Select Committee on Defence Minutes of Evidence

Examination of Witnesses (Questions 1-19)


24 JANUARY 2006

  Q1 Chairman: Good morning, Mr Jeffrey, Mr Woolley and everybody else. Welcome to this evidence session on the Report and Accounts of the Ministry of Defence. Mr Jeffrey, can I begin by saying thank you very much for coming to your first evidence session with the Defence Select Committee. You have been in post fully for two months now and here you are, expected to come and answer questions about absolutely everything which I think is a bit tough frankly. I am being soft obviously! How are you getting to grips with the MoD and what do you think the comparison with other departments you have knowledge of shows you about how you ought to be getting to grips with it?

  Mr Jeffrey: Thank you, Chairman, and I am rather conscious of the fact that I am facing this Committee early in my time in the MoD. I think, if you will forgive me, as we get into the detailed questioning, I may well rely on Mr Woolley more than I hope to be doing before very long. As to how I am tackling it, I am tackling it by getting around the place and I was thinking this morning before coming to this session that it is actually more like six weeks because it takes account of the Christmas period. I have already been to the Permanent Joint Command Headquarters at Northwood, the DPA, the DLO, the personnel area, the finance area, the policy area, communications, and to the Defence Export Services Organisation yesterday, so I think the answer to your question as to how I am tackling it is that I am getting in amongst it because I am conscious that I did not grow up in this Department and I have to understand its business if I am going to be effective as one of the leaders of the organisation. My first impressions are, I have to say, very positive. I find, as I hope the Committee has found as it has done its business, that it is a body of people who are very committed to what they are doing. As you may know, I was responsible for several years for the Immigration Department in the Home Office and I felt that was true there as well in sometimes quite difficult circumstances; but the thing that I am impressed by in the MoD is, first of all, the joint working between military and civilians does seem to be genuine and quite deep-rooted and, secondly, that people are genuinely focused on delivering military capability and, as I go around the place, that phrase is used remarkably often. I think the priorities I would see, and I was struck by how coincident they are with the things that the Committee is taking an interest in, are, first of all, business effectiveness, building on what we have done in the past and what my predecessor, Kevin Tebbit, did to create a department that has, and deserves, the confidence of ministers, the public and Parliament. I think a part of my function is to provide leadership for the approaching 100,000 or so civilians; my military colleagues do that effortlessly and I think that is something I definitely have to do as Permanent Secretary. I think I need to apply quite a bit of attention to a topic that I know your Committee is becoming interested in, and indeed you are going down to Abbey Wood later this week, which is the whole question of how we procure and acquire equipment for defence. The Defence Industrial Strategy is a very important development, but it is quite clear from my early conversations that everyone accepts that, if it is going to work, we, as a Department, have got to play a big part and, although improvements have been made, there is still a great deal to do. I think I need to attend to the Efficiency Programme which you will no doubt want to ask us about later this morning and that is on course, but it is something that I need to pay a very close personal interest in. There is also a set of issues which I know your predecessor Committee and you have taken a close interest in to do with our duty of care to all of our staff. That is a selection and I think there are other issues. Obviously the Armed Forces are very busy at the moment and there are major commitments in Iraq and Afghanistan and, if I am going to support my Secretary of State as well as I need to, I need to understand these as well and play my part in that.

  Q2  Chairman: That is very helpful, but, if those are the priorities that you have set out for yourself, how will we be able to judge whether you have achieved what you have set out to achieve?

  Mr Jeffrey: Well, nothing is "unimprovable", but in the papers you have before you is the Balanced Scorecard, the way in which we set out our targets and how we are progressing towards them, which is a reasonably user-friendly way of tackling the management of this enormous business. I certainly have now chaired one meeting of the Defence Management Board in which we used the Balanced Scorecard and I think it is well established now. As I say, nothing is beyond improvement, but it gives us a means by which we can track achievement against our main targets. I think in the end one must not have alternative systems in these sorts of things. If we succeed and if I succeed in what I have just described, then it ought to show in the main measures that are described in these papers and, if not, then they are not the right measures, so I would say look to the main systems, look to the running systems and we can assess as we go whether we are achieving the outcomes that we want.

  Chairman: One of the key issues that we are going to have to take an interest in over the coming years is the issue of recruitment, of overstretch, about all the various harmony guidelines and stuff like that which relate to the personnel of our Armed Forces, and I will ask Desmond Swayne to ask about those.

