Examination of witnesses (Questions 1
- 19)
WEDNESDAY 10 FEBRUARY 1999
MR KEVIN
TEBBIT, MR
COLIN BALMER,
AIR MARSHAL
SIR JOHN
DAY and MR
JOHN HOWE
Chairman
1. Mr Tebbit and team, welcome to your first
appearance before this Committee. I am confident it will not be
the last. If in our own Performance Report we set ourselves an
objective of making life difficult for your predecessors, I think
we failed miserably, with a few honourable exceptions. We do hope
you will come quite frequently. It is very important that people
at your level do come. In the Performance Report that we have
now received, in the salary structures, I know who we write to
in the event of a shortfall in the budget at the end of this year.
(Mr Tebbit) I am at the lower end of that high
level spectrum!
2. Thank you very much for coming. The Secretary
of State wrote to us a couple of days ago, 5 February, speaking
of: "The natural break caused by the Strategic Defence Review",
and allowing the opportunity for a new approach to the provision
of information. If this is true, it should be quite traumatic
for the Ministry of Defence in providing more information, because
we suffer from what we believe to be inadequate amounts of information.
Can you give us something of the new philosophy of the non-Ottoman
empire approaches to information disposal that the Ministry of
Defence has perfected over the years. Can we expect now on this
Committee to be generally more involved; by receiving more information
than, I might add, is contained within the Performance Report.
What is the new philosophy, or is it the old philosophy?
(Mr Tebbit) Thank you, Chairman. A nice way to
start. May I first say we very much welcome the Committee's interest
in the Performance Report and where we are going on the output
side of the agenda, not simply the input narrative. I have brought
a team, partly because I am still within six months of taking
office, and also because I thought it might be helpful to have
experts who can enlighten where necessary. On my left is John
Howe, Deputy Chief of Defence Procurement. On my far right is
Air Marshal Sir John Day. A man in uniform is always regarded
as sensible, as an Accounting Officer, for the Permanent Secretary
to bring. In terms of the culture, I hope we do subscribe to what
is a central Government policy of openness and engagement. It
is certainly one of the Modernising Government agenda items, which
the Defence Ministry shares fully, and I hope we are already seeing
some clear signs of that. I think the statements made by the Secretary
of State on nuclear policy and British nuclear weapons—warhead
numbers, stocks—is a clear sign that even in the most sensitive
area of defence we are seeking to be as open and transparent as
possible. In terms of the ways in which we do this, clearly there
is a balance to be struck between masses of information and identifying
the critical issues that really need to be tracked: whether it
is by this Committee or, indeed, by the Department, in order to
deliver the outputs we are committed to producing. So although
formally this is a talk about the 1997/1998 Performance Report
I would point to our Public Service Agreement, for example, which
was published in December. This, I think, does clearly commit
the Department publicly to some very clear goals and specific
outcomes in some detail. It is that which we will judged by over
the years to come. Certainly I know the Prime Minister attaches
importance to all of that Comprehensive Spending Review material.
Within the bounds of operational confidentiality and security,
which is self-evident in the narrow line of defence, we are determined
to be as open and transparent as we possibly can. Until the time
when we have a full Resource Accounting and Budgeting structure
working, it will be quite difficult for all of us to track precisely
how inputs are being generated into outputs and where the relative
benefit lies. We are going to get better at that and I think it
would help the Committee as well. So we are very much in transition.
While the system and the structure is moving to a more user-friendly
format, I hope we will be able to fill any gaps which exist now,
in what we can say in answer to your questions. I see this as
part of a process and not just one event.
3. Thank you. How was this written? Can
you give us some indication of the background. Who was involved
in the writing of this and what were the guidelines which you
set? Why did you choose the performance indicators that you did
choose?
