Select Committee on Defence Minutes of Evidence

Examination of Witnesses (Questions 60 - 79)



  60. So are we.
  (Mr Tebbit) We have done a big study about this and they are genuine.


  61. Can we see those?
  (Mr Tebbit) We sent you a paper last March, Mr Chairman.

Mr Brazier

  62. I am just coming to that.
  (Mr Tebbit) The study we have done in September showed these were genuine efficiencies. We did not look at every single one. We took major ones because, as you know, we do not collect them centrally in that way. We do not ask the top-level budget holders to give us all the details of every efficiency measure they are taking, but we have got quite a lot of the major ones from then and they are genuine and not double-counted. I am concerned that we should put them closer to the point of delivery and have them built more clearly into management plans, so that the efficiency targets are part of delivering the output rather than separately.

  63. Thank you for that. Last time you were here, the Chairman emphasised that we wanted to see as much of the list as possible. Could I support his request for a copy of the study. This paper you sent us is very interesting so far as it goes, but it only lists savings of £230 million out of £1.2 billion, and a quarter of what you do give us is the Laarbruch decision, whether that should be on the list or not, so you have identified less than a fifth by value of your savings. If I may run down a few of the specific items on which you may wish to come back in writing. A small one first and, remember, this is out of the relatively few savings you are willing to show us so I am picking out of the best list. "Reorganisation of training design and support at Royal Navy Submarine School". Could you confirm whether or not that involved simply taking a day off the length of the submariners' training course, something which one imagines in the end may impact in a small way on efficiency? Can you let us know whether the main courses are going to be shortened?
  (Mr Tebbit) I cannot answer it here.

  64. Of course not. The next one that particularly surprised me is number 15, "Smarter stock replenishment for the Mk20 1000 lb High Explosive Bomb, Mk117 Tail and Ancillaries." You saved about £4 million on that. Given that Smart bombs are more expensive than the old "dumb" bombs and that we were extremely short of stocks of several categories of bombs, even for the relatively small Kosovo operation, it does seem extraordinary that we could be making savings on stock purchases in this very important area.
  (Mr Tebbit) I cannot answer that. I assume that this is very much technical detail in the bomb area rather than affecting the overall characteristics of the thing. I would make a general comment. As long as the final outputs are sustained with less resources or we get more output with the same resources, it is quite possible and acceptable for intermediate outputs to be cut. So, for example, and I am not saying this is the answer to the question, if we still judged that the purposes of the course were served perfectly well operationally with one day less that would still be a legitimate saving. If it is a cut in competencies then it would not.

  65. In the case of courses that is a subjective judgment; in the case of bombs, I think the Committee would be very interested to see how you saved £4 million in an area where it was widely regarded there were shortfalls, not only by us but by the United States as well.
  (Mr Tebbit) I think it is the tail of the bomb, not the Smart bomb.

  66. Can we have a little note on that. Another one that looked rather surprising is one of only three large items on your list, number 24, "A refit descoping study into submarine refit costs examining reduced maintenance content of the work package . . ." In the light of the recent press interest, to put it mildly, in the problems we have in the submarine fleet at the moment, it would be very interesting to see a little more detail on that one.
  (Mr Tebbit) Mr Gould is the world expert on this.
  (Mr Gould) It is not linked. The particular repair in the cooling pipe, which I think you are referring to, is not something that is affected by the change in the refit plans. What the rescoping does, and I can provide you with more information on that, is previously what we tended to do was every time we did a major refit on a submarine we "re-lifed" the submarine, with a complete refurbishment. What we are moving towards now is to do a refit that will take the submarine through its next ten years or so commission rather than take it beyond that because that is really unnecessary work. We are getting smarter at specifying the amount of work required to take a submarine through.

  67. So that in a way is pushing costs off to the ten-year point?
  (Mr Gould) No, it does not necessarily increase the costs beyond the ten-year point. It reduces the amount of work in the refit. We are building better confidence about what amount of work will guarantee a ten-year commission. What we have tended to do in the past is take things back to the condition they were when they were new because we were not confident about taking them through the ten years.

  Mr Brazier: I see. I will accept that answer but I would be interested to see a little more detail on it. The next one is number 31, "A manning review of RAF Cranwell following a review of various training and support functions produced a reduction in manning levels". By chance, as part of our Personnel study, I happen to have just been to RAF Cranwell and they have found themselves operating over far more flying sites, as you no doubt know, than was originally planned under the original configuration. That stretched its health and they are losing a lot of flying because of overstretch there. They could not get everything on the airfield that was originally configured. Given that the original manning levels were posited on a much tighter and much easier framework based around one main airfield, it does seem extraordinary that you have been able to achieve manning savings there. It would be very interesting to obtain more detail on that. The last one was the Ministry of Defence police, not entirely this Committee's favourite subject.

  Chairman: It is for me.

Mr Brazier

  68. Indeed. I think our Chairman might be interested and I certainly would be interested in seeing how you have managed to save nearly a million on firearms training. Does this have any implication for quality of shooting which might, on occasion, be important for the Ministry of Defence Police, or for safety?
  (Mr Tebbit) I think I might be able to answer that one because when I was there recently I was shown how this happens and it is use of simulators and laser firing which is very, very accurate and very good, I am told, for weapons technique. That is how they have done it—by using high-tech laser technology. Other forces are interested in using it as well. Of course, we now have a new Chief Constable for the Defence Police, a very fine man indeed and I am sure the Chairman is interested in that area.

  69. If we could have something in writing on those areas I would be very interested.
  (Mr Tebbit) I would be very happy to follow it up.

