Red Faces Over MoD's £110m Loss In A Year

The Ministry of Defence has admitted it has "not managed its resources well for many years" after new figures revealed it wrote off over £110m last year.

The department 's annual accounts reveal it paid a £1.7m out-of-court settlement with a furniture company, while a crash involving a warhead in California cost more than £1m.

A "gift" of fibreglass helmets and body armour to the Ugandan government cost £1.7m and just over £57m was written off as "constructive losses" - mainly cancelled projects.

The accounts show that some £10.2m of spending in 2010/11 has been counted as "fruitless payments".

Losses of £6.5m, which will be signed off in the future, are also included in the figures.

They include the cost of scrapping Nimrod and the withdrawal of the Harrier fleet of jets - both announced by Defence Secretary Liam Fox in the strategic defence and security review (SDSR).

The losses come as the MoD is facing 17,000 job losses because of massive cuts to its budget following the SDSR.

An MoD spokeswoman said: "As we acknowledged in our response to the NAO's (National Audit Office) report in June, the Ministry of Defence has not managed its resources well for many years.

"That said, the NAO has now rightly acknowledged that improvements have been made to the MoD's inventory processes.

"The Defence Secretary recently announced major defence reforms to deliver clearer structures and accountability across the department that should see marked improvements in the MoD's inventory management, and while these will be implemented at pace, the situation cannot be fully resolved in the short-term."

The spokeswoman said that programmes stopped as part of the SDSR would ultimately lead to "significant savings".

"We take the issue of write-offs seriously and while it is not possible to plan for every eventuality, a full investigation is carried out whenever write-off action is taken to ensure relevant lessons are identified and learned," she said.