No retreat

FROM PRIVATE EYE Latest! 14-27 Nov 2008 1223
The Ministry of Defence is increasingly desperate to save its faltering plan to privatise military training at a new defence academy at St Athan, SouthWales, despite having acknowledged that the £12bn PFI deal is unaffordable and poses rishs to the frontline (see Eye 1213)

With the credit crunch also having put costs up by £1bn, something has to give. So when defence minister Bob Ainsworth announced that the MOD was ploughing ahead, he pointed out that "considerable progress had been made in driving down costs". This will involve cutting the length of training courses by 25% through "compression, rationalisation and harmonisation". Officially that means cutting waste but those involved in defence training say there is nothing like the scope for 25 percent cuts.

So defence training will have to suffer to spare the PFI deal, even though the off-balance sheet allure of PFI - which defence ministers admitted was the reason for a PFI in the first place - has vanished as all PFIs are going back on the books.Could it be because the deal is so crucial to the companies lining up for it? Qinetiq, the defence research company privatised by the MOD but on which it remains reliant, admits in its 2008 accounts: "There is a risk that the MoD may materially change the final scope or delay or cancel the implementation of the programme, which would have a significant effect on the expected future growth of the group".

Other firms have already got their snouts in the trough. The programme has cost £35 million so far, of which £12m has gone in consultancy. The biggest earner, predictably, is PwC which has received almost £1m a year for advising the MoD. With the plan already well delayed, the MoD's commercial director, Amyas Morse, who joined from PwC in 2006, will be signing in its cheques for a while yet.