(Mr Tebbit) These are based on the existing set
of measures, pre-SDR, so what you are looking at here, the targets,
the Departmental Standing Objectives, these have in fact been
overtaken and updated by the SDR which you have already talked
about. It reflects really a fairly sophisticated system of a Departmental
Plan, which is put together early in the year. It then cascades
down to units and stations through management plans and is picked
up in detailed targets and performance indicators. Usually it
is expressed in narrative because, in a way, many of our key outputs
are proxies: readiness of people, ships, aircraft, which is the
standard structure you have there. I think it is fair to say that
where we have been moving recently, has been pushing this cascading
set of objectives right down to the individual. As we have been
developing Investors in People accreditation, it is now true to
say that at the lowest level people have personal plans which
fit into the management plans, to the Departmental Plan, and indeed
to my own personal objectives. So I think we do have at present
a very full set of linkages throughout the Department. But we
are refocusing those objectives—as you know, as a result
of the SDR and now through the Public Service Agreement—into
the critical issues that drive defence outputs rather than a completely
descriptive diverse set of sometimes rather difficult bits of
information to assimilate.
4. Now the Performance Report tells us what
the MoD has been doing under nine Standing Objectives. What I
do not think we get is a feel of whether the various activities
amounted to a successful or an unsuccessful year. I know 1997/1998
was quite successful for you and that is why you are sitting here
and why Michael is sitting there. Can you tell us what you and
your colleagues think: whether in terms of the Ministry of Defence
it was a good year or a mediocre year or was it, as usual, a pretty
awful year?
(Mr Tebbit) I think we can come down to some objective
statements here. It was a good year for defence in the sense that
the Armed Forces, which is what we are about, conducted a wide
range of operations in that year. I think the Armed Forces have
never been busier—one of the paradoxes of being at the end
of the Cold War. Clearly what we are doing in Bosnia, (the former
Yugoslavia), was extremely important although less critical during
that period—perhaps less critical than it had been earlier—but
nevertheless continuing to be vital. Obviously our deployments
in the Middle East in Iraq, in support of the Special Commission,
were especially critical. I think if I may digress very slightly:
we find at the moment, for example, that the British Army is something
like 27 per cent engaged in operations; 27 per cent operationally
active, as I speak. This is also mirrored certainly in the Air
Force configuration. Operationally, this is the best measure we
have, short of war.
Mr Blunt
5. Sorry to interrupt but could you define
what "operationally active" means. Does that mean on
operations or does it include recovery from a training fall?
(Mr Tebbit) This would be putting together essentially
what is going on in Northern Ireland, plus what is in Bosnia,
plus what is on the threshold for Kosovo, putting those together
but not training.
6. So it is deployment
(Air Marshal Sir John Day) It is preparation for
deployment: deploy and recovery, but not the general training
that is going on. I will come back to you later if I have that
definition wrong.
(Mr Tebbit) Operationally the Armed Forces feel
themselves to be extremely active, which is good for morale although
not necessarily good for families who are left at home. At the
management level it has been an extremely taxing year, partly
because it was the year in which the Defence Review was conducted.
This engaged a wider cross-section of the Department, I suspect,
than ever before because of the way it was conducted. It was not
three people in a closed room but probably the most widely participative
exercise the Ministry of Defence has carried out. Also, because
of Project CAPITAL and the transition from cash to accruals, Resource
Accounting and Budgeting, I do not think the effect of that on
the Department is fully appreciated. The MoD is something like
50 per cent of the total Government Departmental work in moving
to accruals accounts. We have had a training scheme of something
like 12,000 people in the Ministry of Defence going through that
process, not just the accountants, but everybody who needs to
think about using resources better, at all levels. This is a massive
effort which has gone well. We had a letter of congratulation
from Andrew Likierman, the Treasury Chief Adviser on this issue
and, fingers crossed, it is working. That is a huge effort which
is putting people through a great deal of strain. So operationally,
for management and the Strategic Review, it was a very busy year
and, I think, a successful one.
Mr Colvin
7. In measuring performances it is going
to be difficult, both for you and for us, to get a true picture.
This is because the MoD is not just like a business. We have already
been through the Resource Accounting and Budgeting brief and even
we got a grasp of it by the end, but trying to apply business
measurements to the MoD is going to be almost impossible to do
unless you go out and count the number of bodies on the battlefield
like we used to, and as you still can after a General Election.
