Spending watchdog slams defence chief's 220,000 pay deal with 25,000 thrown in for a London flatFormer Labour advisor Bernard Gray was hired by the coalition in 2011 to be in charge of military equipment But his pay and perks package was not properly signed off by the TreasuryNational Audit Office refuses to sign off the Ministry of Defence's accounts
14:45 GMT, 7 December 2012
15:52 GMT, 7 December 2012
Bernard Gray was appointed as Chief of Defence Materiel in 2011, but the deal to pay him for a London flat was not signed off properly, the National Audit Office found
The Ministry of Defence agreed to contribute some 25,000 towards a senior official's living expenses without proper authorisation from the Treasury, auditors said last night.
The National Audit Office refused to sign off the department's accounts after raising questions over the way Bernard Gray was appointed as Chief of Defence Materiel.
He was taken on with a salary of 220,000 – 80,000 more than the Prime Minister – in early 2011; an amount cleared with Danny Alexander, the Chief Secretary to the Treasury, in accordance with civil service rules.
But the MoD failed to get authorisation for a later decision to pay the Bristol-based official a further 25,000 towards the cost of a London flat.
The NAO also raised concerns over record-keeping for equipment and spare parts worth around 10billion.
It is the sixth year in a row that auditors have failed to give the department a clean bill of health.
Amyas Morse, the organisation's head, said: 'The MoD has made welcome progress in improving the way it keeps track of its inventory and capital spares.
'It is still not able, however, to provide enough evidence to meet the accounting requirements for its valuation of over 10billion worth of military equipment.
'It has again not followed proper accounting requirements with regards to leases. Therefore, I am qualifying my audit opinion.'
The watchdog said it was now satisfied with how the MoD was accounting for Bowman radio kit – a problem which led it to qualify the books in previous years.
But although there had been 'improvements' in records of warehouse stocks, there was still 'insufficient evidence' about whether some of it was leased.
Under rules brought in by the Coalition in 2010, any remuneration package above the Prime Minister's 142,500 salary has to be signed off by the Treasury.
But the NAO said that had not yet
been properly done in the case of Mr Gray, even though he was appointed
to the post in January 2011.
to the MoD accounts – which were published today, eight months after
the end of the tax year – Mr Gray's annual package was between 240,000
and 245,000 in 2011/12.
This includes the contribution towards the cost of a London flat – the issue at question.
note in the document added: 'Approval for the remuneration package…
is being sought from the Chief Secretary to the Treasury.'
Deals to pay civil servants more than the Prime Minister are supposed to be signed off by Danny Alexander, the Chief Secretary to the Treasury
Mr Gray is a former defence correspondent for the Financial Times who later worked as a special adviser to Labour defence secretaries George Robertson and Geoff Hoon.
The NAO report on the accounts said: 'In July 2010 the department obtained outline approval for the basic salary package of the future Chief of Defence Materiel, on the basis that it would seek approval on finalisation of the package following appointment.
'The department has not yet obtained the required approval for the overall remuneration and benefits package. Consequently I am unable to give an opinion on whether the remuneration of the CDM has exceeded the department's delegated authorities.
'As a consequence I have qualified my opinion on regularity in respect of these payments, which I consider to be material in the context of the remuneration report.'
Last night a spokesman for the Ministry of Defence said that although Mr Gray is based in Bristol, his job meant he often has to stay in London to meet Whitehall officials.
Rather than pay hotel bills, the department decided it was cheaper to contribute to the cost of a flat.
'The Chief of Defence Materiel role, whilst based in Bristol, is required to undertake significant activity in London,' the spokesman said.
'During 2011 and early 2012 the amount of work undertaken in head office was higher than normally the case due to the pressing need to balance the Equipment Budget.
'Whilst originally principally staying in hotels when working in London, on the department’s advice he moved into an apartment for which the department makes a contribution towards rent and service charges as this is judged to cost the tax payer less money overall than paying for hotel accommodation.
'Mr Gray intends to relinquish the apartment and return to using hotels once the lease expires in 2013 and the split between London and Bristol assumes a more normal balance.'
The spokesman added: 'The department recognises its responsibility for the administrative error that has caused this irregularity and that it could not have been known by Mr Gray.
'The package offered by the MoD has seen a significant reduction in income for Mr Gray in comparison with his private sector remuneration. Furthermore, Mr Gray has declined to be considered for a performance bonus of up to 40 per cent of salary.'