8.14 Ensuring that financial risk is understood, held and managed at the appropriate level is key to any financial control framework. The model of financial delegation seeks to strengthen the accountability of the Service Chiefs / Commander JFC to manage within their delegated budgets. One of the major considerations in delegating more financial authority to the Commands will be their ability to handle risk and cost growth. Our recommendation to pass responsibility for planning new capability to the Commands requires them to consider its overall affordability and directly address the culture of entryism, and our recommendations in Part 11 should also more closely align projected and actual costs. In the first instance, therefore, and as a principle we see no reason why Commands should not absorb any unforeseen costs and set out in their Command Plan how they would propose to do so.
8.15 We accept, however, that the scale and volatility of some projects may drive costs that the Commands would be unable to absorb within their budgets (or doing so would unacceptably skew the balance of their outputs). Any recourse to the Head Office in these scenarios that led to a significant re-negotiation of delegations across TLBs would undermine the principle of ownership and accountability and create bad incentives throughout the system. The Department should therefore consider whether it should hold a contingency against the largest programmes for these instances and, if so, whether this is best held centrally (and the criteria for accessing it) or whether it is better held within each TLB.