MoD is warned that it is too optimistic over its finances

An artist's impression of one of the supercarriers
An artist's impression of one of the supercarriers
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The Ministry of Defence was today warned by the Whitehall spending watchdog that any further cost-overruns on its equipment programme could jeopardise its future plans for the armed forces.

The National Audit Office said there was ‘systemic over-optimism’ built in to the MoD’s planning which ran the risk of leaving ‘capability gaps’ in the years ahead.

The warning came as Defence Secretary Philip Hammond published an equipment plan for the next 10 years which, he said, had finally eliminated a £79bn ‘black hole’ inherited from the former Labour government.

The £159bn programme includes £35.8bn for a new generation of nuclear-powered submarines, £18.5bn for combat aircraft for the RAF and £17.4bn for Royal Navy warships, including the Queen Elizabeth Class aircraft carriers, which are being partly built by BAE Systems in Portsmouth and will be based in the city.

In the plan there is £4.8bn for contingencies as well as £8bn of unallocated funding which the MoD said would be allocated to meet equipment priorities as they emerged over the coming decade.