  Q3  Mr Swayne: PSA Target 4, if we look at the performance of the Royal Navy and the Royal Marines, has essentially gone in the wrong direction. It was 95.1% on 1 April 2005 as against 96.8% in 2004, so it is going in the wrong direction and it is nearly 5% below what is required. What difference does that actually make, given that we are told that there have been only very isolated breaches of harmony guidelines and, if that is the case, have you set the target too high in the first place?

  Mr Jeffrey: I think that the Navy is certainly, of the three Services, the one which is still facing a significant challenge in getting up to the strength that it is intended to be at. It is not yet at what is described as `manning balance' within the 98-101% of the preset figure. The latest figures I have are that the forecast deficit for April 2006, a few months hence, was 3.6% compared with 4.9% in April 2005, so that suggests that it is now moving in the right direction, but I should emphasise that what one is measuring it against is also a moving target because there are planned reductions in manpower over that period as well. That may be a partial answer to your second question. It is certainly the case that, although the harmony guidelines are not proving possible to meet for the Army and the Air Force, they are, broadly speaking, being met by the Navy and the Navy is managing within that. That may reflect the fact that the Navy, although it is much involved in current operations, is rather less involved than the other two Services.

  Q4  Mr Swayne: If we take the Army then, the Army is now in balance, is it not, at 98.3% which, after all, sounds a very creditable figure? I suppose we are all conditioned by pure maths O Level where, if anyone got over 45%, they were a real boffin, so 98.3% sounds pretty good. What are these statistics actually hiding? What are they not telling us because the anecdotal evidence is actually that there are real problems with the Army? Only yesterday in the press we are being told about the Paras being under strength, to be augmented by Infantry units, of Paras having to go direct from Iraq to Afghanistan and of there being tour intervals of less than one year. Are these statistics actually robust? Are they really telling us things that we need to know or are they just simply covering them up?

  Mr Jeffrey: I think there are several points in response to that. The first is that the figures are accurate in the sense that they tell us what the strength of the Army is at any one time and what that represents as a percentage of what it was planned to be. What they conceal, although it is not really concealed in the sense that it is in there in the rest of the Report, is that for some particular trades there are what are described in the papers as `pinchpoints' where historically it has been hard to recruit people with specialisms, people like ammunitions technicians, explosives and ordnance disposal officers, signals information systems engineers, these sorts of categories where it is hard to recruit and the recruitment climate is not as benign as we would want it to be and there are some special efforts to tackle these so-called pinchpoints. Otherwise, I think the only other point I would make is that there is no doubt that, although the percentage of the total Army manpower that is currently deployed in operations has been falling and is a little less than it was even when these papers were published, this is a very busy time for the Army and the commitment in Iraq and Afghanistan in particular is such that on the ground there may well appear to be difficulties of the kind that you describe, but certainly the advice I am hearing from senior military colleagues is that, although this is a very busy time, it is manageable and will continue to be so.

  Q5  Mr Swayne: The 25 pinchpoints in 2004-05, how are they actually defined, what impact do they have on operations and will the deployment to Afghanistan make them worse?

  Mr Jeffrey: They are a collection—and I am not sure if they appear in the published Report or not, but we can certainly provide the Committee with a full list of what these categories are.

  Q6  Chairman: I think it would be helpful if you could, yes[1].

  Mr Jeffrey: I think I probably also ought to do the same in relation to Afghanistan. I think it is undoubtedly the case, again as the Committee will know, that we are not completely clear what the nature of any future deployment in Afghanistan will be, but I think I ought to take notice of the question about whether any Afghan deployment, when it comes, will make that situation worse than it already is, and we can provide the Committee with a note on that certainly[2].

  Q7 Mr Swayne: The Report tells us at paragraph 113 that Army recruitment has been affected by perceptions of the war in Iraq and issues surrounding Deepcut, particularly parental perceptions, so what actually is being done about that and is it proving effective?

  Mr Jeffrey: Well, I think the factors that affect Army recruitment are various. The Secretary of State was asked about this during Questions yesterday or on an earlier occasion and he said that he did not think that Iraq was a particularly significant factor, although it obviously is possibly in the minds of parents and others. I think principally, apart from keeping up a very strong recruitment effort, the steps that are being taken are steps around improving recruitment, training, responding to the Deepcut events, looking at the way in which we support recruits under training through welfare and in other ways and, by these means, giving potential applicants the confidence that they need to put themselves forward, but it has to be recognised that we are operating in quite a difficult recruitment climate with still historically pretty high levels of employment, so the task of the Army recruiters is not straightforward.

