That is the financial interface that I was referring to. The process we have is that AWE records the expense. It is running the programmes that build the assets and managing the assets. It then gives the MOD the information so that we can record the assets on our balance sheet, but the MOD is reliant on AWE processes to assure the assets under construction and balances. That is where the interface created some complexity and some of the control weaknesses came in.

That seems extraordinary, but no doubt you will be putting in place your own safety measures and telling them what you think about it too.

You used the word “extraordinary”. Can we assume, from what you have just said, that you got the wrong information and figures from the AWE, which is why the MOD accounts are so askew? Aneen Blackmore: I hesitate to use the word “complex” again. As this Committee would rightly expect from us, we did a full end-to-end process review in understanding where the control weaknesses occurred. They happened at a number of stages. One of those was understanding the MOD’s accounting policies, where assets that were expected to be capital assets and therefore recorded as assets under construction did not meet the MOD’s accounting policies for capitalisation. As you would expect, we responded to that by not just setting out the guidance, but setting out a training programme and support to understand that guidance. There were some control failures on where the assurance sat between the two organisations, which we resolved as well. It is a mixture of reasons. We have set out really clearly where it has happened and why it has happened. Going forward, it is not just the controls and where we think that they should be operating; we have also set out really clearly the accountabilities for ensuring the effectiveness of those controls.

So the answer, in real human-being speak, is yes? Aneen Blackmore: Is that to the question, “Were we given the wrong information?” Rachel Gilmour indicated assent. Aneen Blackmore: There were certainly misunderstandings and accountability weaknesses. Rachel Gilmour I will take that as a yes.

I think it is a yes. It is extraordinary that we could forget that assets of £6.1 billion, which is a lot of money, exist. It beggars belief, but there we are—we must move on.

This is probably one for you, Jeremy. Why have you not yet published the defence investment plan?

This is the third hearing in three weeks where I have talked about the defence investment plan. First, I really do understand the parliamentary interest in this. The Prime Minister has just been talking about it at the Liaison Committee. He has set out that we are working very hard to finalise it. It is important that we get that right. Those of you who have heard me at previous Committees in the last few weeks will have heard me say that we are working flat out to finalise it. That is absolutely right. It is important that we get it right. It is the first time in 18 years that we have been doing a zero-based review. There are three things I would add to that. First, I would emphasise that this is difficult and sensitive work. We are identifying our core plans not just for capabilities, but for supporting infrastructure and people for the next 18 years. That needs to fit within our budget and enable the transformation of armed forces to be warfighting-ready. The second thing I would emphasise is the context shift: demands on us are rising. In my Department, what am I doing most of the time? I am focused on leading my Department in managing two wars at the moment, in relation to the middle east and Ukraine. We know the Russian threat is real, whether that is in Ukraine, its activities in the grey zone, the eastern border of Europe, and the increased activity in the High North. The US is asking us to do more, so the context is shifting as well. The final thing is that this is a really important document. It obviously needs to be agreed across Government as well. I really do understand the interest in this issue. We are working flat out to get it right, and it is our highest priority.

It sounds from your response as though, in the six months of delay since it was initially promised, the context has changed. Does that mean that it will take significantly longer to produce the plan, given that in the time since it should have been produced, the context has changed?

I have not got a date—I know the Committee would normally like a date. I am afraid I have not got one today. We are close to finalising it. We are working incredibly hard to resolve all the outstanding issues. The other thing is that it would of course be better—and I am sure we will come on to this—to publish the document, provide certainty and give a clear demand signal. We are not letting that stop us. We are getting on with the job we need to do to make sure our armed forces have the capability they need. Rupert can talk more about this, but this month several more contracts have been issued—about 1,000 contracts have been issued since July 2024. One of the larger contracts, the new medium helicopters contract awarded this month, has secured 3,300 jobs and invested further in autonomous air systems; this is Leonardo in Yeovil. So we are getting on, guided by the SDR, but we want to finalise the investment plan and get on with that.

Obviously it is reassuring that it is not stopping progress as it needs to happen, but as you say, there is great parliamentary interest. There is also obviously a huge interest from businesses that want to make plans, invest in the UK, create jobs and opportunities and add to our resilience and security. One of the challenges is not just the big prime companies the MOD contracts with, but their supply chains. Have you made an assessment of the impact that the ongoing delay to the defence investment plan is having on the supply chain within the procurement industry?

If I may, can I bring in Rupert to talk about this? This is very much what we need to do. There is always a balance between financing, getting it right and publishing it. It is really important that we get it right. In my experience, it is then that you can move on to delivering and implementing the DIP. Of course, we are getting on in the meantime.

The whole point of the DIP was to provide, for the first time in over 20 years, genuinely long‑term demand signals from the MOD to enable young and older companies alike to lean in and invest for success. The complete reset of our ambitions and putting them out over 10 years is a qualitatively different thing. That is our glide path through 3% of GDP to 3.5% by 2035, in line with the Government’s statements. It is vital we do that to foster a better investment climate, attract companies into the UK and, above all, partner with them for the long term. You will appreciate that the SDR and the DIS bring a lot of commitment towards innovation—towards UK innovation—and particularly working with smaller companies as a bigger component of what we do going forward. That is less than 4% of what we do today, so we want to put several billion pounds a year into SME engagement in the years to come. Those signals are important, but we are also going in and doing business every day, every week and every month, so we are not closed for business without a DIP. I think we are in a period in which I would say there is an impact on our communities—our defence ecosystem. I would not say it is material or systemic at this stage, but smaller companies will suffer more than larger companies in this kind of case. At the margins, there are some things that we are waiting for the DIP to do, and that delay is costing people. We do not like that. We want to get this DIP done and get through it and out the other side. But, every day, we continue to do stuff. We continue to put things on contract. We are very busy; we are busy in Ukraine and busy supporting our allies in the middle east, and we continue to sign up to large and small contracts alike, so we are not closed for business. There is a credibility issue around the DIP being serially delayed, and we need to recover that position, both with our UK defence ecosystem and with our allies.

Thank you. That is a really thorough response and is very helpful in the circumstances. I want to clarify one further thing, following the earlier discussion around the Defence Nuclear Enterprise—I think it was you, Permanent Secretary, who responded on it—because, as the Chair noted, the increases in spending detailed in the SDR are highly ambitious. Without the defence investment plan, there is a lot of scepticism about how it will all be afforded, particularly with the growing element of the defence budget being spent on the Defence Nuclear Enterprise. That again limits scope for choice as to how that budget can be spent. Could you clarify how much of the budget—I know you said it is around 20%—is to be spent on the DNE and how much is available for the other ambitions within the SDR, which we are hoping to see as soon as possible in the defence investment plan?