Are there any moves to provide the public with more tangible measures
of achievement, perhaps by showing performance indicators; and,
if this were possible what do you have in mind? And, if you have
nothing in mind, why have you not thought of this? In answering
that question, could you say whether there would be any attempt
to find common performance indicators amongst NATO allies, because
comparability with our NATO partners—and particularly those
newcomers to NATO, the three new members likely to join—is
going to be important, and part of the whole business of building
up inter-operability. To do that, of course, you need to be able
to compare like with like, which is very difficult to do internationally.
Can you tell us your thoughts on performance indicators and a
more tangible measurement of achievement.
(Mr Tebbit) To start from where we are, at the
technical level we have a range of targets appropriate to the
objectives last year and this year, even though we are changing
them slightly. Central to this is our military capability. The
targets for military capability are defined as force elements
types of aircraft, Army formations, ships, at specified readiness
levels: a proxy, as it were, for fighting power. This is the closest
one can get essentially to that measure if you are not actually
at war. Other targets we use at present are things like bill paying
performance, in terms of management; recruitment levels; procurement
performance; slippages, time, cost, quality of equipment entering
service. What we are now doing is to bring together the key indicators
of success and project them in the new, as I said, Public Service
Agreement, which is a contract between us and the Treasury, (us
and Number 10 really), in the context of the Comprehensive Spending
Review. We will be reporting our success in these areas in an
Output and Performance Analysis which will be published annually.
Would you like me to describe some of those performance targets,
because they are less technical than they used to be and they
do identify some of the key areas. One of the key goals we have
set ourselves is to exercise of the Joint Rapid Reaction Force
by October 2001: the ability to show that we can indeed conduct
expeditionary action beyond the immediate European boundary—for
example, into the Middle East—moving a brigade with significant
naval and associated air elements. That will be a real test of
whether we have achieved what we say we have achieved in the SDR:
of moving to a much more expeditionary force and going to the
crisis rather than waiting for it to come to us. Another key target
will be how well we are doing in "Jointery", the idea
of bringing forces together to get greater synergy. Establishing
the Joint Helicopter Command. Bringing together the Army, air
and naval elements by 1 April 2000 is another key target to see
whether we are actually moving in the right direction. For manning
we have targets to hit our recruiting levels by 1 April 2001.
It will not be the full requirement by then but we have set the
targets of where we need to be: 98 per cent for the Royal Navy
and Royal Marines; 95 per cent for the Army; (lower there, of
course, because we are recruiting 3,300 more in the Army); and
to meet 100 per cent of the RAF requirement by then. Another key
indicator other than manning is the logistics and medical areas.
As you know, we are creating a Chief of Defence Logistics—the
first target for that is 1 April this year— who will bring
together for the first time the three individual Service logistics
organisations and will actually have the full budgetary control
of the whole by that stage, with his headquarters set up by 1
April 2000. There is the formation of the first Joint Force Logistic
Component Headquarters by April 2001. And also targets affecting
our medical services which, as you know, were regarded as one
of the weaker areas in the SDR: the establishment of a regular
ambulance regiment and use of medical reserves to support to field
hospitals at medium scale. I could go on to give you a lot of
detailed force structure changes, which have target dates associated
with them and which are now public. Reducing our destroyer frigate
fleet to 32 hulls by 1 August 1999, so we have our new figures
by then. The first Army unit relocated from Germany on 1 April
2002. The restructured TA operational from 1 April 2000. I could
go on. I will give as many examples as you like.
8. Obviously there is a big list.
(Mr Tebbit) The point is that these are now public.
They are clearly expressed as targets with dates attached. Through
these we will be able to demonstrate whether or not we are meeting
the key elements set out in the SDR.
9. My question on comparability with our
NATO allies? For instance, the Western European Union is an organisation
which is constantly looking for something to do to justify its
existence. This might be one area. It is difficult to get strict
comparisons with the United States, I agree, but with our other
NATO allies in Europe this is one area where the WEU might prove
quite useful in drawing comparisons, and seeing if countries can
meet similar targets and whose performance is strictly comparable.
