Armed Forces face 'critical shortfalls' in airpower Despite the problems with airpower and communications systems, the auditors" annual report on major defence equipment projects suggested that the Ministry of Defence's management of its procurement plans is improving slowly. The costs of the MoD's biggest procurement projects increased by £468 million last year, including £217 million for the Royal Navy's new aircraft carriers, partly due to the Coalition decision to change the type of aircraft they are planned to carry. However, a significant share of the overall overrun on equipment was caused by increases in worldwide fuel prices, over which the MoD has "only very limited control," the NAO found. The biggest problems identified by the auditors relate to the Armed Forces" aerial capabilities. "The delays in introducing the new aircraft and budgetary constraints have caused critical shortfalls in some capability areas," the NAO warned. Cuts made in the 2010 defence review in the Hercules fleet will leave the Forces facing a "capability gap" in tactical transport aircraft, the reports said. Between 2014 and 2016, British capability will "fall critically short of the requirement." The Forces are also facing a "critical" shortfall in air-to-air refuelling capability, because of delays in the arrival of the Future Strategic Tanker Aircraft. Although the first of the planned 14 FSTAs has now entered service, fuel leaks "instability" in its refuelling system have meant it has been restricted to transport duties. With the current generation of VC10 refuelling aircraft due to retire in March, the MoD could be forced to extend their use for several months to reduce the shortfall in refuelling capability. The NAO also raised concerns about the MoD's performance in delivering equipment urgently required for personnel in Afghanistan. A version of the Falcon communications system, which was being developed for use in Afghanistan at a cost of £32 million, will never be used in the country, the report said. This is partly due to development delays and it means that there will need to be reliance on legacy systems for a longer period. Jim Murphy, the Labour shadow defence secretary said that the shortfalls in equipment and vehicles were worrying. "We welcome any progress made, but under this Government troops in Afghanistan will be using less efficient equipment and there are concerning capability gaps," he said. The MoD insisted that measures were in place to "mitigate" delays in new aircraft, largely by extending the life of older aircraft. By 2022, the RAF will have "significantly greater air transport capacity" than today, the department said. Philip Hammond, the Defence Secretary, said the Coalition was still coping with Labour's mismanagement of the defence programme. He said: "It will take time to rectify years of mismanagement, but the work this Government has done to balance the budget and address fundamental project management problems is paying off. We can now make more accurate cost projections and invest in the best equipment for our Armed Forces with more confidence than ever before.