We will set out more details in the investment plan. As I think I said, it is between 20% and 25% for the DNE. Obviously, then our budget rises in the coming years as well, but I just want to give you a sense of the rough order of magnitude and proportion.

Rupert, you said to the hon. Member for Widnes and Halewood in last week’s Defence Committee: “Affordability and the DIP is one aspect of that.” Then, when you were asked about the big factor with major GMPPs, you said: “They are sliding to the right for a range of things. A lot of the programmes are bleeding-edge, or at least leading-edge, technology, so there is a big technology-risk quotient in there. Many of them are subject to the vicissitudes of supply chain problems.” This is the important bit: “If you look at what has happened over the last few years, we had a lot of supply chain issues”—exactly what Catherine was asking about—“Many of them are multi-party, with other countries involved. It is just a very complex situation to manage.” Surely the longer you have to manage it, the worse it is going to become. Then there was another example of mine hunting, which has been suspended until the DIP is announced. I wonder how many more major projects have been suspended until the DIP is announced.

I mean, there are—

It is a very poor situation, isn’t it?

Yes, it is. I would like the DIP to be settled as quickly as possible, from my own selfish perspective of wanting to get after programmes and attack costs. Time is money in procurement; things are not getting cheaper at the moment. In fact, as a Department, we have to start assessing the long-term implications of energy prices and supply chain disruption from this latest conflict, as you would expect us to do. Generally, if you look back over the last few years, we have been dealing with a lot of international supply chain issues, inflation and energy-cost oscillations, and those have made life more difficult. Even if they are short-term things, they are often priced in as a risk component for our supply chain when they bid to support us. It has been a very complex and challenging environment. It is also an environment in which the whole of NATO, if you like, has committed to increase defence spending in lockstep. I think it is €300 billion a year of increased expenditure on defence over the last five years, and another €300 billion a year of increased expenditure over the next five years. That sounds great until you realise that they are all looking to buy the same stuff and that the defence industry sees us coming and will sell to the highest bidder. I know that NATO is committed to interoperability and interchangeability and working together. As a community, we are definitely looking to buy and work together as much as we can to offset that competition with each other. It is a complex environment for procurement, and my teams have been working incredibly hard in that environment to try and contain cost and maintain schedule.

Permanent Secretary, we are about to go into a period of purdah, and then Parliament is likely to be prorogued. We are going to have to wait at least another month for the DIP, aren’t we?

As I said, I do not have a date for the Committee. On that specific question, there are obviously things that can and cannot be said during the pre-election period of sensitivity, as I think it is called.

Or when Parliament is prorogued.

Correct. The rules are not quite the same as around a general election, but there are, of course, limits. I do not want to speculate while the actual plan is being finalised, but of course it is a factor.

Okay. We now have questions from Sarah Green. Sarah, I am sorry I overlooked you—I did not mean to cut you out or anything.

No offence taken, Chair. Returning to the impact of the super-injunction: Permanent Secretary, what impact did the super-injunction itself have on the Department’s understating of the potential Afghan compensation and resettlement costs?

Do you mind if I ask Aneen to answer that question?

Not at all. Aneen Blackmore: The way we accounted for the costs of the resettlement scheme related to the super-injunction was the same way we accounted for our other resettlement schemes. The super-injunction itself did not change how we were accounting for the resettlement costs of the scheme. To the point that I made previously, when we did further audit work, we found that a greater visibility across the Department of some of the potential impacts was not where we wanted it to be. That is something that we have resolved. The provision change we made in how we accounted for the resettlement schemes was an accounting treatment change. It was not a result of how we were treating the super-injunction; it was an updated accounting treatment recognising that we thought we should now be accounting for future costs.

So it was not treated differently? Aneen Blackmore: It was not treated differently.

Thank you. When this first came to light for our Committee, it raised real issues of accountability to Parliament, this Committee and the Comptroller and Auditor General. Permanent Secretary, have you given any thought to how the MOD would secure parliamentary budgetary approval if a similar situation occurred—not a data breach of that nature, but a super-injunction or a legal requirement? How would you square that circle because it has caused a real challenge?

The Treasury is working on this. It intends to issue guidance in the next few months on the principles and practicalities of sharing information with the Comptroller and Auditor General in the event of a super-injunction. That is with particular regard to our statutory duties to support the NAO and the Comptroller to enable them to examine Departments’ accounts. We are supporting the Treasury with that work, and that is something that I will obviously prioritise as accounting officer. If the extraordinary circumstances that occurred were ever to occur again, it would be very helpful for us to have that guidance.

Rupert, you mentioned the importance of looking at the various complications of procurement, particularly with so many countries trying to buy the same thing. How might you manage to do that? I am not anticipating what the DIP is going to say, but how do you square that circle with the Government’s increasing pressure for public procurement to buy British?

It is a very good question. If you look at the SDR and the defence industrial strategy, woven through them are three things. The first is making sure that our armed forces have the capabilities they need to be able to fight and win on the modern battlefield, and therefore to deter war from ever happening. The second is to deliver tremendous value for money to UK taxpayers. The third is to recognise that the MOD can be an arm of UK industrial strategy by spending as much of our transformation investments into the UK economy as we can. If we get this right, we can provide a huge stimulus for growth into the UK economy through building fantastic infrastructure and great jobs and skills in the UK. That is one of the reasons why we have also assembled an export team inside my group, designed to make sure that we do not just buy for the MOD, but buy something that can then be sold into the 31 other markets inside NATO and beyond, and have a team that can do Government-to-Government deals to create the framework for our UK companies to have the biggest possible market. There is a tension in all that, because if it is cheaper for the UK taxpayer to buy non-British, or if we cannot buy British for some reason, we have to balance that out. By and large, I think we already spend 85% of our budget in the UK. We want to continue to do that. As the numbers go up, I hope to keep at least the same proportion of spend into the UK economy. If I can, we will try to do more. Specifically, we are looking to stimulate our relationships with SMEs in the UK. Because of the size and shape of the SME elements of the UK economy, that could make a big difference. We are trying to drive UK innovations through investing earlier and being more of a development partner with innovative UK companies. Above all, a lot of the transformation of our armed forces in years to come will be through the same kind of things that every company in Britain is looking to do—namely, digitalise. I do not want to sound flip by saying that we are trying to digitalise the business of warfare, but things such as the digital targeting web, the use of data and the interconnectedness of every asset—sensor, effector and platform—are key parts of what we need to do in the years to come. I think we can draw on a lot of dual use technology in that case. That allows us to be a customer, if not the only customer, to supply us as well. Those are all structurally things that will help us drive growth in the UK economy through our expenditure.