  Q8  Chairman: Mr Jeffrey, when we went to meet the ARRC, we asked whether it was possible, at the press of a button of a computer, to work out the individual harmony guidelines relating to any individual Service person and we were told that it was not yet possible. Surely that ought to be possible. Do you have any views or comments about that?

  Mr Jeffrey: I do not. I have to say immediately that it is probably better to start with this Committee by being entirely straight with it. I am not briefed on that and I think I ought to become so and again, if you would be happy to take a note on that, we will provide one.

  Chairman: Yes, I should be grateful if you could provide us with one please[3].

  Q9 Mr Jones: Mr Jeffrey, welcome to the Committee and, if you give us straight answers, you will be the first person from the MoD who ever has, apart from, I think, the last Procurement Minister who did when he came before us, so I look forward to these straight and honest answers. Can I just pick this up in terms of the issues surrounding Deepcut. How much damage do you think not just Deepcut, but the related publicity which has taken place over the last few years has done not just to the Army, but generally to the reputation of the Services?

  Mr Jeffrey: Well, I find it hard to assess that. There is no doubt that the Deepcut events, which are now some years in the past obviously, attracted a great deal of publicity at the time and in some respects continue to do so. All I can say is that, as a recent arrival in the Department, it is clear to me that everybody from the Secretary of State down, and I have in particular discussed this with the Armed Forces Minister once or twice, is utterly committed to addressing this set of issues around the way in which we care for our military and civilian staff and the nature of the training experience and the culture of training establishments. It is a difficult set of issues and it is hard to say what the impact has been publicly, but I am sure there has been some.

  Q10  Mr Jones: So why has your Department ignored one of the main recommendations in our Duty of Care Report, ie, the independent oversight of complaints, which surely would be a method of instilling confidence back certainly in mums and dads who are going to be sending their kids into the Armed Forces?

  Mr Jeffrey: I do not think it is fair to say that the Department has ignored that recommendation. It is certainly the case that we have not proceeded with the full-scale, entirely independent system that your predecessor Committee recommended, but there are plans in progress both to have an independent element in redress panels where the Secretary of State appoints an independent person—

  Q11  Mr Jones: They are pretty pathetic though, are they not, these panels?

  Mr Jeffrey: Well, they are a step in that direction. There is also a proposal to have a form of independent audit of the health of the system where an independent person will be able to look at a selection of cases after the event and advise us on the way in which the system operates. Now, that is not, I am sure, as much as the Committee was looking for and as independent a system as the Committee was recommending, but it definitely does represent an element of independence in the process.

  Chairman: Please will you bear in mind, Mr Jeffrey, that the Committee will be worried that the Ministry of Defence is seen from time to time as being judge and jury in its own court.

  Q12  Robert Key: Could I turn to civilian personnel management, Mr Jeffrey, and the People Programme. I am very conscious that behind all the uniformed Services, there is a valiant band of people, civilians, on whom the Armed Services depend for the delivery of almost everything, particularly when they are out in theatre. I see it in my own constituency every time there is a little operational flutter when the planes are flying more regularly at Boscombe Down and so on, but I wonder if you could tell me what manpower savings there will be resulting from Project Hyperion? That is very specific and I am asking it for a purpose, because it is a good example of a change which the Army is making to their organisation in Land Command and the Adjutant General's Department which is going to have an effect on recruitment and retention, but it also has an impact on civilian manpower. I wonder if you could tell me what those manpower savings are off the top of your head and, if not, because that is a pretty precise question, could you let us have the figure?[4]

  Mr Jeffrey: I am searching for the figure as you speak, Mr Key. I think it might be better for me to undertake to give you a figure for that.

  Q13  Robert Key: That is fine.

  Mr Jeffrey: I may say I entirely share the sentiment of the first part of your question which is the importance of the civilian element in everything that we do and it is true that, taken across the board, our efficiency savings involve quite significant reductions in the numbers of civilian staff. I cannot speak for the particular programme that you have just mentioned, but we will give you the details.

  Q14  Robert Key: I would be very grateful because it illustrates the difficulty for the civilian staff of relocating, for example, from Land Command, Wilton to wherever it is going to be, and the word on the street is that it is Andover, but it might be Solstice Park, who knows, but wherever it is, in terms of the travel-to-work area and so on, you have to manage civilians as well as the military and this is where it gets very difficult because out there, are tens of thousands of civilians who are very worried by what they see as a continuing programme of efficiency mixed with privatisations and PFIs and so on and they feel that the old family of the Ministry of Defence is being diluted and they worry about it very much and so do I. I wondered if you could just give me some reassurance that you do not just see civilian manpower as a management exercise and you really do realise how important they are.