(Mr Tebbit) I feel the problem is probably not
the targets but the resources actually to meet them. We have in
NATO a Force Goals process which has been refined over the years
and states very clearly what is expected of allies in order to
generate the NATO force levels.
Mr McWilliam
10. We remember 50 hulls when we had 38.
(Mr Tebbit) Yes. The problem is not the absence
of a collective framework within which to do these things but
the difficulty of realising it in practice.
Chairman
11. Collecting the individual will is quite
difficult to measure.
(Mr Tebbit) That is a problem. With the new members,
we have certainly done a lot ourselves to help them set and achieve
the targets necessary for absorption into the alliance, which
have gone pretty well. We already have the targets. What we do
not have is the resources as we look around. We do not see the
resources there to achieve them, which is a fundamental reason
why we have been launching the European Defence Initiative, because
that is not about fiddling around with the architecture of European
institutions; it is about strengthening European will and European
capabilities and linking them properly in order to share more
of the burden for our own security, and enabling the Americans
to do what they always tell us they would like to do, and so have
to do a little less themselves.
Mr Colvin
12. Is the format for this Performance Report
likely to stay the same? Some of us are a bit surprised at the
absence of any new information. Most of this is already available
to us in the public domain anyway. I was a little puzzled at the
imbalance or disproportion with some of the contents. A whole
page on the hydrographic, geographic and meterological services
seems to be rather a lot, when only a couple of small short paragraphs
on nuclear forces is considered adequate. How did you work out
the priorities in producing this Report? It cannot be anything
to do with expenditure.
(Mr Tebbit) I suspect it would be wrong of me
to say that the former Hydrographer is now a four-star admiral.
He moved from two stars to four stars in one go. Perhaps that
is why he had a page! I think there is a certain artificiality
at the moment. That Report formally is required, and it covers
the year essentially before the Defence Review, so the SDR really
updates all that. We need to talk about where we are going on
this. As I think you know, we are planning to move to a rather
different approach. This will have a White Paper in the spring,
at the end of May, which will accompany the Expenditure Plans;
or will come just after the Expenditure Plans come out of the
Budget. But it will be forward looking: more about what our policies
and strategies are and what we are seeking to achieve. At the
end of the year, October/November, we will publish the Departmental
Performance Report, which will cover, as we go along, how we are
achieving those plans in a rather more expanded form than at present.
I can assure the Committee that we are planning to give you more
information rather than less, but we are aggregating our activities
so, as you know, instead of having nine Departmental Objectives,
which we go through in a rather undifferentiated way, we will
in the future have three key areas. These will be what we call
the Department of State, that is to say, the central policy and
strategy; the Military Capability; and the Equipment Plan. Those
will be the focus of the Resource Accounting and Budgeting structure,
with specific elements underneath those focused on outputs, and
eventually by 2001 linking the money to those outputs so that
the public can see quite clearly and the Committee can see quite
clearly what the people are buying for their money.
Mr Hancock
13. I am interested in what you have to
say about this Report. However, if this was my report I would
be slightly disappointed by it. It poses a lot of questions because
it fails to set any targets. It really does not address some of
the issues that the Report actually mentions. It does not come
up with any solutions of action that need to be taken in response
to where things have happened and maybe how it has gone. There
are 44 agencies that were set up. They were set up to make defence
expenditure and the actions of the Ministry of Defence more transparent
and more accountable. Yet what we have here, after the first year
we have no information about the targets that were set, and whether
they achieved what was expected of them, or any comment other
than the bare facts of how many people were employed and how much
they spend. I have no way of knowing whether the expenditure matched
what the budget expenditure was meant to be. There is no wording
in here which would lead anyone to believe whether or not any
of these were achieved. The Disposal Sales Agency. They have received
£85 million worth of sales. What does that mean? How do we
know whether that was good judgment? When I have asked questions
about defence land sales I have been told they are state secret.