That leads me very nicely on to an extra question about trying to link bits of Government together. I am going to mention Sheffield Forgemasters, as I always do, because the taxpayer owns it. It produces important parts for our nuclear submarines, but it has the capacity to produce for the nuclear civil industry. At this stage, I do not see any join-up between those two sectors, where you are looking at supply chains and at training and skills, which are the same in many respects. How far is that in your thinking? You mentioned dual use, and there is a potential dual use. Is it there in the thinking of other Government Departments?

Again, that is a very good question. We spend a lot of time thinking about that, and I can assure you that we are working across Government in areas where that can happen. Next generation materials is a good example, but areas such as AI and space are also good examples where we have the ability to work across Government. The MOD is quite unusual in that we are also a customer. We are not just somebody looking to foster innovation who goes on to sell to the world. We can be an anchor customer. We can get our supply chain off and smaller companies to cash-flow break even alone, and open up NATO markets as well. We are quite unusual in what we can bring to cross-Government collaboration. In next generation energy, we are working with DESNZ. For space, we are working with DSIT. We have a lot of cross-Government collaborations going on. I think that is a great thing.

How nice to hear the voice of reason—and interestingly, without a civil servant’s background. I have a question for Anna-Lee Reilly. When do you think that the MOD will achieve the strategic defence review’s vision of delivering the best kit and technology into the hands of our frontline forces at speed? Obviously, I am posing that question in a completely different context from what frontline forces might have needed even five or six years ago. As a recent and regular visitor to Ukraine, I am very aware that, certainly in terms of drone technology and things like that, there is much that we need to do.

That is a brilliant question. I might start answering it and then hand over to Air Marshal Jones, to give you a bit of a head start, but you are absolutely spot on. Ukraine has the cutting-edge technology at the moment, not just in drones but in what they are doing across the board. You will be aware that we have spent £13 billion so far supporting Ukraine, with another £500 million pledged at the Ukraine defence contact group a couple of weeks ago. Part of that is investing in Ukraine, and part of that is bringing the technology back to the UK. You are probably tracking one of the most exciting things—it does not sound exciting on paper, but it actually is—which is Project Lyra. That is about bringing back technology from Ukraine and being able to generate the manufacturing capacity back in the UK, first of its time—it is the first time Ukrainians have made that sort of contract with anyone. That also brings us to a project called Octopus, which is a low-cost drone interceptor, previously announced. There have been lots of exciting things and lots of ability to be able to innovate. A couple of things you might have heard about include Brakestop and Nightfall. Nightfall is the follow-on from Brakestop, which gives us a ground-launched ballistic missile out to beyond 500 km. That is all stuff we would never have dreamed of doing for our own armed forces five years ago. It is about working with our Ukrainian partners to bring such technology back. That is absolutely linked in with the strategic defence review and with the formation of the National Armaments Director Group to bring this technology and innovation together with the delivery and the exports, and being able to support it in the future. That all links together.

I suppose nothing good has come out of the Ukrainian war, or Putin’s illegal invasion, except for the fact that the Ukrainians have really led the way in defence innovation and technology. To do that at the same time as being set against one of the wickedest men in the world is a huge achievement—that was an observation rather than a question. I wondered if there were any delays in delivering the kit, creating capability gaps, given where we are.

Delays in equipment we are providing or procuring for Ukraine?

Yes.

The nature of the equipment that we are providing is quite a lot of cutting-edge stuff. There is the standard procurement—the drumbeat of ammunition and those procurements that we do, which goes on regularly behind the scenes. It pretty much runs on rails now, as we are sadly a number of years in. The exciting stuff is very iterative, very spiral. We are absolutely cutting-edge with programmes like Brakestop and Nightfall. Therefore, it is hard to say where they will develop and at which point we will hand them over to Ukraine. This does not have a set timeline like a traditional procurement that we would have for ourselves, but obviously, the Ukrainians are very keen to get that capability across their border as soon as they can and to develop and integrate it.

There is very close, ongoing discussion and dialogue, with Ukraine about what they need and when they need it by. The areas they are focused on particularly are air defence, for obvious reasons, drones and counter-drone technology, and long-range strike. With all but air defence, Ukraine is increasingly developing its own domestic manufacturing and innovation capabilities, so we support with cash, money and skills. To some extent, we are onboarding back into the UK, where we have cutting-edge manufacturing capabilities and can spiral-develop their capabilities, but much more of our support now is in the form of cash for their own domestic manufacturing than it was, say, two or three years ago—except for air defence, which has very complex systems that they have to go and buy.

If I may add to that, I think the brilliance of this partnership is the fact that we have a lot of exquisite air-defence capabilities, for example, and Ukrainians have a lot more attritable air-defence systems, so the UK knowledge—with our amazing prime contractors—to bring this together into a system of systems is hugely powerful. You will also note that we have had our first Ukrainian unicorn—the first such company listed on the UK stock exchange for over £1 billion—so there are great investment opportunities and partnerships there.

Rachel and I have just come back from Ukraine, among 20 other MPs. From talking to the top drone man, he says that they can innovate within a week. The interesting knowledge we got from that was the fact that they use their young drone operators to actually define what it is about their own drones, and the incoming Russian drones, that they need to alter or innovate on. It is a fascinating process. We also learned that the war is likely to continue for several years, so I would suggest that the UK is going to have to be prepared to provide the Ukrainians with that amount of support for several years to come. Do you agree with that?

I could not comment on the operational issues in Ukraine at the moment, but we are ready to stand by them for as long as it takes. That is the stated position, and we continue to do so.

I would also add that the European Union needs to recognise that it is as much its war as the rest of eastern Europe. Until it recognises that and produces the goods, the Ukrainians will continue to suffer at the hands of that ghastly man.

I am going to move on—presumably to you, Anna-Lee—and talk about the dreaded subject of Ajax. I gather that the interim in-service delivery has been temporarily frozen. When is the army going to finally decide this matter, one way or another? Either we are going to have Ajax, or we are not, but I think people—particularly those who are worried about their personal health—need to know what the position is on the Ajax programme.

