UK MoD may write off 'tens of millions of pounds' due to inefficiencies in expenses

The UK Ministry of Defence (MoD) may need to write off tens of millions of pounds due to inefficiencies in its expenses system, the UK House of Commons defence committee has heard.

The committee also heard the MoD deny that its focus on efficiency savings is the main cause of failures relating to its equipment procurement processes.

Responding to questions from committee members at an open hearing on 10 November, Sir Bill Jeffrey, the permanent under-secretary for the MoD, said the department may need to write off a large proportion of expenses errors worth GBP268 million (USD448 million) gross, identified by a National Audit Office (NAO) report published in July.

The NAO's review of the MoD's 2008-09 report of accounts found that 14.7 per cent of transactions carried out using the MoD's Joint Personnel Administration (JPA) expenses system were in error. (The JPA handles specialist pay, allowances and expenses for MoD personnel.)

When asked what proportion of the GBP268 million may eventually need to be written off, Terrence Jagger, the MoD's director of financial management, said: "At an educated guess – I'd say considerably less than half of it."

"GBP268 million is the NAO's estimate of gross error," he added. "Those errors arise from situations where we can't provide satisfactory evidence ... . It may well prove that GBP268 million is an over estimate."