The Ministry of Defence has been accused of financial mismanagement for giving back nearly £400 million of unspent budget to the Treasury, while the cash-strapped Armed Forces were being dramatically cut back.
The money was clawed back because it went unused, even as the Armed Forces have lost thousands of soldiers, sailors and airmen because of Coalition cuts.
Ministers have previously admitted an underspend of more than £3 billion pounds, but have said they were able to roll the money forward into the defence budget for future years.
The MoD did not deny handing the money back and did not explain how the underspend had happened.
MPs questioned how many soldiers could have been saved if the MoD’s budget had been better handled.
The £400 million is equivalent to at least five new F-35 stealth fighters or at least one new Type 26 frigate. According to Government estimates it is enough to run a light infantry battalion for nearly 14 years.
Vernon Coaker MP, Labour’s Shadow Defence Secretary, said: “These figures, slipped out just before Christmas, show the Government has serious questions to answer over its handling of the Defence budget.
“With thousands of Armed Services Personnel being made redundant and vital equipment having been withdrawn, the public will be angry and astonished that the Ministers have mismanaged the MoD’s finances in this way.”
John Baron, the MP and former Army officer who led a backbench rebellion against Army cuts, said: “The apparent return of such large sums to the Treasury requires explaining. How many infantry battalions could have been saved through better planning?”
Coalition austerity cuts saw the defence budget drop by eight per cent after 2010 and the overall spend on the military drop by about £10 billion.
The reduced budget will see the Armed Forces cut by 33,000, with the Army losing 20,000 regular soldiers, the Navy losing 6,000 servicemen and the RAF is losing 8,000.
Prof John Louth, a senior research fellow at the Royal United Services Institute, said £400 million was a “significant sum of money” which could have gone to buy “a lot of training, supplies and ammunition”.
The Coalition has been under such pressure since 2010 to rein in notoriously wayward defence spending that officials have actually veered towards underspending.
He also warned the MoD may still not receive the money it claims has been rolled forward into future years.
He said: “It's easy to say we are going to roll forward this money, but how does that physically work?”
Officials have refused to answer questions on how the unspent money will be injected back into defence, he said.
An MOD spokeswoman said: “The MOD underspend in 2011/12 stands in stark contrast to the £38bn budget black hole that this government inherited, which required the difficult decisions in the last Strategic Defence and Security Review.
“The Defence budget is now on a firm footing and since 2012/13 the MOD has rolled forward underspends into future financial years. We are confident that the £163bn ten-year equipment plan is affordable and sustainable, ensuring our Armed Forces get the equipment they need at the best value for the taxpayer.”