Examination of Witnesses (Questions 1
- 19)
WEDNESDAY 9 NOVEMBER 2005
MINISTRY OF
DEFENCE
Q1 Chairman: Good afternoon, welcome
to the Committee of Public Accounts. Today we are considering
the Comptroller and Auditor General's Report Assessing and
Reporting Military Readiness. We welcome back Sir Kevin Tebbit,
who is the Permanent Under Secretary at the Ministry of Defence.
We are also joined by Lieutenant General Sir Rob Fry, who is Deputy
Chief of Defence Staff Commitments and Air Vice-Marshal Kevin
Leeson, who is the Assistant Chief of Defence Staff Logistic Operations.
You are all very welcome. Sir Kevin, it is your last appearance
before the Committee. Would you like to reflect on your time in
office with particular regard to what might be of interest to
the Committee and what you think are the outstanding features,
what you may have achieved or not achieved?
Sir Kevin Tebbit: I hope the barely
quorate nature of the meeting does not reflect my popularity with
your Members over the years.
Q2 Chairman: I regret that Gerry
Steinberg is not here. I had thought he might make a guest appearance.
Sir Kevin Tebbit: Absolutely;
he is the Member I am missing most. I have been Permanent Secretary
through the last seven and a half years which has coincided with
a huge transformation of our defence posture. I came to the MoD
basically with the remit to implement the Strategic Defence Review
in 1998. Most of my time has been pushing through and managing
that change throughout the organisation, while also helping the
Armed Forces to organise their own frontline effort; indeed that
was the first priority, to shape the force structure around a
truly expeditionary capability. The second was to shape the Department
and our relationships with industry to support that more effectively.
Frankly, whether we have done that well or badly is not for me
to judge. What I would say is that I think we were quicker than
most countries to recognise the way the world was going and we
did indeed generate a capability broadly used in line with our
expectations and forecasts and our analysis. If I have a positive
comment, it would be that I think the NAO has been very helpful
in those years in their analyses of our business in showing a
pretty deep understanding of the challenges we face. Ours has
been a budget, which, as you know, has remained pretty static
or has grown in very small ways over the period. We just had our
largest increase for 20 years, but it is still 1.4% a year and
considering what is going on elsewhere in terms of costs, we have
had to cope with some huge challenges there. The comments and
proposals and recommendations we have had from the C&AG have
been very helpful; I have to say that sometimes I felt the debate
we had around the table here did not always add to the objective
value of the issues, but by and large the process has been very
helpful in enabling the Department to do better. One thing, if
I may, almost moving into this Report, is that we sometimes have
a difficulty in separating out two very different issues. Because
we are about defence most of our planning, virtually all of our
planning, has to be for contingencies. We have to make assumptions
about the world and plan in considerable detail, including, for
example, readiness assumptions, which are not what we actually
do; it is how we get ourselves into a position to be able to do
the things. Our main effort, as an organisation, tends not to
be improving literacy or reducing waiting lists in hospitals,
but in the rather artificial world of planning contingency assumptions.
We then have to translate that into action, using crisis management
and risk management and flexibility and it is the operations we
undertake which are the things which really matter. What sometimes
worries me is that the natural imperfections in our planning structure
and our system, which are supposed to be there, because we are
testing ourselves all the time and deliberately setting ourselves
targets which are stretching so that we maximise our ability to
do the right thing, are sometimes taken as weakness in the output,
when in fact I believe the output has been very strong.
Q3 Chairman: That is what we are
going to get onto now, but you of course set these targets and
our questions are around suggesting to you politely that you set
your own targets, so why can you not meet them? Let us try to
test that, shall we? Thank you for that little introduction. Will
you start, please, by looking at one of the most important figures
in this Report by the Comptroller and Auditor General, which is
figure 8 on page 15, which deals quite well with the whole issue?
If you look at that figure, you can see that one quarter of your
forces consistently reported serious weaknesses in their peacetime
readiness over the past couple of years. Why is that, do you think?
Sir Kevin Tebbit: These are of
course the forces which are not engaged in operations. The main
reason is because we have just had a massive operation in Iraq,
which was large scale by any standards, and we have now to come
down from that level to be within what is called our defence planning
assumptions of three operations consisting of medium and small-scale
operations. We are slightly above that still. We expect to have
three years to recover our force structure into balance from an
operation of the size of TELIC, of Iraq. We have not yet got through
that three-year period. We also expected, in that recovery period,
not to be operating at the level we are at present. This is entirely
to be expected.
Q4 Chairman: You hope; you hope that
you are not going to have to operate at the level you have been
recently, or did I misunderstand you?