It is worth saying, first of all, that the safety of our soldiers is clearly of the utmost importance. You are clearly tracking Exercise Titan Storm, where 33 soldiers reported symptoms from noise and vibration. Five are still under medical review, and the rest were returned to work with no follow-on conditions. After various safety reports, we are now very clear that Ajax, when maintained and operated as designed, presents no safety concerns. However, we now need to work with General Dynamics and Ministers to make sure that we can get Ajax back into service in a measured way, where we can assure that safety, and assure our position.

What is the timetable likely to be for that?

We are working on the timetable at the moment. I know that the Minister for Defence Readiness and Industry wants to make an announcement to the House, so it would obviously be wrong of me to pre-empt that. Industry has been working very hard on a number of activities that will enable us to modify this on a growth to Ajax 2, which is very important. That sees us do things like composite rubber tracks and automatic track tensioners, all of which will improve the lived experience of the soldiers in the back of the platform. If you imagine that you are in the back of a platform, you have no light—clearly, there are no windows—and you are travelling cross-country and looking at screens. Even if there is a tiny bit where your track has not been tensioned to the right amount, you can feel that adversely really quickly. For those of us who have operated in armour, the human dynamic of being in the back of that is hard. Therefore, making that experience as comfortable for the users as possible is part of the plan to get to Ajax 2. Safety is an absolute given; no soldier should come out of that platform and be injured in any way. That is taking us to a new platform that will be much improved from the current Ajax 1.

You were very clear in that reply that there are no safety issues with Ajax. How can we be sure that that is really true, when the senior army officers said, in writing to the Minister for Defence Procurement, that it was safe? It was not until he went to the exercise that you referred to that the problems were discovered. How can we be sure that this is safe, or will ever be safe?

When it is operated and maintained correctly within its parameters, we have no safety concerns about it. As you will know, it is one of the most trialled and tested platforms we have ever brought into service for that reason, and that is what the safety reviews have found. Obviously, when it is operated outside those parameters—as is the concern that you are talking about on Exercise Titan Storm—the safety parameters are breached, and there is a consequence to that.

Lieutenant General, you are a soldier, so you know. Which was incorrect: the operating parameters, or what they were asked to do in the exercise?

The exercise was part of growth trials, so it was quite a difficult test, and the soldiers had been out for a prolonged period. Clearly, the platform was not operated and maintained within the specification it should have been, and that led to the incident. Because we have done all the research, we know now that if it is operated within those standards and specifications, it is safe. That is what we are being told by the Army safety investigation team, and what has been reported. We now need to make sure that the platform is always operated within those parameters, and, in the meantime, develop it to get to Ajax 2, so that we can make these improvements and make it a more comfortable ride. It is about going back to safety is sacrosanct, but we can also improve the lived experience of our soldiers in the back of that platform, no doubt.

So the commanders on the exercise either were ignorant of or chose to ignore the operating parameters of the vehicle system.

Of course, over time, as you travel cross country, the tension of the track alters; it was a very long exercise, and soldiers were on the platforms for a long time. It was not, as you might suggest, wilful ignorance, but part of operating on armour. Now that we are aware of and are tracking that, we can get to a position whereby we know what instructions to give our soldiers: for example, to do checks every time they stop the vehicle and that sort of thing. Of course, that is leading up to Ajax 2. Getting things like automatic track tensioners takes that out of it, as you create a technical solution, rather than a solution that needs to be done by a soldier.

My understanding of the problem was that the original vehicle, which could have been bought off the shelf, with the six variants, increased the weight from 28 to 42 tonnes. That weight on the tracks is basically what caused the problems, noise and vibration. How will you be able to overcome that physical problem technologically?

At the moment, we are working really hard, with General Dynamics, on solving that problem. One thing we looked at mentioned composite rubber track, and at the end of the year, we will start to do trials on that to look at whether it is value for money and makes a sustained difference to the platform. As we mentioned, things like automatic track tensioners would take the edge off. It is also about what we ask soldiers to do when they are in the back of that platform. Because of our years campaigning in Afghanistan and Iraq, we have not operated like that for a really long time. These are skills. We are keen to get our soldiers back on those platforms as quickly as possible because they could lose that skillset of operating on armour. We need to keep that skillset current, so we need to get them back on the platform as quickly as possible.

Okay, we have heard those answers; it will be interesting to see whether you are able to overcome the problems. We cannot afford to put any more of our soldiers at risk because of hearing and vibration problems. Sitting suspended. On resuming—

Welcome back to the PAC hearing this afternoon. Matt will start. Q50        Matt Turmaine: Forgive my slight breathlessness—I have just run up the stairs. I would like to ask some questions about Annington Homes. The annual report and accounts says: “The landmark deal with Annington Homes in December 2024, to return military homes to public ownership, provides new opportunities for forces homeownership. It has provided the ideal opportunity to embark upon a major modernisation of the Defence estate to fundamentally improve the lived experience for Service families”. Can I start with you, Rupert? What benefits of the deal to buy back more than 36,000 military homes have been realised so far?

We are right at the beginning of that journey, since they were only bought back in the second half of 2025. The first task was to stop the bleeding of the deal, if you like, which I think this august body described as “disastrous”, and that captures it very nicely. I am sure we went into it with the best intentions in 1996, but it turned into something deeply toxic. The 2025 deal gives us the chance for a reset. We are not spending £600,000 a day on rent any more or seeing our estate degrade to boot. It delivered nothing that was good. I am very pleased that we now have the chance for that reset. There are a number of things we need to get right. The first is that this programme needs long‑term funding. A lot of the commentary on what went wrong in the past has been about how we lived a hand‑to‑mouth existence. When you are investing in infrastructure and trying to make good change, you need to think long‑term. By getting towards a proper programme to upgrade and replace our housing, and by freeing up real estate in the defence estate for public investment elsewhere, we think we can add upwards of 100,000 new homes into the civil market. You need long‑term thinking and consistent investment. It is extremely welcome that that is what we are moving towards with the defence housing strategy and the creation of the new Defence Housing Service. Taking a holistic approach to maintenance will pay dividends. On that, I would say that we have made a good start. If you look at where we were in our armed forces families’ appreciation of the service, it has gone from very poor to much better. We are on a journey back to good in day‑to‑day maintenance and servicing of the estate, and in the provision of new houses where we need to bring them in from outside our estate. There are some gleams of good, but we are at the beginning of the journey to liberate the £9 billion to establish the Defence Housing Service, which is going through in the Armed Forces Bill at the moment. Once that is in place, we will have long‑term funding, and the Defence Housing Service set up as an ALB, able to recruit specialist capability and stay the course with its ringfenced money, and we will be in a qualitatively better position to get after the 36,000-plus homes. I think nine out of 10 homes need some kind of remediation, and three in 10 need something incredibly substantial, out of the 50,000. Then we have to deal with growth in the estate, because we are expanding the definition of who can access service family accommodation, which is very good—modern family units are now being catered for. Of course, we are beginning to see our armed forces growing as well. There is a big challenge ahead, but I am confident that we will have the building blocks in place to get after it. Q51        Matt Turmaine: As you say, it is obviously quite early days. Presumably most of those benefits are yet to come, because we are still at that early stage in the process.