They will not answer questions about the disposal of a unique
piece of land. They will not tell me how much we got for it. That
cannot be right, can it? How on earth can this be a performance
of the Disposal Sales Agency, when what you say here is £85
million on behalf of the Department. What does that mean? Is that
good value? Did they do the right thing by the Department or could
someone in the private sector have done better for us?
(Mr Tebbit) There are a lot of questions there.
Let me say at the beginning, I think we do need to repeat that
this was preceding and during a major Strategic Defence Review
which has been widely published.
14. But the agencies were not.
(Mr Tebbit) Well, in the first question you asked
you said that this seemed to be a report which did not follow
up things and set any targets. It is because the targets are not
based on this. The targets are based now on the Strategic Defence
Review so we have had a shift, a sea change in our strategy. Therefore,
it would be wrong for us to try to extrapolate from this Report
what we are trying to do in the future, when in the middle of
it was the largest defence review which has been conducted. This
does need to be seen in that context. As far as the agencies are
concerned, most of the agencies (if not all of them) are required
to produce their own annual reports which are published. As you
say, there are 44 of them and it would have been a huge work to
have attached them to this document. But this is not the only
source of information about the Ministry of Defence. There will
be, I suspect—I am not sure if they are all set up in time—44
individual agency reports going into great detail about how they
achieved their objectives. I am certainly puzzled about your point
about not being told how much money was received from defence
land sales or disposals. I can assure you we have a clear target,
a minimum of £700 million worth of land disposals, estate
sales, to achieve over the period of the next three years. There
will be full and open accountability of how we go about it under
the new agency which has been set up.
15. If you have a transparent agency, which
is the disposing of the public assets, what you receive for them
surely must be a matter of public record. I am interested to know
why the Ministry of Defence will not tell the public of this country
how much sites are sold for individually. I cannot understand
why this is a secret. Look at the Parliamentary Answers which
have been given. Your Ministers have repeatedly said they will
not give that information, and they have invoked some sort of
secrecy clause in answering a Parliamentary Question.
(Mr Tebbit) I wonder if any of my colleagues can
help you.
(Mr Balmer) I confess that I cannot recall the
particular Answers to Questions that you are quoting, but I suspect
that it is not a matter of secrecy but a matter of commercial
confidentiality which is involved. If a competition has been run
for disposal, then there may well have been a clause which requires
us not to disclose the precise figure of the winning bidder.
16. So how are we expected to judge whether
the Ministry of Defence got good value for money?
(Mr Balmer) You have to rely on the fact that
the National Audit Office can investigate all of our books, whether
they are commercially sensitive or not. Those documents are available
to Parliament and clearly this Committee and the Public Accounts
Committee can ask questions of us and our Accounting Officers
on our performance.
Mr Hood
17. Mr Balmer, you are doing reasonably
well in trying to defend the indefensible. Quite frankly we are
going round in circles. It seems to me pretty simple. Why is the
MoD holding back information? It is nothing at all to do with
security. Why are they so secretive and holding this information
to themselves? I have to tell you, talking to the National Audit
Office is not the answer to the question. We have a Select Committee
of this House of Commons. They can scrutinise the Ministry of
Defence and we cannot even get the information on how much they
have sold a piece a land for without breaking national secrets.
(Mr Tebbit) Forgive me, I do have to disagree
with you. I testified to the Public Accounts Committee in December.
I gave them tremendous detail of just how much individual bits
of land were sold for. I really do have difficulty in understanding
what the problem is.
Chairman
18. Could you drop us a short note, please,
when you have had a chance to consider the matter in detail.
(Mr Tebbit) I would be very happy to. However,
I would refer the Committee to testimony to the Public Accounts
Committee, which gave very great detail of precisely what individual
sites were sold for.
Mr Blunt
19. In summary, when you are asked Parliamentary
Questions about what sites are sold for in future, you will answer
them? We are a Committee of the House of Commons like the Public
Accounts Committee.
(Mr Tebbit) I would be grateful to know what the
particular issue is here. As I say, it may be that it is a request
for information——
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