Ministry of Defence Annual Report and Accounts 2024-25

Status / emerging findings

• Defence Nuclear Enterprise budget is ballooning to 20-25% of total MOD spending, driven by new programmes (nuclear fuel production, AUKUS), scope changes, and inflation; Dreadnought submarine costs remain on track at £31bn + £10bn contingency but other nuclear components are escalating faster than budgeted
• AWE (Atomic Weapons Establishment) holds £6.1 billion in misclassified assets dating back to 2007 that lack audit evidence; approximately 85% should have been expensed as feasibility work rather than capitalised as construction, revealing four years of undetected control failure
• MOD created a £2.56 billion regulatory audit qualification by failing to budget for prior-year legal provisions and Afghan resettlement scheme obligations, suggesting systemic gaps in financial planning
• Committee signalled adversarial tone, challenging MOD claims of 'broadly effective oversight' despite multiple qualified opinions and evidence of long-standing accounting weaknesses

Why it matters

If the MOD cannot account for billions of pounds or control its fastest-growing budget line (nuclear), Parliament loses visibility over defence spending at a time of rising geopolitical tension and constrained public finances.

Tone arc

Opened procedurally examining audit qualifications; shifted sharply adversarial when evidence revealed the scale and age of the AWE misclassification (dating to 2007) and the systemic nature of control failures across multiple financial areas.

Key witnesses

Jeremy Pocklington CB (MOD leadership), Rupert Pearce (MOD), Aneen Blackmore (MOD), Air Marshal Tim Jones CBE, Lt Gen Anna-Lee Reilly