NAO slammed for failing to check report with MOD

AN ASTONISHING row has erupted between the National Audit Office and the Ministry of Defence over the cost of building two new aircraft carriers and mothballing another.

MoD permanent under-secretary and accounting officer Ursula Brennan took the unusual step of criticising the NAO for publishing the report without her approval.

The report states that, contrary to government assertions, it would be cheaper to proceed with building two and mothballing one: scrapping the second carrier would save £200m.

Commons Public Accounts Committee chair Margaret Hodge said it was "a deeply worrying report from the NAO", and added that her committee would cross-examine Brennan on Monday next week.

Hodge criticised the government's failure to provide the NAO with cabinet papers on the cost, affordability, military capability and industrial implications of the carrier decision "despite their rights under the National Audit Act 1983".

She said: "This lack of transparency over such a crucial and costly decision is not acceptable."

Defence Secretary Liam Fox joined in the row, stating: "I am disappointed that the NAO was not able to produce an agreed report."

An NAO spokesman said that the office went to considerable lengths to agree a text with the MoD, accepting amendments until the previous evening when the deadline was reached for finalisation of the text in time for publication before the PAC hearing.

The spokesman said all that was lacking was a final letter from Brennan agreeing the text, adding that publication of reports lacking departmental agreement was unusual but not unprecedented.

The report was prepared under assistant auditor general for defence Martin Sinclair, reporting to NAO chief operating officer Michael Whitehouse and overseen by chairman sir Andrew Likierman, all of which was done to avoid of a possible conflict of interest involving the comptroller and auditor general Amyas Morse, a former MoD official.

In the report, the NAO expressed deep concern about risks to value for money of the carrier and associated aircraft purchase decisions.

The NAO has qualified the MoD's accounts for four years running.