The Ministry of Defence has been accused of giving "misleading" answers to MPs scrutinising its budget.

The defence committee said it appeared the MoD was "in the process of taking steps to manage a funding gap of £21bn" when officials gave evidence last year.

But it added that witnesses' denials of the existence of such a gap at that time "now appear disingenuous".

Defence minister Quentin Davies said nearly 90% of defence projects had been delivered to cost.

The Commons defence committee highlighted last year's National Audit Office criticism of the MoD's "save now, pay later approach" - delaying projects in the short term but driving up eventual costs by hundreds of millions of pounds.

Chairman and Conservative MP James Arbuthnot said financial mismanagement by the ministry meant taxpayers' money was being wasted.

"What I point the finger at is not a specific project, but at a system within the Ministry of Defence, which consists of perverse incentives to buy the wrong thing, to buy it more expensively than it needs to be bought, to take longer over it and to buy something that does less than was originally intended."

Witness denials

The defence committee said when it questioned MoD witnesses about funding problems last year, they did not give straight answers.

The evidence we have received indicates that the MoD's responses to our questions... were at best confused and unhelpful and at worst deliberately obstructive
Defence select committee

"The evidence suggests that at the time... the MoD was in the process of taking steps to manage a funding gap of £21bn," the report said.

"Witness denials at that time of the existence of such a gap now appear disingenuous."

They said the minister for defence equipment had "told us he could not provide any information" about the reduction of the funding gap nor how much spending had been "merely postponed beyond the planning period".

The committee also said it did not believe the MoD's claim that it had reduced the number of Type 45 destroyers from 12 to six due to a "better understanding of the capabilities of the ship".

Acquisition reform

"The spiralling costs of the ship and the pressure on the equipment programme budget suggest that the reduction in numbers was in fact primarily down to affordability," they said.

"The misleading explanations provided by the MoD in this case are another example of the unhelpful nature of MoD responses to our questions."

It concluded that answers to questions about funding gaps were "at best confused and unhelpful, and at worst deliberately obstructive".

For the Conservatives, Liam Fox said: "It is clear that the MoD's procurement programme may as well have been operating in Wonderland.

"It is nonsensical to deny the very existence of a deficit, refuse to share crucial information with the defence committee and consistently order equipment with no means of paying for it."

But defence minister Quentin Davies said the committee had not criticised the way forces were equipped on the front line and said troops in Afghanistan would "continue to receive the equipment they need".

He added: "We are currently managing some 2,000 projects and over the past two years, nearly 90% have been delivered to cost and over 80% have been delivered to time, but we recognise that further improvements must be made."

He said the government was looking at reforming their strategy for defence acquisition.

"This strategy includes clear commitments to improve the way we manage our future equipment programme, by bringing costs into balance and being more transparent - all of which will ensure the MoD delivers the future equipment our armed forces need effectively and efficiently."

In December the National Audit Office - the public spending watchdog - warned of a £36bn deficit over the next 10 years if the defence budget was not increased.

Its report said the cost of the 15 biggest military projects had increased by £1.2bn in 2008-9 alone, and £733m of that was down to deliberate delays.