Ministry of Defence Annual Report and Accounts 2008-09 - Defence Committee Contents

Conclusions and recommendations

1.  It is a cause of concern to us that the NAO found the need to qualify the MoD's Resource Accounts for the third consecutive year, particularly given the assurances made to the Committee by both the Secretary of State and the Permanent Under Secretary last year. It cannot be acceptable that the MoD continues to fail to provide accurate and sufficient audit evidence to support their accounts, both in relation to personnel administration and stocks and assets. (Paragraph 7)

2.  We agree with the Secretary of State's assessment that capability in theatre must be the Department's first concern. However, failing to maintain accurate and full information on personnel and to keep track of assets such as Bowman has the potential to threaten the long-term capability of the Department, including operational capability. The MoD therefore needs to take urgent action to rectify the outstanding problems; progress made on implementing the recommendations of the NAO is welcome, but must continue in earnest, but needs to be increased. (Paragraph 8)

3.  We are concerned that the resolution of the problems in relation to the JPA that led to the qualification of the MoD's Resource Accounts last year has shed light on further problems. It is of great importance that the remaining problems with the JPA system are resolved as quickly as possible. The MoD cannot possibly hope to manage personnel effectively with incomplete or inaccurate information and must ensure that any further problems that arise are dealt with immediately. (Paragraph 15)

4.  That the MoD could not, at a given time, account for the whereabouts of radios worth £155 million is unacceptable. While we acknowledge the difficulties associated with tracking assets in theatre, particularly given the deliberately flexible nature of Bowman, the MoD cannot afford to be complacent in this matter. The security implications associated with losing equipment such as this are significant; having an effective audit trail is the only way to ensure that all radios are accounted for. We hope that the development and roll out of the Bowman And Communication Management System (BACMS) and Joint Asset Management and Engineering Solutions (JAMES) systems can be achieved quickly and effectively. (Paragraph 22)

5.  While the sample taken by the NAO for its analysis is not large, it is statistically valid. It is possible that the NAO's sample had a higher incidence of errors than is the case overall, but it is equally possible that the opposite could be the case. We hope that the NAO will continue to monitor closely the MoD's management of stock, perhaps giving consideration to undertaking a broader analysis of this problem at some future date. (Paragraph 24)

6.  It is of course vital that the MoD identifies and ensures that all staff are aware of and working towards its key objectives and strategic direction. We recognise that the Strategy for Defence is designed to respond to current and short to medium term organisational needs but are concerned that its five year declared time table should not pre-empt or restrict the introduction of changes that will be identified in the Strategic Defence Review. We would expect any organisational and other management and budgetary measures identified as part of that Strategic Defence Review to be implemented as soon as possible and before 2014 as required. (Paragraph 30)

7.  While we welcome the Department's review of its performance management system, we hope that the outcome of this work will feed into the SDR and we once again emphasise that new programmes must not pre-empt the findings of the SDR. (Paragraph 31)

8.  While improvements have been achieved, work to implement the Department's Capability Review Implementation plan quickly and effectively must continue, and areas of previously good performance cannot be allowed to slip. It is vital that staff reductions and Value For Money savings are achieved without impacting directly or indirectly upon frontline capability and contingent readiness. (Paragraph 37)

9.  The MoD has a poor record of compliance with data protection legislation. Whilst we are encouraged by the progress that has made in implementing the recommendations of Sir Edmund Burton, there continue to be too many incidents of data loss. The heightened number of incidents reported in the last year highlights the severity of the problem and the need for the MoD to continue to be aware of and to manage the risks more robustly. Unless it becomes evident by the time of the next annual report that progress has been made, we recommend that a champion to drive this important area of policy is appointed at ministerial level. (Paragraph 41)

10.  While we accept that the MoD is following Treasury guidance regarding the use of terms such as "some progress", we are concerned that these phrases are unhelpful when used in isolation, without giving any indication within the Annual Report as to their meaning in real terms. We recommend that the MoD ensure that an explanation of these assessments are included in next year's report. Furthermore, the Department needs to make the basis for these assessments clear. A full outline of targets and sub-indicators will not be appropriate in every case—where there is operational sensitivity, for example. However, we expect the Department to provide as much information regarding the assessment of performance as is practically possible. (Paragraph 47)

11.  Given that the recently published Strategy for Defence identifies operations in Afghanistan as the Department's "main effort", it is important that both we and the public are able to make a reasonable assessment of the Department's performance in this area. The war in Afghanistan and the casualties incurred are inevitably emotive subjects. We recognise that the Department cannot make public all of its activity, but we recommend that the MoD needs to put more work into accurately conveying its performance on operations to the public. There are some welcome signs that this is beginning to improve. (Paragraph 52)

12.  The MoD must continue to work to implement the recommendations of the NAO and PAC as quickly and effectively as possible. (Paragraph 56)

13.  Addressing the continuing problem of maintaining manning balance, particularly with regard to pinch point trades, needs to be a high priority for the Department. This is a long-term concern that directly affects the operational capability of the Armed Forces. It can only be addressed by ensuring that personnel are not only recruited and trained effectively, but that they are retained. To ensure that the improvements seen in recruitment are reflected in the long term, the Department needs to ensure that budgets are sufficient to meet training needs, and that remaining in the Services is attractive to personnel, both financially and in terms of wider Service life, such as meeting harmony guidelines. (Paragraph 66)

14.  An arbitrary target on readiness which does not reflect the reality of the MoD's operational requirements serves little purpose. The MoD needs to ensure that it communicates the real position of readiness effectively. (Paragraph 70)

15.  It may be that greater accountability over budgets among senior officials would improve the situation. However, we will be discussing the complex issues of equipment procurement in greater detail in our separate Report on Defence Equipment. We welcome the publication of the MoD's Defence Strategy for Acquisition Reform, which represents an initial step towards addressing these issues. (Paragraph 73)

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