Yes, that is fair. Q52        Matt Turmaine: Can you tell me how much of the £1.5 billion for rapid work to fix the poor state of family housing has been spent so far?

I don’t have that number. Do you have that number? Aneen Blackmore: I don’t. Matt Turmaine: Or give me a sense of what proportion of the budget you have?

I don’t—

Perhaps you could let the Committee have a note on that.

We can come back to you on that—yes, of course.

That’s very kind, Rupert. Thank you. Q53        Matt Turmaine: That would be great—thank you. You have touched on some of this already, Rupert, but can you just give us a little info on what evidence you have about service personnel and their families starting to feel benefits from the new Defence Housing Service?

I can come back to you in detail on that, but what I have seen is the incoming responses from service families to questionnaires that have gone out. We have seen quite a low base, in terms of approval, now coming up above 50% approval rates. Obviously, we want that to get better. The latest data I have seen is, I think, 51% approval in terms of the service. There has been a lot of work going in. The FDIS had a bumpy start. That is the work we do with Pinnacle, Amey and VIVO. But recently we have seen those rates come up materially. I want to continue to see that. Again, I can send the stats to you. Matt Turmaine: That would be brilliant. We would really appreciate it if you could send some of that additional information through.

Rupert, you may be aware that the Committee went to RAF Marham recently and saw defence housing that was really not up to modern, expected standards, particularly for families. The personnel had just returned from Operation Highmast, going all the way around and ending up in Japan. Within a week or two they were then sent off to the Gulf. It seems to me that you should be prioritising modernisation of the houses of those armed forces personnel who are on high-intensity work, such as the F-35 pilots. How are you prioritising this programme?

I do not know how we are prioritising among different service families, unless somebody else has the answer to that, but in terms of the estate you are absolutely right. When we look at modern family usage, it has changed. Something like 50% of our housing stock is over 50 years old and does not reflect how modern families wish to live. We have done a huge amount of consultation in the armed forces to get the basic topography of a modern family house right. It is about everything from the kitchen now being the centrepiece of the house, to people needing to be able to work from home—simple stuff that we all take for granted in the civil world, but which has been allowed to slip in the armed forces world. There is huge passion to get after this, with the right kind of money to make long-term decisions, and to use the fact that we can free up some of the defence housing estate, and some of the defence estate generally, for civil development to continue to fund the modernisation of our defence housing estate for families and for single service people.

This sort of thing, with high-intensity operations like that, is not helping retention at all. These high-intensity people, whether they be submariners, certain naval personnel or certain RAF personnel, should be made a priority when they are on long tours of duty away from home.

I absolutely agree. I get what you are saying, Sir Geoffrey; I will look into that and see what we can do to improve that.

Thank you. Q56        Matt Turmaine: Rupert, can you please tell us what progress you have made in developing the 10-year plan to deliver a generational renewal of defence housing?

Well, it looks at all aspects of the defence estate. I think the defence estate is just under 2% of the land in the UK. It is a very significant estate. We have more listed buildings than the National Trust. It is a very complicated affair that we need to right-size and orientate towards the modern armed forces. Only part of that equation is dealing with service family housing. It is over 36,000 houses that we bought back from Annington Homes; I think the whole estate is just under 50,000 houses. Nine out of 10 of those houses need some form of remedial work. Some of the common problems are well documented, such as damp and mould. Many of them are the wrong size and shape. Some are far too big and not dense enough, in terms of the estate. Some are far too small, as Sir Geoffrey has said, and not suitable for modern family accommodation. Three in 10 basically need to be demolished so we can start again. It is a lot of work, and we have to get after that systemically and in the right way, using our long-term funding to make good long-term decisions. We are not going to get great value for money unless we can be long-term partners for somebody willing to come in and help us get this right. It is extremely welcome that the £6 billion has been put alongside this plan for the long term, and that we are creating a fully professionalised, fully focused Defence Housing Service that will have a degree of independence. We will be able to hire the skills in and joint-venture or partner with the right people to come in and help us succeed. That will include people willing to take the development potential in the land we are willing to give up, which itself will create the funds for us to continue on this journey. Alongside that, as Sir Geoffrey has alluded to, we are looking at expanding the rights to family accommodation to all sorts of modern families, including same-sex partnerships and marriages, to historic entitlements. That is very welcome too, in terms of attracting British people into our armed forces and retaining them. It is quite a complex map. We are also looking at commutability, and we are looking to take a zonal approach to development, so that we can think holistically about our defence estate rather than doing it existing base by existing base. When the dust settles on all this in a decade, we should be in a qualitatively better situation. We will have rationalised our housing estate. We will have created much better, more consistent homes and family experiences for our armed forces, and we will have freed up land for developing what we think could be upwards of 100,000 homes to Homes England and to our nation. Q57        Matt Turmaine: You have touched on some of them already, but what are the primary targets and milestones that you are looking to deliver on in this plan? Commutability is one, and dealing with damp and size issues are others. Are there any others that you would like to surface?

I think I have probably hit the top-level highlights. They are all set out in the defence housing strategy, which was published at the end of last year. That is a strategy document, not a plan, and that is what I have been talking to. It is for the Defence Housing Service, once established, to set out the detailed plan and ambitions year over year on the back of the Armed Forces Bill that will allow us to set that up. Q58        Matt Turmaine: Have the delays to the publication of the defence investment plan affected the plans for the estate development in any way?

I don’t think so. This is separate. This is ringfenced money, in a decision that was made before the DIP, to get after defence housing as a priority, recognising our moral responsibility to our armed forces to provide the right kind of accommodation for them, as part of our contract with them. It is stand-alone. It does need to be implemented through the Armed Forces Bill. Once that is through and out the door, we will get on with this plan, and obviously we will be delighted to come back and report on it to this Committee and others.

My constituency has Queen Victoria school, which is one of the few boarding schools for service personnel. Will you ensure that when we are looking at where families are living, you realise that you have some very articulate teenagers living in this school, and that their accommodation could also do with some TLC? Can I get an assurance that you will be looking in the round at where all our service families are living?

Of course.

Air Marshal, are you the right person to ask questions about recruiting and retention?

