Ministry of Defence accounts under watchdog scrutiny over official’s salary

National Audit Office refuses to sign off MoD’s accounts over £280,000 salary package of chief of defence material

A senior civil servant in the Ministry of Defence has had his £280,000 salary package questioned by a parliamentary spending watchdog in a report which also raised flaws in the department’s internal accounting.

The National Audit Office said it had refused to sign off the MoD’s much delayed accounts for 2011/12 because of its concerns and said the department had to clarify and sign off the money being paid to Bernard Gray.

As chief of defence material, Gray is responsible for the MoD’s equipment and support programmes, and figures show he receives more than any other civilian in the department.

Gray is paid a basic salary of up to £245,000 and he has a £36,000 car allowance. Recently, the MoD has also contributed a housing allowance to help him rent a flat in London.

The NAO comptroller and auditor general, Amyas Morse, said the “department has not yet obtained the required approval for the overall remuneration and benefits package”.

He added: “Consequently I am unable to give an opinion on whether the remuneration has exceeded the department’s delegated authorities.”

Any civil servant earning more than the £140,000 per annum has to have the salary endorsed by the Treasury; MoD officials said it had permission for Gray’s pay, but that there had been complications over the housing allowance.

An MoD spokesperson said: It is as yet unclear whether or not the remuneration of the CDM has exceeded the department’s delegated authorities. This is because the department is still seeking a definitive judgment from HMRC 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.”

Labour’s shadow defence minister Kevan Jones said: “This salary is almost 10 times that of the average household income. The department must provide justification for this and it is worrying and damning that they have as yet been unable to do so.”

The NAO also criticised the MoD’s accounts because of continuing failures in the way the department keeps track of equipment, supplies and stores worth £10bn.

Morse said flaws in the way the MoD drew up its accounts made it impossible for him to be sure they were accurate because “the department has not maintained the records, or obtained the information required to do so.”

“The Ministry of Defence has made welcome progress in improving the way it keeps track of its inventory and capital spares,” he said. “It is still not able, however, to provide enough evidence to meet the accounting requirements for its valuation of over £10bn-worth of military equipment. It has again not followed proper accounting requirements with regards to leases. Therefore, I am qualifying my audit opinion.”

The MoD said the NAO had only failed the MoD on two matters – last year it had failed on four.

“We are making progress,” said a source. “We always said it would take us to 2016 to sort out the accounting mess left by the previous administration.”

An MoD spokesperson said: “As part of the MoD’s improved financial management, we have reduced the number of issues on which the NAO has qualified our main financial statement from four to two.

“This is a problem inherited from the previous administration and the NAO has acknowledged our continued progress in improving the management of our 1.2m lines of stocks and supplies which expected to be resolved by a new inventory system that is due to be completed by 2015.

“Work is in hand to remedy the second qualification, which relates to technical accounting requirements for contracts that may include a lease. As we have said in previous years, this is deep rooted problem that will take time to fix.”

The NAO has refused to sign off the MoD’s accounts for six consecutive years because of accounting problems. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds

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