For the sixth year running the National Audit Office have refused to qualify the MoD’s accounts;
The Ministry of Defence has made welcome progress in improving the way it keeps track of its inventory and capital spares. It is still not able, however, to provide enough evidence to meet the accounting requirements for its valuation of over £10 billion worth of military equipment.
“It has again not followed proper accounting requirements with regards to leases. Therefore, I am qualifying my audit opinion.”
Amyas Morse, head of the National Audit Office, 6 December 2012
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The MoD response;
A number of papers report that the National Audit Office has not signed off the MOD’s accounts for the sixth year running, partly due to the fact that the Treasury has not sanctioned the pay package awarded to the Chief of Defence Materiel (CDM), Bernard Gray.
It is as yet unclear whether or not the remuneration given to CDM has exceeded the Department’s delegated authorities. This is because the Department is still seeking a definitive judgement from Her Majesty’s Revenue & Customs on the tax treatment of payments made for accommodation whilst working away from his permanent place of work. We are seeking approval from the Chief Secretary to the Treasury, which, if granted, will resolve this irregularity.
The Department recognises its responsibility for the administrative error that has caused this irregularity and that it could not have been known by Mr Gray. It also recognises that this error is not anything over which Mr Gray has any influence and that it is a matter that only the Department can resolve.
On acceptance of the post of Chief of Defence Materiel, Bernard Gray accepted the terms and conditions that had been advertised by the MOD on two separate occasions and he did not seek to negotiate more favourable terms and conditions at any point.
The package offered by the MOD has seen a significant reduction in income for Mr Gray in comparison with his private sector remuneration. Furthermore, Mr Gray has declined to be considered for a performance bonus of up to 40 per cent of salary.
On the matter of accommodation, the Chief of Defence Materiel role, whilst based in Bristol, is required to undertake significant activity in London. During 2011 and early 2012 the amount of work undertaken in Head Office was higher than normally the case due to the pressing need to balance the Equipment Budget.
Whilst originally principally staying in hotels when working in London, on the Department’s advice Mr Gray moved into an apartment for which the Department makes a contribution towards rent and service charges as this is judged to cost the taxpayer less money overall than paying for hotel accommodation. Mr Gray intends to relinquish the apartment and return to using hotels once the lease expires in 2013 and the split between London and Bristol assumes a more normal balance.