You can certainly ask questions of me on that.

Thank you. In 2024, the Secretary of State said that he was imposing a new 10/30 rule, namely that any applicant would receive a provisional decision within 10 days, and that they would receive a date of starting training within 30 days. Can you tell me what percentage of applicants across Defence are hitting those markers, as of today?

I have some figures I can cite to you, if that is helpful. As of 31 January 2026, a total of 31,860 10-day offers and 12,850 30-day offers were made.

What is that as a percentage?

I don’t know off the top of my head. I would need to come back to you on that. Clearly it is a very significant increase from what we have seen before, but I do not have the percentage.

It was zero before, so it would be an increase.

Well, absolutely, so we are making a lot of progress, but I can certainly come back to you with a percentage.

It would be helpful to know. The recruiting reorganisation means that recruitment will all come under the same private provider, but not until 2027. Is that correct?

That is correct.

How are you doing with the transitional arrangements from other contractors and services doing their own thing into one swept-up, fully assured contract with the new provider?

The plan is still to roll out the programme in early 2027. There are very active discussions between the MOD and Serco. Clearly our current arrangements are running at the moment, and we make sure that our plan to transition from one to the other is as robust as it can be. The other day, I spoke to one of the officials who is involved in it and he indicated that those discussions are rigorous and are going well. Of course, no transition plan is without risk. We have seen that plenty of times over the years in the MOD, have we not? I do not think that we are looking at a risk-free plan, but there is a lot of work going into managing those risks, and I think the plan is still that it will roll out in early 2027.

In writing that contract, the service level agreements that you have with the contractor are going to be key. Given that the Secretary of State has set that 10/30 rule, is the SLA going to be set to say, “We want 100% of people applying to achieve that 10/30 rule”?

I do not know the specifics of what has been contracted. I can certainly write back to you about that, if that would help. I know that the demands that are being set for the new contractor will speak to those things that the strategic defence review challenged us to do, such as to get people in quicker and to be more flexible about the rules and regulations that we are applying, for example some of the medical standards. We have already been looking at some of those for a range of conditions such as asthma, eczema and autism. Those are things that should not necessarily be a barrier to somebody coming in and serving. All those things are going to weigh on how the new process is carried out. The other fact, to dwell on the medical side of things, is going to be how data is managed and how we get that process a lot quicker. Sadly, we all have anecdotes of people who, for all sorts of reasons, take far too long to join. We are getting after that as much as we can. We are not going to put all of that on the contractor; we have been getting on with it up front rather than just waiting to give it to the contractor. To give an example, the so-called time of flight—how long the whole process takes—was historically about 496 days, back in 2023. That is now down to 290 days, as of 2024, and it continues to come down. It needs to continue to come down, doesn’t it? All those considerations are going to be part of the demands that we place on the contractor. We are going to be working with the contractor to make sure that those demands are achieved.

One of the critical interfaces is between the potential recruit and the NHS—the GPs’ world. The GPs are clearly not subject to your contract, but how are you going to incentivise them to prioritise more highly military applications in order to speed up that bit, because that really is the cost elbow in the arrangement, isn’t it?

The first thing is to make it easier because, historically, we like to make it difficult. We have already implemented an electronic system that is accessed by GPs, which has reduced the time it takes to receive candidate medical records from weeks down to hours in some cases. That is one example of what we are trying to do in that specific area. We need to do a good job of communicating that to GPs and making sure that they understand what is at stake in the process that we are trying to roll out. When people apply and show interest, we want to get them into the forces as soon as possible; we do not want them hanging around for months on end, wondering why no one is getting back to them, and then going off and finding a better offer. Part of the conversation we need to have across the board, including with GPs, is about making sure that we are clear about the importance of this, but we have to make it easier.

Before we move away from recruitment, could you please write to the Public Accounts Committee with the breakdown of what percentage of that 31,000 are 10-day offers, and I think you said—

There were 12,850 30-day offers.

Yes. If you could break that down by service, that would be very helpful. What can you tell us about retention? Is the situation improving or worsening?

It is improving. I do not want to be complacent, because it is an improvement that has been a long time coming. I do not need to tell this Committee or the Defence Committee how many difficult years we have had recently with both recruiting and retention—you know all about that. It is improving in so far as the latest public statistics of October 2025 tell us that trained outflow has decreased across the single services: by 11% in the Army, 8% in the Royal Navy and 20% in the Royal Air Force. The picture we are seeing is that outflow is reducing and intake is increasing. Intake in the year to October across the single services increased by 15% for the Navy, 7% for the Army and 38% for the Royal Air Force. I think that points to a corner being turned, but we do not feel at all complacent about that because we have a lot of catching up to do. All the things that I have been discussing are part of how we weigh in on making sure that the picture is continually improving. Measures such as the housing strategy, which we were just discussing, are really important. We also extended wraparound childcare and protected the continuity of education allowance. Clearly, pay is also an element. It is our approach overall, not just to recruiting and retention, that we feel is starting to work. Let’s see how it goes, because we need to keep pushing on it.

I have a reflection from a few months in the MOD. On creativity and the willingness to try new ideas in this area, I saw for myself on a visit to Northwood the new direct entry cyber pathway. I think we have now recruited 26 personnel who have joined the RAF. It is about having different types of approaches for different skills. I think that will really be of benefit. Similarly, the new armed forces gap year is a really interesting and innovative proposal to perhaps open up to new people and groups who would not otherwise be interested in serving with the military—either for a shorter term, in which case that proves whole-of-society resilience, or for a longer-term career.

In retention, trying to find that relationship between inputs and outcomes is critical. There is a world of good ideas coming from the Department and the services, and that’s great, but you need to weigh it against the overall picture of what is happening outside the wire and the attractiveness of staying in the armed forces in a time of increasing unemployment outside. As long as you are also measuring service personnel’s perception of the job market, you might not take too many false lessons from doing loads of great stuff, but doing so in a worsening economy and higher unemployment. There is always a danger, when this happens, that people sit outside and say, “Come on, it’s a no-brainer. Of course, you are going to stay for an extra year, because the prospects outside are rubbish.” It is worth noting that point. There is a third R, beyond recruitment and retention: rejoiners. I have to say that I am getting a huge amount of third-party direct input from people saying, “I am really keen to rejoin, because the world is going to hell in a handcart, but boy, do they make it hard.” Do you have any statistics on rejoiners? By the way, they become your retention officer, because once they are back in, boy, do they go on about what life is like beyond the wire.

