Ministry of Defence’s ten-year cost savings lower than projected
Important lessons for achievable spending cuts
The Netherlands Court of Audit has found that the Ministry of Defence has failed to realise a significant proportion of the cost savings sought since the credit crisis 10 years ago. The government and parliament can learn important lessons to improve decision-making on future spending cuts or investments from the Court’s audit of four measures to reduce expenditure.
The Minister of Defence had to make structural spending cuts following the financial and economic crisis in 2011. The Court of Audit has examined whether four of the measures (the disposal of mine hunters, transport helicopters and battle tanks, and the relocation of the Marine Corps base) were implemented efficiently and effectively. It found that none of the four spending targets had been realised 10 years after their introduction. Expenditure was reduced by 46% (cumulatively: €423 million) less than projected. This press release summarises two of the four measures.
Relocation of the Marine Corps base
To reduce expenditure on real estate, the State Secretary for Defence announced in 2012 that the Marine Corps would relocate to a new base in Vlissingen in the province of Zeeland. Lack of time meant alternative locations were inadequately studied and the relocation costs were not fully understood. Following a recalculation in 2019, the capital cost of relocating to Vlissingen proved to be twice as high as initially thought.
In February 2020, the State Secretary decided to relocate to Nieuw-Milligen instead of Zeeland, partly because the Marine Corps had little enthusiasm for the Vlissingen location. To compensate the province of Zeeland for this U-turn, the government will pay it compensation of €670 million until 2030. This compensation package, the recalculation necessary for a new base at Camp Nieuw-Milligen plus the costs incurred to prepare the base in Vlissingen meant expenditure was just under €1 billion higher than initially projected. The Court of Audit is positive about the decision-making process that ultimately led to the choice for Nieuw-Milligen. Looking at the period as a whole, however, it is disconcerting that careless decision-making and partially foreseeable and avoidable additional costs increased government expenditure by nearly €1 billion more than proposed to the House of Representatives in 2012.