Hammond Hits Back Over £2bn MoD Underspend

By Vincent McAviney, Sky News Political Producer

The Defence Secretary has hit back at criticism of a £2bn underspend by the Government department he oversees, saying the money will be spent on future kit for soldiers.

Philip Hammond reacted angrily to claims he had been "overzealous" in pursuit of an austerity drive that will see thousands of soldiers lose their jobs.

They were made in a Daily Telegraph article which suggested the underspend at the Ministry of Defence (MoD) was partly down to cuts in military personnel and equipment.

Mr Hammond said: "These retired 'senior military figures' (quoted by the newspaper) are presumably the same people who presided over an out of control defence budget that led to the previous Government sending troops into battle without the proper equipment needed to protect them.

Mr Hammond is overseeing a major cost-cutting exercise at the MoD

"They clearly have no idea how the defence budget now works.

"Instead of having to delay and cancel programmes as in the past, we now budget prudently and then roll forward any underspend to future years, allowing us to place new equipment orders."

Mr Hammond's comments came as a Sky News investigation revealed Government departments have spent hundreds of thousands of pounds on calls to directory inquiries numbers since the last election.

The MoD alone made 158,640 calls to 118 lines between May 1, 2010, and August 31, 2013 - the equivalent of 186 calls per day - at a cost of £271,000.

A spokesman said the number of calls made from fixed phone lines had fallen by more than three-quarters in the last four years.

However, the expenditure is equivalent to the annual salaries of 15 squaddies or nine junior officers, or around 270 sets of Osprey body armour.

The Department of Work and Pensions (DWP) made 97,265 calls between May 2010 and August 2013 at a cost of £72,387.

This was despite the department barring staff from calling 118 numbers in March 2011 and Secretary of State Iain Duncan Smith pledging to cut costs to help fund police and the forces.

The MoD says it has cut the number of directory inquiry calls it makes

Robert Oxley, campaign director of the TaxPayers' Alliance, added: "It's astonishing that so much taxpayers' money has been wasted needlessly dialling these services, especially in the internet age.

"Sadly, a blase attitude over who is picking up the phone bill is all too common in some corners of the civil service."

It is the second time in as many months the MoD's spending on phone calls has been brought into question, and comes at a time when the military is undergoing a massive cost-reduction programme which includes thousands of redundancies.

In August, the department revealed it had run up a £40,000 bill on calls to the speaking clock.

The MoD has said this was partly down to a "technical error" in one of its systems which meant the number was being dialled automatically.

Thousands of soldiers are losing their jobs as the MoD cuts costs

However, Sky News now understands that between May 1, 2010, and August 31, 2013, 99,887 calls were in fact made by departmental staff to the speaking clock at a cost of £39,845.

The faulty automated system placed an additional 28,663 calls to the number but the £12,355 cost of these calls is being repaid by the company which installed it.

A spokesman for the MoD said: "Calls to directory inquiries from the majority of the 260,000 MoD fixed phone lines are banned but some staff working in isolated locations, who do not have access to a military phone network or the internet, are able to call directory enquiries to obtain contact details."

A spokesman for the DWP added: "118 numbers are banned, except where they are used by jobseekers or their advisers when looking for work.

"The costs of these calls have been cut by more than two-thirds since 2010, as more of the 1.4 million claimants we support move online for their job searches."

Freedom of Information Act requests were submitted to all government departments, although some departments including the Home Office and the Department for Environment, Food and Rural Affairs refused to provide the information.

Several other departments said they had barred 118 calls, instructing staff to use internet search engines to obtain contact details.

Labour shadow minister Jon Ashworth told Sky News: "This is yet another example of the Government's failure to tackle waste.

"David Cameron and his ministers need to act now to stop allowing thousands of pounds of taxpayers' money being squandered on these costly calls."

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