Defence spending is running £2.6 billion over budget on its 20 biggest projects, which could have a damaging knock-on effect on the Armed Forces, a committee of MPs will say today.

A report from the Public Accounts Committee argues that efforts to reduce the cost of major projects such as submarines, aircraft and armoured vehicles had merely resulted in the costs being moved to another budget.

A Ministry of Defence review cut £781 million from the bill for its 20 biggest projects, but the committee claims that more than half the money involved had been moved to other military budgets, which were also facing cuts. Even after the savings the total cost of the 20 projects was forecast at £2.6 billion (11 per cent) over budget and there is now a cumulative delay of 433 months for the projects, it says.

Edward Leigh, the committee’s chairman, accused the Government of massaging the figures. He said that it was too early to know whether the MoD would achieve the necessary savings. “The truth is, the department’s track record in managing these projects is pretty dire and it is too early to say whether its confidence is genuinely justified,” said Mr Leigh.

He called on the Government to learn from past equipment overspends when it embarks on the £19 billion replacement for Britain’s independent nuclear deterrent. He pointed to the £1 billion overspend on the Astute Class submarine as an example of what not to do.“More than half of the sum the MoD has claimed to save has simply been loaded on to other budgets. We have no idea what cuts will have to be made to other activities of our Armed Forces as a result of this massaging of the figures,” he said.

Nick Harvey, the Liberal Democrat defence spokesman, said: “It beggars belief that the overall delay in getting military hardware to our forces is now 36 years — six times longer than the Second World War.”

Liam Fox, the Conservative Shadow Defence Secretary, said: “These are horrendous overruns that inevitably impact upon our ability to run the front line at a time when our troops are in need of extra equipment.”

Britain spends about £6.5 billion each year on 50 major equipment projects, the report says.

Lord Drayson, the Minister for Defence Equipment and Support, said: “The report takes a constructive view of the work we’re doing to improve the way we buy weapons and equipment needed by the Armed Forces.”

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