I do not think I have rejoiner statistics with me, but I can find those and write back. You are absolutely right; we in the armed forces all know people we have served with over the years who are keen to rejoin. I would say the same to them as I would to any young person looking to join the armed forces: we want the very best talent, and if you are interested in joining the armed forces, we want to get you in as quickly as possible, and to make that as easy as possible. I think the prospects of a career in the armed forces are extraordinary at the moment. It is a time in my career when I have never known so much talk and interest in the kind of things that the armed forces are going to be doing in the future. So whether you are joining for the first time or rejoining from a previous period in service, I think it is a great moment to do so. We owe it to all those people to take them up on those offers, and to make that as easy as possible.

With that in mind, it would be helpful if you could write to the Committee. I think your phrase was “time of flight”, so where are we with rejoiners? What is their 10/30 equivalent? How long is it taking to get back in? What gets measured gets resourced, and if you knew more about it, and could tell us more about it, I suspect that it would get more departmental focus and speed up, as the others do.

For sure.

I have a couple more questions on this really important subject of armed service personnel numbers. My information says that, between April 2024 and March 2025, a net 1,140 more people left the UK regular armed forces than joined. Given Lincoln’s comments about the general economy, that is a pretty dire figure, isn’t it?

We have had a tough few years in recruitment and retention—I would not disagree with that at all. The statistics I have are from October 2024 to October 2025, so there is a little bit of danger that I am trying to—

Maybe they are a bit more up to date than mine.

The lines have crossed. We were talking about this at ExCo—our executive committee—only a few days ago, and the lines have actually crossed, so we are now seeing net increases.

We are. The net intake is up, and the net outflow is down.

So the trend is in the right direction.

It certainly is. I think that the cause and effect is a really interesting question because, ideally, one would want to know which of the measures we are doing is having which of the effects. It is more complicated than that, though, isn’t it? I think the answer is that we should be doing all of these things anyway, because a modern employer should be imaginative and creative about engaging with the modern workforce. We still have challenges in certain skills like cyber, engineers and digital—of course, we are not the only organisation in the country that is struggling to get hold of those skills in the numbers we need. However, the situation is changing and we are being imaginative to make defence appeal to young people with new skillsets, which we have not previously been accustomed to having in our organisation. It is about making sure that we are as attractive as possible to them, and doing justice to those people who are turning up and showing an interest.

Permanent Secretary, I have a process question. Again according to my figures, which may not be as up to date as yours, in ’24-25 the total numbers in our armed forces voted on by the House of Commons were 173,160, whereas the actual numbers you had were 145,300. That is 27,000 or 16% less. Why are the numbers voted on in Parliament significantly more than the ones you actually have?

The figures I have for 1 October—sorry, Chair, what dates were you quoting?

For 2024-25.

There might be something historical about this. It is more a cap than an actual number, but I am afraid I do not have all this at my fingertips—there is quite a lot of detail and technicality around that particular vote, and literally hundreds of years of history here.

I am sure you are right that it is a cap, although it does not say so on my piece of paper here. Nevertheless, one might have thought one would be a little closer to the actuality when asking Parliament to vote.

I do not know why that is the case. I will have to write, I am afraid.

Very good, thank you.

This is what young captains think of when they sit in the back of armoured vehicles for hours on end—this always struck me. On the basis that you are right that it is the establishment figure of each of the armed forces that gets voted on annually, yet you undershoot it and have a shortfall, the armed forces are still required to do the same amount of work as if they were at full establishment. It is pretty short, and normally they get asked to do a lot more. It always occurred to me that, deeply unfairly, the shortfall wages get handed back to the Treasury and are not spread out across those who are serving in the form of a retention bonus. Would that not be a fairer way of doing it?

Mr Jopp, that is a brilliant question. I love the idea, but I have been around this game long enough to know that I am not going to give a positive answer in the moment. Let me say just how much I have seen in the past few months of the brilliant work that our military do. I am focused on leading the Department to deliver the vision in the SDR. That includes a commitment on the size of the Army—I think it is about 76,000—so we need to grow our military to meet the demands that we are facing. But I am not going to take the bait and respond on that particular proposal, creative though it is.

Air Marshal, I am the Scottish MP in the room and am always interested to ask a devolved question. When you talk about liaising with doctors to break logjams of paperwork, can you tell me what you are doing to ensure that those engagements happen in the devolved health services? Will you also talk about general recruitment in the devolved nations? Are you looking at the devolved nations as a subset of the overall recruitment, perhaps to work out where any problems may be developing that are caused by the fact of a different approach to health and to education than you might be used to dealing with in a Westminster environment?

My first visit to a careers information office was to one on Hanover Street in Edinburgh in 1985, so I am very familiar with the importance of making sure that our recruitment footprint is wide, thorough and engaging across the United Kingdom. I do not have the detail of specific measures being taken that are particularly pertinent to how each of the devolved nations is approached. What I know of the armed forces recruitment service programme is that it definitely takes an approach on all the devolved nations. It looks very carefully at how that is resourced and how we engage in each part of the country in a way that makes the best use of the contacts that we have there, the lay-down of the existing armed forces, and how we communicate across different aspects of those communities. I can certainly take that question away and try to do more justice to it as it relates to any specific unique aspects regarding the devolved nations, because I do not have that detail to hand.

Thank you. The assurance I am looking for is that you have a mechanism by which it will land on your desk if there is divergence or more of a problem around accessing medical records in Scottish GPs versus English GPs, or if there is a consistent level of recruitment from Scotland versus England in the total, or if there is divergence. Is there an assurance that you have a mechanism to spot problems that are unique to the devolved nations and that you can then address them?

Yes. There are performance indicators that go into some detail around how the whole process is performing. Back to the point about time of flight, there is a great deal of interest and performance monitoring that will be about, “How long was that taking, what are the blockers, where are the hold-ups, and how is that being addressed?” As that rolls out, the data gathered will allow us to see not only the impact that different aspects of the pipeline are having, but where that is happening as well. That should allow those who are running the armed forces recruitment service to target and, where necessary, apply the different interventions that they need, whether it is more resource or better communication or whatever it might be. That is so that, where there are blockers in specific areas, they are in a position to target those inputs to address them.

This final question is for you, Rupert, since it is your first visit and we are very pleased to have you with us. I have described your Department’s procurement policy in the past as dysfunctional, so I am really keen to hear from you on how you are going to change it, particularly in relation to the integrated procurement model, the defence industrial strategy and the Defence Command Paper refresh. What specifically are you going to change?

