The Whitehall spending watchdog has warned that the Ministry of Defence's equipment spending plan is over-optimistic, and could leave "capability gaps in the years ahead."
The National Audit Office analysis said:
There is systemic over-optimism inherent in the department's assumptions around the costing of risk and uncertainty at both project and portfolio levels, which may not be sufficiently mitigated by the contingency provision.
The £8 billion of unallocated budget does offer protection to the core programme.
However, our review of departmental documents and interviews with departmental personnel suggest that the unallocated budget is essential to deliver the full intent behind Future Force 2020.
Using this budget to protect the core programme would therefore result in capability gaps.
The Defence Secretary Philip Hammond has said that his department will eliminate the spending "black hole" inherited from the last Government's "years of mismanagement."
The National Audit Office acknowledged the MoD had "taken significant positive steps" and looked to spend on a "more prudent basis", but still expressed significant concerns.