House of Commons - Army 2020 - Public Accounts Committee

Army 2020 - Public Accounts Committee Contents

2 Managing risk in the transition to Army 2020

11. To date, the Army has been successful in reducing its size towards the planned 82,500 by 2018. The reduction in the size of the Army has been accelerated due to the need to make savings sooner than originally expected. As at May 2014, just under 8,000 Army personnel had been selected for redundancy and a final 1,000 redundancies were announced in June 2014.[21] The Army told us that the reduction in the regular Army has been taken forward faster than they could expect to regenerate or increase the size of the Army Reserve. By April 2014, there were 87,180 trained regular Army personnel against a requirement of 91,910, a shortfall in requirement of some 5%.[22]

12. The Army recognised that it had underperformed against its recruitment targets for the last year. In 2013-14, it missed its regular soldier recruitment target by more than 30% (or, over 3,000 soldiers). The Army has been managing this underperformance by adjusting the rate of outflow from the regular Army through its redundancy programme, but that approach is no longer possible following the completion of the redundancy programme.[23] The Army also asked Capita to recruit 6,000 reserve soldiers last year but it recruited only around 2,000. The Army was not content with its recruitment performance in 2013-14 and recognised that recruitment for both regulars and reserves needs to be picked up.[24] In particular, the Army agreed that it needs to substantially increase reserve recruitment if it is to hit its ambitious recruitment target of 9,270 reserves in 2016-17. The Army's underperformance in recruiting also means that that the pipeline of new recruits in the training system is not full.[25]

13. The Army identified that its ability to provide 'effective capability' will depend not only on numbers, but on the quality of personnel, the amount of training they have undertaken and the extent to which the Army can operate effectively under its new structure. However, the Army acknowledged that, as a result of budgetary pressure and the resulting acceleration of the reduction in the regular Army, resilience would be lacking in the Army structure until the planned growth of the Army Reserve can be achieved. We are deeply concerned to hear that a capability gap could be emerging in some parts of the Army structure that could increase the risk of additional pressure being placed on regular units.[26] The Army noted that the true extent of any capability gap will only be determined by the events the country gets involved in and what the Army is asked to do as a result. The Department was unable to provide us with any assurance that it has established clear monitoring criteria for the transition to Army 2020 and defined trigger points for enacting contingency measures should progress against the plan start to slip further.[27]

14. The Army's recruitment contract with Capita was not established on the basis of a clear understanding of the scale of the recruitment challenge. For example, the Army's poor management information meant it vastly overestimated the number of recruitment candidates it was passing to Capita at the start of the contract. Capita originally expected to be working through some 55,000 potential candidates for recruitment to the regular Army or Army Reserve. However, by the time it had verified the Army's records only 12,000 potential candidates remained, of which 6,000 had been on the system for over a year and were considered likely to be redundant.[28] In addition, Capita identified two major policy changes that were introduced after it signed its contract with the Army. These were the decision to increase the size of the Army Reserve, leading to a much larger overall recruitment operation for Capita involving both the recruitment of regular and reserve soldiers, and the decision to make the entrance standards for regulars and reserves equal, making it more challenging for people to join the reserves.[29]

15. While acknowledging that IT will not alone result in more people applying to join the army, Capita explained that it was important for the successful operation of its recruitment contract with the Army.[30] The Department's failure to provide the IT infrastructure critical to the success of the Army's and Capita's recruitment contract was largely caused by its decision to have two separate contracts for hosting and software: one contract with ATLAS held by the Department and another contract with Capita held by the Army. The Department and the Army failed to manage the contracts with these two suppliers effectively and the necessary IT is not expected to be ready until summer 2015.[31] The Department acknowledged that this poor management was unacceptable.[32] The Army will incur additional costs of £1 million a month up to that point. These costs relate, for example, to the Army having to fund 80 extra soldiers and 100 temporary staff to help Capita run the recruitment process.[33]

16. The Department originally expected the Army's recruitment contract with Capita to deliver savings of £267 million, but the IT problems experienced on the contract have led to additional unforeseen costs.[34] The Department said it was still seeking to finalise these costs because it believed some of them may be covered by existing contractual obligations. However, it acknowledged that these costs would be at least £70 million.[35] Because of the way the contract was set up by the Army, and its requirement for supporting IT to be provided by the Department, the Army has been unable to apply the contract's performance regime. This means the Army has had to pay Capita as though they met all of their recruitment targets in 2013-14, using taxpayers' money to pay Capita for recruiting 6,000 reserves when it only recruited around 2,000.[36]

17. We are concerned that much of the Department's and Army's confidence that it can improve reserve recruitment and hit the 30,000 trained strength target by April 2019 is based on bold assertions rather than robust evidence. For example, the Army's assumptions about improving training success rates for reserves from 34% to 55%, included in its existing workforce model, were unevidenced.[37] The Department is confident that the action it is taking will increase the trained strength of the Army Reserve to 30,000 by April 2019 if the trained strength of the Army Reserve includes reserves returning from Full Time Reserve Service in the regular Army and 'sponsored reserves'.[38] However, the Department refused to provide its most up-to-date model, including the impact of these actions, to the National Audit Office to support full scrutiny of its wider planning assumptions for reserve recruitment.[39]

18. The Department's Accounting Officer confirmed that he had agreed the factual accuracy of the National Audit Office's report, on which our evidence session was based. The Accounting Officer was, however, unable to explain why, the day before the report's publication, national newspapers reported that the Department had criticised the evidence it contained. Despite one newspaper sourcing the briefing to a 'defence official', the Accounting Officer stated that he did not believe the individual was an official in the Department. The Accounting Officer agreed to investigate whether the source quoted in the article worked for the Department.[40]

21 Qq 23, 60, 64; C&AG's Report para 14 Back

22 Q 60; C&AG's Report para 2.24 Back

23 Q 181; C&AG's Report para 16 Back

24 Qq 51, 53, 74, 122, 181; C&AG's Report para 16 Back

25 Qq 50, 122; C&AG's Report para 16 Back

26 Qq 7, 64, 97 Back

27 Qq 7, 183 Back

28 Qq 111-115; C&AG's Report para 1.20 Back

29 Qq 74-75 Back

30 Q 129 Back

31 Qq 146-147; C&AG's Report, paras 17 and 2.15 Back

32 Qq 116-118 Back