Sir Kevin Tebbit: Under our planning
assumptions, which are the things which drive these figures, we
should be at 100%, that is if all the rest of our assumptions
are normal. Having done a major operation, we should not expect
to get 100% for three years at best. Having also sustained an
operational level above our planning assumptions for the two and
a bit years since then, that would extend it still further. This
is entirely to be expected by the nature of our operational tempo.
Q5 Chairman: Will you look over the
page to page 16, figure 10? This is the Public Service Agreement
readiness target set in 2004. We read there that you have a 5%
improvement in the readiness state of force elements over three
years. Do you think that is stretching enough? Why can you not
set a more ambitious target?
Sir Kevin Tebbit: We are doing
pretty well at present. Perhaps I ought to say what the current
quarter shows of how fast we are recovering. The last figure we
were able to give the Committee for April to June was 75%, which
was well up on the 69% the previous quarter. I have just received
the figures from June to September and that shows 79%, so
we are improving rapidly. We have agreed, as a result of recommendations
from the C&AG to base our improvement on a rolling average
of the past 2004-05 year as a whole, which obviously pulls down
the performance against that average. At the moment we are at
70.25% from 68%, so we are on the way, but we still have a way
to go.
Q6 Chairman: It is not a great improvement
though, is it, 75% from 68%?
Sir Kevin Tebbit: It is a great
improvement over a quarter. The improvement over a quarter has
gone right up to 79%; it is just that we are trying to pace it
over time.
Q7 Chairman: You talk about the particular
tempo of operations with which you have had to deal during your
time in office. If we look at page 22, paragraph 2.13, it says
there that "figure 13 . . . shows that the operations on
which the United Kingdom's Armed Forces are committed have consistently
exceeded this planned level of activity in the past three years".
We know that because of the international situation. Why then
do you have a readiness system which reports against planning
assumptions which are lower than the level of actual operational
commitment, or are you going to tell me that you cannot possibly
predict what those operations are going to be? Is that the reason?
Sir Kevin Tebbit: No; it is that
if you wanted us to have Armed Forces which could regularly, routinely
deal with the sort of peak you saw in 2003, you would have to
increase the defence budget by a very large sum indeed. We expect
to be able to generate that scale of activity about once every
10 years with our working assumption. There then needs to be a
period of recuperation and recovery of the force structure. Frankly,
another word for 79% or 75% is the recovery margin, the recuperation
margin which is being used and needed to reform the force structure
after this huge stress on it.
Q8 Chairman: What is the actual impact
on the Armed Forces of consistently operating above these planning
assumptions? What is the impact on them?
Lieutenant General Sir Rob Fry:
There is a certain amount of strain and that is undeniable and
that is widely reported. I would endorse entirely what Sir Kevin
has already said, which is that to jump around constantly with
your assumptions in order to try to chase the error, as it were,
of the current level of deployed forces, seems to me to be not
the way to give steady and mature guidance to the Department's
planning processes.
Q9 Chairman: It is widely reported,
but just assume that we are standing alone in a vacuum in this
Committee and we have not read all the press reports. Tell us
more, as a serving officer, of the impact on the Armed Forces
of operating consistently above defence planning assumptions.
Lieutenant General Sir Rob Fry:
I will take it in several areas. Let us look at the material impact
in the first instance. We do have stresses on some of our equipments,
we do have to go through processes like the cannibalisation of
equipment, which is not what we want to do and it does have long-term
effects. Those things are well recorded and recorded by the Report.
In terms of the human impact, it means that people work above
the guidelines which we establish for the amount of time that
they will spend separated from their family. This is a rather
capricious figure, because it is far harder in some areas than
it is in others. The areas which we call the pinch-point trades,
the engineers, the communicators, the people who are involved
in human intelligence, for example, are always in demand in whatever
operation we find ourselves. For them, there is a much reduced
interval between the tours in which they deploy and the harmony
guidelines which we broadly try to observe are sometimes observed
in the breach. What we do about that in those particular areas
is try, as far as we possibly can, in very particular areas, to
increase the capacity, because we do understand that whatever
the campaigns we shall be undertaking those will be at a premium.
Q10 Chairman: You mentioned cannibalisation
and that is dealt with in the Report. Shall we look at that just
for a second as you happen to have mentioned it? It is on page
28, "Example b `Cannibalisation'", particularly paragraph
2.42. It says "Cannibalisation is also becoming more prevalent
within the fleet". You can understand our concern that you
are increasingly relying on this.