  Chairman: Before you continue maybe it will save Mr Tebbit some time if I say that this is our fault. We were sceptical a year ago about whether there were efficiency savings at all or whether the Ministry of Defence was just being smart in cutting. We asked for information. In fairness the information that you have alluded to Mr Tebbit was very swiftly provided, and it is our fault entirely that we have not carried out what we said we would do and that is give you four or five cases, possibly chosen at random, possibly reflecting Members' interests. There is no blame attached to your Department, you did what you were asked. However, I think it will be quite helpful to us if we were to identify four or five items from the list you provided us with and then seek, as Mr Brazier sought to do, to elicit more information.

Mr Brazier

  70. Could we have a copy of that full study you mentioned?
  (Mr Tebbit) That is the main point, Mr Chairman. We are reviewing our efficiency policy and practice. I am not content that it is sufficiently closely linked to the delivery of outputs. I was very grateful for the views of the Committee and you have helped us in the design of the study and the way it has gone, and I am very happy to provide details of the study and how we hope to go forward. We will have negotiations inevitably with the Treasury on it but I really wanted to register that point.


  71. Have you worked out how much this financial year so far you have saved by way of efficiency savings?
  (Mr Tebbit) It looks to us at the moment as if we are going to end up with about £500 million.
  (Mr Balmer) We think it is slightly over.
  (Mr Tebbit) Less than last year. Last year we got £590 million but, as I say, because it is gross and not net, I am sure they are genuine, but I do not believe this is a true reflection of the overall position of the way the Department goes about delivering its outputs most effectively.

  72. Can you make an estimate for the next financial year? Is that possible?
  (Mr Balmer) It is difficult to do that yet. Last year's figure in the end was £511 million for 1999-2000.

Mr Cohen

  73. What percentage was that?
  (Mr Balmer) That was about 3.5%. The current year we expect to be around £500 million, so quite close to last year.

Laura Moffatt

  74. May I pursue the issue of the Strategic Defence Review? Will you need another Review in two or three years' time? If we are sure that the review underpins all of the work you are doing and the way you are going to pursue efficiency savings, the rationale, it would seem, is that you would need another Review to see that the process keeps going. Is there going to be another Review?
  (Mr Tebbit) There are several points. Firstly, we are already updating our strategic analysis which underpins the SDR. I am hoping that a version of that will be published quite soon so that you will see that we are continuing to take stock of the environment. We have consulted outside academics as well when doing the revision, just as we did when we wrote the Strategic Defence Review in the first place. We are certainly keeping the overall context of our plans under review. The most obvious thing, for example, is national missile defence and the question of how that affects defence/offence arguments. The second point is, clearly nothing is static. The Strategic Defence Review is not so much a blueprint but more a framework and a set of priorities we are pursuing. It is still only 50% implemented, which is more or less according to schedule. We have about 33% still to go, that we know will come in on time. I expect the rest of it will essentially be delayed. We talked about the joint rapid reaction force and manning levels. We are doing two things, we are reshaping and modernising the full structure in the Armed Forces around 21st century realities, which is a major challenge and a major change. Also, the more rapid deployment, the more flexible forces are able to get to the crisis quickly. We are also completely changing and transforming the support structure of the organisation and the performance of the organisation to enable those things to happen within a budget of £23 million to £25 million. We are going to have to work at that and get better at it as we go along. That will be a continuous process using the private sector, using best management practice internally, more efficient ways of doing things in the organisation, more PPP, more private partnership.

  75. I do hear you. I am not entirely sure you have answered the question. You talked about the way this Review is implemented.
  (Mr Tebbit) I do not think we need another Strategic Defence Review at this stage.

  76. You talked about the review and how it is all going, is that including the audit of the efficiency programme, or is that completely separate from what is going on at the moment?
  (Mr Tebbit) That is just one study going on within a whole wide range of what is happening in defence.

  77. Why are you undertaking that? Are you concerned that you are meeting targets far too easily?
  (Mr Tebbit) Although I am quite satisfied with the result of the study, that these are genuine efficiencies, they still do not give me confidence that we have that efficiency drive focused on the output priorities. We have listened to the Committee, for one thing, and you asked us to look hard at efficiencies, and that is what we have been doing. To put it another way, I am concerned that we are delivering these efficiencies but we are still finding offsetting rising costs elsewhere in the budget, so I want to make sure we are really targeting the right areas to push.

  78. That is very helpful. I wanted to ask you about the French Report and how the goals are matched to policy outputs and how that link is made. Is that helpful to you?
  (Mr Tebbit) We are doing a great deal in defence at the moment. As I said, it is not just a modernisation process or an evolution process, it is a transformation going on. We have five modernising sub groups at work within the organisation, at the middle level of the organisation, some are top down and some are bottom up. One of our groups is looking at this issue of better policy-making within the department, picking up the French Report and applying those principles to the way we do policy in defence. We are very good in some areas. We do a lot more scenario planning. We do a lot more operational analysis than most other government departments. We have a lot more analysts than most other departments. We always build our plans around long-term strategies. We do risk management. We are used to do project management and because of that we tend to do our policies in a project management way. We have not been as good at that in the past as we should have been, about post-project evaluation, and seeing how our policies went down. I do not just mean in NATO policies or European defence, but also in ordinary policies to deliver our programmes, or whatever. That strand of work is still going on. There are some good recommendations from it, things like annual awards and prizes for best policy behaviour in the department, that sort of thing. Model policies are being developed and, as it were, shared for best practice. That is one of those five strands of modernising sub groups.

  Chairman: Thank you.

Mr Gapes

  79. Can I ask a number of questions about the new innovation of the conflict prevention budget?
  (Mr Tebbit) Yes.

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