  Mr Jeffrey: I do and, if it is any reassurance, all my own history of managing businesses inside the Civil Service has been with a measure of responsibility for significant numbers of civil servants. I take that very seriously and I think, as I said at the beginning, that one of my tasks, working alongside my military colleagues, is to really make the civilians feel that they are as significant a part of this enterprise as anyone else. I will do that in consultation with the unions and with a full appreciation of the fact that the decisions we take, which often do need to be taken for good logistic and efficiency reasons, are ones that also take account of the human dimension because it is very important.

  Q15  Robert Key: Indeed and I know that that is how you will seek to manage civilian manpower. In the memorandum we received from the Ministry of Defence on the response to our questions on the Annual Report[5], right at the end where it is talking about civilian manpower on page 26, it is a bit clinical and it says at paragraph 67, "Cashable savings from civilian manpower reductions are made centrally". Now you can see where I am coming from. I asked you about Hyperion because it is all measured centrally, but I am not quite sure that the answer is there and I just wonder if anyone behind you has got any of these figures and can help us, and I know you are going to send them along. I just want really to make the point here that you say in paragraph 68, "There are no quality measures against the reduction in civilian manpower because this is not an efficiency measure in itself, but rather a consequence of other efficiency measures". Again I simply ask: are you quite sure that you are putting people first and not the management machine?

  Mr Jeffrey: Our first responsibility, and it comes back to the targets and the high-level objectives in these reports, is to provide defence capability in an effective fashion. That will inevitably sometimes, and there are some recent examples of this, cause us to look critically at the numbers of staff we have and what we have them engaged on, but I certainly would not want to approach any of this without a good appreciation of the impact that the decisions we make have on the people who work for us.

  Q16  Linda Gilroy: I am sure that some of our constituents who will be coming to Westminster tomorrow to lobby us from the defence trade unions will welcome the sort of approach you have outlined and I wonder if I could just take that a bit further. Attached to the notes we had was a copy of the MoD Efficiency Programme and in that, paragraph 14 describes how the Department has established an Efficiency Delivery Board to oversee the overall Defence Efficiency Programme. I wonder if I might ask just one or two questions about some of the principles that we might expect to see that Board having in mind in order to follow through some of the approach you have just outlined. The Gershon efficiency savings are set to produce something like 10,000 job cuts or transfers to the private sector, I think, by 2010 and the unions will be telling us, I think, tomorrow that that ranges across agencies like DARA, ABRO, the Defence Information Initiative, Defence Logistics, the Defence Training Review and the Future Defence Supply Chain Initiative. The sort of questions that the unions will be bringing to us and their members, our constituents, will be seeking reassurances about having a level playing field, about consultation, about the possibility of having inhouse options and I just wonder if you might be able to give us a flavour of how the Efficiency Delivery Board takes into account the kind of concerns they express in those respects.

  Mr Jeffrey: Well, I do not have a great deal to add to what I said in response to Mr Key. It is a balance and we have a responsibility to our ministers and to the public, as taxpayers, to deliver this extraordinarily expensive business as efficiently as we can. That does mean that we have to keep looking at ways in which we can do so, and the Gershon changes which you have referred to have some impact in the MoD and there is no question about it. As I said in my response to Mr Key, I think that, in working through changes of the kind you have referred to, we have to be sensitive to the human dimension and I am sure that the Board you have referred to will be so, but in the end we also have to achieve the outcomes that our ministers seek and as efficient an organisation as we can provide, so it is the usual difficult balance.

  Q17  Linda Gilroy: I think on the Defence Committee we understand the need to look for efficiencies to make sure that we are getting good value for the defence budget. It was really looking for, whether in delivering that, there are principles which guide the Efficiency Delivery Board in how they relate to the workforce and to the trade unions. It might be something that we could come back to in the future, but, if I could just ask a similar question, I think one of the concerns which the trade unions would have, and certainly we had when we were looking at the front-line capability inquiry, was that we could end up with some parts of industry having almost a monopoly situation as far as the provision of services was concerned. One area that I know the unions have concern about relates to the Defence Training Review where there are three consortia bidding for two contracts. Now, if one of those consortia ended up with both of those contracts, over a short period of time the MoD could find itself in the hands of a monopoly supplier and again I wonder if there are principles which the Efficiency Delivery Board have in looking at how they seek best value which takes into account the longer-term position that they might be placing themselves in with regard to private contractors?