Sir Kevin Tebbit: Before I ask
Air Vice-Marshal Leeson to give a logistician's expert view on
this let me just say that this all has to be seen in terms of
how we prioritise our resources across defence. If you pick an
individual area, you are sure to be able to find a problem, but
you have to see how we apportion them. The good thing about this
Report is that it shows how we manage the risk across the totality
of the force structure. If cannibalisation became prevalent, serious,
we would have to think very seriously about taking the strain
in other areas rather than this. May I just give you an important
figure? It says here in paragraph 2.42 that the incidence of using
this has risen from five to 10 instances a month to 30 a month;
that is out of 15,000 items which are demanded each month. So
we are still talking about a very small proportion of the normal
extent to which we have to go to these sorts of arrangements.
However, it is on the increase and it is still an area of last
resort. We should still believe it is the right thing to do if
the alternative is to increase stock levels to a point where it
is simply unaffordable in relation to the rest of the budget which
grows at 1.4% a year.
Air Vice-Marshal Leeson: Sir Kevin
has really answered your question. Our ranges of equipment are
very wide, broad and deep. We hold a number of items in capacities
to cover attrition over 20 or 30-year buys of equipment and therefore
that represents in itself a pool of spares which can be very legitimately
used to cover short-term eventualities while we then buy stock,
rather than holding large amounts of stock on the shelf. So cannibalisation,
robbery, redistribution, call it what you will, is a very legitimate
mechanism for solving your supply difficulties without holding
enormous stocks on the shelf when you cannot predict which of
those stocks will actually be used and in what timescale.
Q11 Chairman: I am particularly worried
about the Royal Navy and this is dealt with in paragraph 2.8 on
page 20 "Readiness of the Royal Navy". It talks here
about the £310 million cut in resources. What effect is that
having on current and future naval capabilities?
Sir Kevin Tebbit: We all regret
this. I shall answer your question directly first. No operational
tasks of the Royal Navy are not being performed as a result of
this at present. The Royal Navy is still fulfilling its operational
commitments at present. I say "at present" advisedly,
because clearly if this continues for a long period of time that
could not be the case. The effect on the Royal Navy is mitigated
by the fact that this was a decision taken corporately by the
Defence Management Board, which included the Chief of Naval Staff,
on the basis that this was the best thing all round, given that
in the recuperation period after TELIC and given the current commitments
we have still in Iraq and in Afghanistan as well as the Balkans,
the priority was not the naval tasks, but the land tasks and the
air tasks. This shows the corporate solidarity of our Defence
Management Board and the Chiefs of Staff.
Q12 Chairman: So the Royal Navy is
taking the hit.
Sir Kevin Tebbit: They have taken
the hit on the basis that it is the best balanced solution for
defence within the budget of 1.4% real growth.
Q13 Chairman: In terms of corporate
collective responsibility they accept this.
Sir Kevin Tebbit: They do indeed.
Q14 Chairman: With a bitter heart.
Sir Kevin Tebbit: With a promise
that we will revert to this. This is not an indefinite thing.
The graph you have assumes only that it carries on going like
that; that is not the assumption.
Q15 Chairman: Somewhere in this Report
they have 42 ships on normal support and 26 ships on reduced support.
What is it at present? Are more ships now on reduced support than
were at the time this Report was written?
Lieutenant General Sir Rob Fry:
We do not have a definitive answer to that.
Sir Kevin Tebbit: I should think
it has stayed about the same. The ships which are performing the
tasks which are operationally essential to meet their operational
commitments are on full support. There is a flexibility because
you can use a ship perhaps without its sonar fully working, if
you are not expecting any anti-submarine warfare activity on that
ship; if it is doing guardship duty, for example, in the Caribbean.
There are flexibilities around this which still enable tasks to
be performed. I am told that it is the same number.
Q16 Chairman: Defence Logistics.
If you look at page 29, "The Defence Logistics Organisation's
Transformation Programme", it says you are expecting savings
of £2 billion by 2010-11 as part of this Defence Logistics
Transformation Programme. We already have shortfalls in logistics.
Is that not going to pose significant risks to the readiness of
our Armed Forces?
Air Vice-Marshal Leeson: The Defence
Logistics Transformation Programme aims to make those savings
by a variety of means, principally mechanisms to improve efficiency
and effectiveness not just reducing the budget. We are certainly
some long way towards achieving the strategic goals with £1.5
billion in already. There clearly are stresses, to which Sir Kevin
referred earlier, given the current level of commitments and where
we are emerging from the earlier Operation TELIC experience. It
is therefore somewhat inevitable that there are some logistic
shortages across the piece. These are not because of the transformation
programme: it is all about moving us into a new era of efficient
delivery of effective logistics support.
