Ministry of Defence Annual Report and Accounts 2007-08 - Defence Committee Contents

1  Introduction

Purpose of our inquiry

1. Government departments are required to publish annual reports at the end of each financial year. Their purpose is to set out achievements and performance against objectives and targets, to describe administrative structures and set out financial information on actual and planned expenditure. Scrutiny of a department's performance against its targets, and of its expenditure is central to the work undertaken by select committees.[1] Our inquiry continues a series of annual inquiries into the MoD's Annual Report and Accounts. This Report examines the administration, expenditure, activities and achievements of the MoD during the 2007-08 financial year, using the Ministry of Defence Annual Report and Accounts 2007-08, published on 21 July 2008.[2]

2004 Spending Review Period (SR 2004)

2. Departmental Expenditure Limits are set in fixed three year periods, or Spending Review Periods, and are tied to objectives which set out the services and improvements to services that the public can expect from these resources.[3] The MoD's three objectives in the 2005-08 period were underpinned by six PSA targets, as well as specific Gershon efficiency savings targets for increasing the MoD's efficiency. Reporting year 2007-08 was the third and final year of the 2004 Spending Review period (SR2004)[4] and the final year that this round of PSA targets will be used to measure the MoD's performance. The MoD Annual Report and Accounts 2007-08 thus provides the MoD's final assessment against SR2004 PSA targets. We have followed the MoD progress towards its SR2004 PSA targets in our earlier reports; Ministry of Defence Annual Report and Accounts 2005-06;[5] and Ministry of Defence Annual Report and Accounts 2006-07.[6]

Conduct of our inquiry

3. In a departure from previous inquiries into the MoD's Annual Report and Accounts, we held two oral evidence sessions instead of our usual one. This allowed us to question the Secretary of State about the MoD's performance as well as senior MoD officials, and to spend more time examining some of the key issues. We took evidence from Sir Bill Jeffrey, MoD's Permanent Under Secretary (PUS) and Mr Trevor Woolley, MoD's Finance Director, and from the new Secretary of State for Defence, the Rt Hon John Hutton MP, who was appointed on 3 October 2008, and appeared before us only six weeks later. We welcome him to the post of Secretary of State as well as other new members of the MoD's ministerial team. As we noted at the evidence session, we recognise the scale of the task the Secretary of State faces in responding to a very broad range of issues after such a short time in office.[7] We would like to place on record our appreciation to the Secretary of State for fulfilling his predecessor's appointment to appear before us.

4. We sent written questions, prepared with the assistance of the Committee Office Scrutiny Unit, to the MoD at the beginning of the inquiry. We also asked the MoD for further information following each of the evidence sessions. Both oral and written evidence are printed with this Report.[8] We are grateful to the National Audit Office (NAO) for providing written briefing on the performance of the MoD—that briefing is available on the NAO's website.[9] We extend our thanks to all those who assisted the Committee during the course of the inquiry

1   Liaison Committee, Second Report of Session 2001-02, Select Committees: modernisation proposals, HC 692, para 16; Modernisation Committee, First Report of Session 2001-02, Select Committees, HC 224-I Back

2   Ministry of Defence, Annual Report and Accounts 2007-08, (HC 850-I & II, Session 2007-08) The Annual Report and Accounts consist of the Annual Performance Report (Volume I) and Departmental Resource Accounts and Annexes (Volume II) Back

3 The MoD's objectives are: achieve success in the military tasks we undertaken at home and abroad; be ready to respond to the tasks that might arise; build for the future. Back

4   The 2004 Spending Review (SR2004) Public Service Agreement (PSA) targets ran from 1 April 2005 to 31 March 2008. Back

5   Defence Committee, Second Report of Session 2006-07, Ministry of Defence Annual Report and Accounts 2005-06, HC 57 Back

6   Defence Committee, Fifth Report of Session 2007-08, Ministry of Defence Annual Report and Accounts 2006-07, HC 61 Back

7   Q 129 Back

8   Ev 1 Back

9   National Audit Office, Performance of the Ministry of Defence 2007-08, Briefing for the Defence Committee, October 2008, available from Back

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Prepared 30 March 2009