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MPs said the MoD's lack of transparency meant they "cannot yet have confidence" the military's £160bn equipment plan is affordable.
Auditors said the fragility of the programme could destabilise the entire MoD equipment plan unless the "affordability gap" was addressed.
"The equipment plan became meaningless because projects were committed to it without the funding to pay for them, creating a fantasy programme," he says.
It added: "For this reason, this report does not, and future reports will not, offer a definitive view on the affordability of the equipment plan.
"Problems with the affordability of the enterprise could destabilise the department's overall equipment plan given that around a quarter of its planned spend on equipment relates to nuclear programmes," the report says.
Margaret Hodge, chair of the PAC, said: "The Ministry of Defence has made a good start in trying to get to grips with its budget but its deep-seated problems cannot be solved overnight, and we do not yet have confidence that its Equipment Plan is affordable.
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