Sir Kevin Tebbit: I know that
permanent secretaries are supposed to do strategy and not detail,
but some of the detail here is relevant. For example, as part
of this programme we have managed to make 12 more Harrier airframes
available from the same number totally in the fleet by more efficient
ways of putting them through repair and maintenance. We are using
techniques called pulse line techniques whereby you do repair
and maintenance rather like conveyor belt production; you put
the thing through various stages and it is much faster and with
the same number of aircraft, or armoured fighting vehicles or
whatever, we are able to get much more availability from them.
It is not the case that this is a zero-sum gain. You can get the
savings and still sustain, if not increase, some availability
in the frontline.
Q17 Chairman: Lastly, Sir Kevin,
I cannot resist asking you this and you may rule me out of order
in my own Committee: are we going to get these carriers on time?
Sir Kevin Tebbit: I should not
dream of ruling you out of order. The trouble with us is that
we created a time before we even had the thing on the drawing
board and knew what it looked like. We named both carriers before
we even had the first picture. We have shot ourselves in the foot
frankly. I could not give you an answer to that until it goes
through main gate and that is due pretty soon. Unfortunately I
shall have retired just before it happens and that is the point
at which you will know.
Chairman: So you are not going to answer.
We now have a Member of Parliament who is intimately interested
in the Royal Navy.
Q18 Sarah McCarthy-Fry: I have two
lines of inquiry and I was going to go down the naval readiness
one. I am actually more interested in your defence logistics efficiency
savings and your whole risk management thing. Coming back to the
carrier, when the carrier is commissioned how far do you go in
your future Defence Logistics Transformation Programme? Obviously
there could be common components across each Service. When the
carrier is designed, do you bring any requirements in there to
use similar things such as electronics or smaller components,
because then obviously you would have to keep their spares, would
you not, if common things could be used?
Sir Kevin Tebbit: Just to set
the general policy and strategy, what you are talking about is
also true of a thing called the Defence Industrial Strategy, which
we are about to publish; Lord Drayson hopes to publish that by
Christmas. One of the elements of that is a genuine through-life
approach to equipment, so that we build in the through-life issues
right at the beginning of the project rather than add them on
at the end. That is one way in which I can give you a positive
answer. Another aspect of that is much closer partnering with
industry than we had in the past. We are now finding, particularly
in repair and maintenance, that if we pose the problems to industry
in a fuller way and get them more engaged, we get much better
value for money for everybody. They get their profit, but we get
reduced cost. We contract for availability rather than for particular
bits of spares. Thirdly, we are trying increasingly to build
into our programmes off-the-shelf open architectures, stuff which
is available in the private sector generally rather than stuff
which is purely for defence and has no other market, which again
makes it much easier to maintain them through life because we
upgrade them as the commercial industry is being upgraded. The
answer is very much yes. May I ask Air Vice-Marshal Leeson to
give you more expert detail?
Air Vice-Marshal Leeson: I wish
I could better that. That is the key issue. We shall always be
designing our equipments to optimise the effect we are trying
to deliver from them and they are born of a defence programme
which is joint and aims to direct towards capability, rather than
a particular pre-conceived platform ideal. Within that it is inevitable
that there will be very, very different systems on different platforms.
Clearly, where you can use generic systems such as information
technology systems, communication systems, we aim to use common
enablers in all vehicles, be they air vehicles or seaborne or
land. The key issue, which is the one Sir Kevin picked on, is
to focus your ability to be able to deliver from a wider industrial
base onto a more commercially founded basis. Then you can use
the might of a much, much larger delivery system than the pure
military would require and that applies equally well to ships.
Lieutenant General Sir Rob Fry:
May I offer an observation which I think is a valuable one? To
see a fleet carrier at sea is actually to see a triumph of human
endeavour as much as technological endeavour. One of the main
components of capability is actually the people, those who fly
the aeroplane for example. We have made great strides in ensuring
that the naval and the air force crews who do this in the current
generation of aeroplanes have been brought together as a common
pool.
Q19 Sarah McCarthy-Fry: I do not
dispute that. I am trying to get back to the Chairman's point
on this £2 billion in efficiency savings by 2010. That seems
to me a pretty tall order, considering we are already at 2005.
Is it right that you have so many different IT systems that your
IT systems across departments in the Services cannot actually
talk to each other? I believe there is a programme going on now
to bring everything together.
Sir Kevin Tebbit: It is the critical
programme for our transformation programme across defence, Defence
Information Infrastructure. That is replacing about 300 different
legacy systems built up by the individual Services when they were
completely separate. All of those are being replaced by one ring
main, which will service both the business function of defence
and the operational nature of defence. We have signed the contract,
it is now working, we are on phase one; we are fielding it more
or less as from now, bit by bit throughout the Department. This
is absolutely critical. This is critical, but the risk is being
managed and worked on by the top level of the Department and others
because it has to work and without that nothing will work. You
have hit the nail on the head.
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