The first thing I would like to say is that coming in I have been very pleasantly surprised by the quality of my people. Perhaps that should not be a surprise, because when we gave them more licence to hunt in relation to Ukraine, they did an extraordinary job moving at pace and agility to deliver things into Ukraine that we could never deliver for ourselves under our normal rules. My problem is not my people; my people are amazing, incredibly passionate and hard-working, and very collegiate and smart. That is a great place to start. I think we can do a lot better in terms of our systems for procurement to right-size them for moving at pace. The systems we have inside MOD have been built and established over many years to spend money slowly and very carefully. There is nothing wrong in that, except that right now, we have to move very quickly and in a very assured way to provide a stronger deterrent for our adversaries and to equip our armed forces for the modern battlefield, which has changed enormously over the last four years, as we all know from the lessons of Ukraine. We need to change the systems. We start by creating options, commissioning and portfolios, which is a division of my new group—national armaments—as the design agency for procurement. In the past, the frontline commands would themselves delineate what they wanted and send a list of requirements over the transom at the NAD Group, which would then salute smartly and go off and procure what was demanded. Two things have changed. First, we now have an integrated force model, which Air Marshal Tim Jones can talk about in more detail. We are now looking across an integrated force model to procure for that integrated force, not just a frontline command. Hopefully, that will deliver more consistency and interoperability across the integrated force. The integrated force will now present a capabilities request, or a problem statement, to us in the NAD group, allowing us much more room for manoeuvre to solve problems creatively. At the very outset, that is a hugely important step. The second step is to ensure that when we attack those problem statements, we draw in a coalition of the willing, if you like, to look at that. That is not just military strategic headquarters, but the whole of the NAD Group, with its huge areas of specialisation in digital, in broader equipment, in infrastructure, in innovation, in exports and in supply chain. Of course, we bring industry to the table as well. We will be able to look much more holistically at how we solve problems and how we drive the outcomes of a procurement request. Thirdly, we are looking to change the way we go about solving some of those problems. When we come to procure, I expect that we will go shopping a lot more than we go developing. Our mindset is, “If we can buy it off the shelf, let’s buy it off the shelf.” If we can hit eight out of 10 requirements, that is probably good enough to be getting on with. It will be a lot cheaper, we will be able to deliver a lot more consistently and more quickly, and we can go from there.

But that contradicts the answer to Clive’s earlier question. If you are buying off the shelf, it may very well not be British.

You are absolutely right. We have to bring a number of criteria and balance them as we are looking at the right option to go for. The idea scenario for an everyday procurement, where we do not have to be leading edge or bleeding edge, would be to go shopping in the UK—to buy something off the shelf, COTS or MOTS, in the UK, for a fixed price and quick and low risk. To the extent that we have to build beyond that, we are looking at doing our procurement in stages. That is spiral development, where we buy something that is more off the shelf or has limited development risk, and then deliver it into the field, learn by doing, and spiral develop from there. There are lots of different models we can bring into our procurement quiver. The other thing we are looking to do is not to have a monolithic approach to procurement. If you look at what we set out in the SDR and the DIS in terms of procurement reform, we are looking to stratify procurement, so not everything has to be treated as really complicated. We can move more quickly and take more risk for smaller types of procurement. We are looking to create more powerful commercial pathways to ensure more consistency and speed in the way we procure. We are looking to bring the average time for a procurement down by orders of magnitude. We are also looking to foster more competition in procurement by making it easier for SMEs to do business with us. The opening of the Defence Office for Small Business Growth is a good example of that. UKDI is now funded with £400 million a year to go work with UK innovation to foster young companies that do not know about the onset of many more competitions thrown out there for people to come with their wares. General Anna-Lee talked about Project Brakestop, which is a very good example of sending out a problem statement to the world and getting some interesting stuff back. We had a Formula 1 company coming back, which we had never heard of. It is not part of the defence ecosystem, but boy, did it know about aerodynamics, materials and engines. Put that together into a missile and it was very competitive. There are some really interesting things you can do to foster speed, risk sharing, more competition and moving at pace. These are the different tools we are looking to bring together to revolutionise procurement and get better value faster to deliver these capabilities to our warfighters, when time is of the essence.

You may recall my question when I appeared as a guest at the Defence Select Committee. There were two parts to the question. One is that the Israelis can procure all their equipment with 1,000 people, where DE&S has, I think, at least 12,500. Secondly, the Japanese can procure a really complicated piece of kit like a Type 26 destroyer in a third of the time that we can. Internationally, it looks as though a lot of our parameters are well behind the curve. How long is it going to take you to get absolutely up to the best in the western world in terms of procurement?

One of the things that hit home in your question, Sir Geoffrey, was that we need to get good at benchmarking ourselves against others. Sometimes, we look inward and not outward enough. I took that away as something where we need to keep a weather eye on, “What’s the competition doing? How are they doing it? Where are they better than us and why are they better than us?” It may be different—it is always different—but you can pick up some themes there. As I said in my answer to you at the time, I think that the SDR and the DIS have the right idea. I cannot tell you to the week or the month when we will start to see something qualitatively different, and I think we have to get after these things together. It is going to be three or four things coming together that will get us into a much better situation.

We will replay those words to you. I see the permanent secretary has shut his book, but I have one more question for him. It is about civilian employees in the MOD. Do the same parameters about reducing the employees in the civil service apply to the civilian employees in the MOD?

We have set out the ambition to reduce the cost of the civil service workforce by 10% over the course of the Parliament. The numbers have already come down. Today, there are approximately 55,000 civilians in the MOD. The opportunities that will help us are, first, the creation of the NAD Group, bringing together over time and in stages the different organisations that are currently very separate, with separate back offices. Things like corporate service modernisation, which no doubt you have talked to many Departments about, will help us simplify how we operate. There is a risk, however, of thinking, “Civilians bad, military good,” when I have seen that it is the integrated workforce that really makes the MOD tick. That is the alchemy that we need to see, and what you will sometimes see in bases. When you visit bases, what civil servants are doing and what the military does is not necessarily the same in every base, as it is about having a local solution for local circumstances. It is that integrated workforce that really makes a difference. Nearly half the civil servants work in the Military Strategic Headquarters.

Thank you all very much. You are all very busy people. We have appreciated hugely the evidence you have given us today. Permanent Secretary, I guess there is a fairly long list of things you are going to let us have a note about. We look forward to receiving that, but we thank you all very much. We know that you are very busy people. The uncorrected transcript, in case anybody is worried about what they said, will be available in the coming days, following which we will write a Report, no doubt with recommendations, which we ask you to study carefully. Again, many thanks for today.