A NEW report by the National Audit Office (NAO) has rated the Ministry of Defence equipment plan – which accounts for 42% of the MoD’s total budget – as “unaffordable” for the third year running.
The figures have prompted questions over whether the security measures for Scottish people are "best served by remaining in the UK".
The equipment plan has a potential funding shortfall of up to £13 billion, the Whitehall spending watchdog has warned.
The NAO said the MoD's unwillingness to take "difficult decisions" meant military capabilities could be lost as funding for them simply runs out.
The warning comes after Boris Johnson confirmed armed forces' procurement processes would form part of what the Government has billed as the deepest review of foreign and defence policy since the Cold War.
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It has drawn criticism from the SNP’s Shadow Defence spokesperson, who warned that the UK is rapidly becoming a “hollow force” unless the Tory Government takes action to improve its record of good governance and transparency towards the defence budget.
Stewart McDonald MP said: “After a third consecutive year where the MoD’s ongoing Equipment Plan has been described as simply ‘unaffordable’, people in Scotland are right to wonder if their security is best served by remaining in the UK.
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“It also must go down as an abject failure of Tory Defence Policy, which has lavished taxpayers’ money on nuclear weapons and aircraft carriers, with no clear strategic plan for their utility – while the people who serve in our armed forces have been subjected to a decade of wage restraint and austerity.
“The UK is rapidly becoming the hollow force experts have long warned that it would.
“Furthermore, as those on the frontline grapple with the cuts that will surely result from this unaffordable equipment plan, attention must turn towards how consecutive Tory defence ministers have been allowed to put their grandiose obsessions on big-ticket items ahead of their most basic obligations to our service personnel."
He called for Multi-Year Defence Agreements, similar to those deployed in Scandinavia and said: "It is time that the UK Government undertook to put good governance and transparency of the Defence budget ahead of party political point scoring.”
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The MoD's central projection is that the rolling 10-year programme to purchase and support aircraft, ships and weaponry will cost £183.6bn between 2019 and 2029 – a budget overrun of £2.9bn.
But in the "worst-case scenario", if all the risks associated with the plan were to materialise, that could rise to £13bn.
It is the third year in succession that the NAO has concluded the plan is "unaffordable".
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While the central estimate for the shortfall is down on last year, the NAO said this was because the MoD had made "more optimistic judgments" about the likely costs, which had taken out £7.8bn, rather than address the underlying issues.
The MoD has been trying to manage the financial pressures by establishing tighter control of in-year expenditure.
But the NAO said this "short-term focus" on living within its annual budget meant existing military capabilities were increasingly being lost.
It said that unless action was taken, the "floating hospital" facilities provided by the ship RFA Argus would go, while the number of Sentry early warning radar aircraft could be cut.
The head of the NAO Gareth Davies said the MoD had failed to take the "necessary strategic decisions" to address the "affordability gap" in its plans.
"There is evidence that its continued short-term focus on living within annual budgets is increasingly affecting the armed forces' ability to maintain and enhance the UK's military capability," he said.
"The MoD needs to determine its strategic priorities so that it can develop an affordable long-term programme of investment."
Defence Secretary Ben Wallace insisted the MoD had made "encouraging progress" in improving its financial management but acknowledged there was "work still to do".
"We will need to create the financial headroom in our equipment plan to harness emerging technologies and develop the battle-winning capabilities of tomorrow," he said.
"We know that to get this right, we must accelerate our work to mobilise, modernise and transform so that we deliver more effectively and efficiently over the long-term.
"Reviewing our acquisition process will be an important part of this work."
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