  Mr Woolley: I actually sit on the Efficiency Delivery Board and I think the first thing I would say is that our goal is very much efficiency as measured in financial terms, and the goal is expressed as £2.8 billion, so we do not have an agenda, as such, to contract out, except to the extent that contracting out services contributes to meeting that goal of £2.8 billion. It is the view of the Department that, as part of the overall Efficiency Programme, the consequence will be, as you say, a reduction of 10,000 civilian staff, but on each case it is a value-for-money judgment and when it comes to the various agencies and the various trading funds, we have taken different positions according to whether or not we think the value-for-money option is an inhouse solution or a sale solution and that has characterised our slightly different approaches to DARA on the one hand and ABRO on the other hand. In the case of the defence training rationalisation contract, this is a long-term PFI contract and it would probably be for a period of 25 years, so we are not looking for a regular competition, but we are looking precisely for a long-term partnership agreement and what the requirements of the Armed Forces will be and what the industrial structure of the United Kingdom will be at the end of that contract is very difficult to predict, but that is in the nature of having a long-term contract. The advantage of having a long-term contract is that it gives a degree of certainty to the private sector partners as to what the requirement is and that the business will be there and, through that, we expect to be able to drive down the costs and provide efficiency. That is an alternative approach to competition and regularly recompeting contracts which does have the advantage of keeping competitive pressure on the contractors, but the disadvantage is that the contractor, recognising the risk he is taking, has effectively to transfer that risk back to the Department and the Department pays a premium as a consequence. Therefore, what I am saying is, I think, that there are different methods by which we can achieve efficiency, the competitive route, but also the long-term partnering route, and in different cases we have to make judgments as to what we think will be the optimal way of achieving efficiencies.

  Q18  Linda Gilroy: I think one understands the benefits of long-term partnership. I think what I and some other Members have a concern about is that it can end up, I think, as a break-point in a particular contract of 15 years if by that time there is only one supplier and there is nowhere else you can look. Can they then say to you that they are the only supplier, perhaps they are in significant competition with people for the sort of posts they need to keep filling to provide that service and that, therefore, they are in that monopoly position at that point and there are long-term dangers as well as benefits in that particular approach?

  Mr Woolley: Well, I think we do recognise the risks. I think one has to make a judgment in some cases whether the market is such that you really can retain competition for a long period and in some cases I think that the market is not such that you can do that. In the case of the DTR, the sorts of services we are looking for, whilst technical, are not so highly specialised that I think one would be eliminating all possibility of competition in the future.

  Q19  Linda Gilroy: Can I just ask you one more question on the Efficiency Review and a different aspect of it to do with relocation and I wonder if you could give us some idea of the extent to which the savings depend on continuing with that programme. In paragraphs 60 and 61, it deals with the moves which have already been made, the relocation out of the South East and, I think, some savings of 1,200 posts from the Army Technical Foundation College, but then that needs another 2,700 to find by 2010. I do not know if you have any information about what that involves, what likely further moves there will be in relocation from London or, if that is not to hand, perhaps you could let us have a note about it.

  Mr Jeffrey: I can provide some information about that. The broad position is that we are on course to achieving the overall target of relocating 3,900 posts out of the South East by 2010. The first 1,230 of these were delivered in the last financial year in the way you described when the Army Technical Foundation College closed and was transferred to Harrogate. The other major contributions to achieving the target are: a move of the Defence Medical Evaluation and Training Agency from Aldershot to the Birmingham area, relocating 1,100 posts in 2008-09; the Disposal Services Agency moving from central London to the Bath/Bristol area, relocating 80 posts in 2007-08; the Defence Science and Technical Laboratories relocating 500 staff from Farnborough and Portsdown to Porton Down in 2006-07; and the fact that, when Chelsea Barracks is closed, its units will move to Woolwich, so those currently based there will relocate, 1,000 posts, to a variety of establishments in 2006 to 2008. It is a mixed picture and, by one means or another, we believe we are on course to meeting the objectives set in the Lyons Review.

1   Note: See Ev 22 Back

2   Note: See Ev 22 Back

3   Note: See Ev 24 Back

4   Note: See Ev 24 Back

5   Note: See Ev 17 Back

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