Recommendations & Conclusions
18 items
4
Recommendation
Fifty-Second Report - Ministry of Defen…
Acknowledged
Likely additional costs in other areas of departmental spending, such as on its workforce and sizeable estate, may squeeze the Plan’s budget in future years, further threatening its affordability. The Department’s plans to make substantial reductions to its military and civilian workforces over the next 10 years are already harder …
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Likely additional costs in other areas of departmental spending, such as on its workforce and sizeable estate, may squeeze the Plan’s budget in future years, further threatening its affordability. The Department’s plans to make substantial reductions to its military and civilian workforces over the next 10 years are already harder than expected as fewer personnel have left the armed forces than normal since 2020 because of the pandemic. Similarly, there are as yet no plans to make an additional £2.5 billion cut to workforce costs, which is also already assumed in the Department’s plans. And the Department does not know how it will afford the pay rises likely to be required as a result of higher inflation and wage growth in the wider economy in the next few years. The condition of the Department’s estate is set to continue to decline despite an additional £500m to be spent on ‘preventative’ maintenance. Service accommodation remains in a very bad way which risks harming recruitment and retention of personnel with key skills. Recommendation: The next Equipment Plan report must clearly set out the quantified realistic affordability risk to it posed by the Department’s plans for its other areas of spending.
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Government response AI summary
The government agrees with the Committee’s recommendation and recognises the importance of managing risks to affordability, particularly from challenges in areas such as workforce and estates.
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HM Treasury
5
Recommendation
Fifty-Second Report - Ministry of Defen…
Acknowledged
The Department remains a long way short of having the finance skills it needs to manage the Plan effectively. Strong financial skills are needed to manage the large and complex set of programmes, crucial to a well managed and affordable Plan. But according to HM Treasury, the Department is in …
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The Department remains a long way short of having the finance skills it needs to manage the Plan effectively. Strong financial skills are needed to manage the large and complex set of programmes, crucial to a well managed and affordable Plan. But according to HM Treasury, the Department is in the third quartile of government departments in terms of financial capability. The proportion of Finance staff with professional qualifications has only increased from 41% to 43% in two years, against a target of 60%. There are hundreds of gaps in finance staff across the Department. Ministry of Defence Equipment Plan 2021–31 7 We acknowledge that some progress is being made, with around 400 staff studying for qualifications, but progress is very slow even taking account of the disruptive effect of the pandemic over the last two years. Recommendation: The Department should accelerate its efforts to increase its financial skills by making a career in finance more attractive and making qualifying easier. It should aim to be in the top quartile of financial capability within government departments within 3 years and set out a credible plan to achieve this.
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Government response AI summary
The government agrees with the Committee’s recommendation and is committed to improving financial professionalism by training personnel, working with professional bodies, and supporting professional development.
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HM Treasury
6
Conclusion
Fifty-Second Report - Ministry of Defen…
Acknowledged
The Department has made little impact in its efforts to change its longstanding cultural resistance to change or criticism, which has for many years hindered a clear-eyed view of its equipment procurement performance. Senior officials do not acknowledge the poor state of affairs of current procurement, as outlined in NAO …
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The Department has made little impact in its efforts to change its longstanding cultural resistance to change or criticism, which has for many years hindered a clear-eyed view of its equipment procurement performance. Senior officials do not acknowledge the poor state of affairs of current procurement, as outlined in NAO reports and the Infrastructure and Projects Authority’s assessment of the Department’s performance. There is still intolerance of criticism within project teams, and 10% of MoD staff say that they have been subject to or witnessed bullying, harassment or discrimination. The Department has only implemented approximately half of the NAO’s Equipment Plan report recommendations since
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Government response AI summary
The government acknowledges the committee's conclusion regarding cultural resistance to change, committing to monitoring progress of NAO recommendations, promoting critical acquisition behaviours and culture, improving management information, and forging closer links with industry through the Supplier Partnering Programme.
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HM Treasury
8
Conclusion
Fifty-Second Report - Ministry of Defen…
Acknowledged
The Department told us that it intended to use the Plan’s increased budget to fund both new capabilities and existing programmes. Significantly the Plan now includes £8.65 billion budget for the Future Combat Air System (FCAS) programme. This is a step change as previous Plans did not include money to …
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The Department told us that it intended to use the Plan’s increased budget to fund both new capabilities and existing programmes. Significantly the Plan now includes £8.65 billion budget for the Future Combat Air System (FCAS) programme. This is a step change as previous Plans did not include money to develop the programme beyond initial spending on innovation and technology.12 However, the Department told us that the project is at an early stage and the concept phase will take several years. The next outline business case is not due until 2024.13 No decision will be made on a concept until some time after that.14 The Permanent Secretary told us that refining the costs for FCAS will be a priority in the next Spending Review.15
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Government response AI summary
The government notes the conclusion regarding the Future Combat Air System (FCAS) programme, stating that the Concept and Assessment phase concludes in 2024, which will provide evidence on programme specifications, schedule, and costs, while also engaging with international partners on cost share and industrial benefits.
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HM Treasury
17
Conclusion
Fifty-Second Report - Ministry of Defen…
Acknowledged
The Department told us that it was confident that the Dreadnought programme would not exceed its lifetime budget of £31 billion plus £10 billion contingency.38 It did not agree that the contingency amounted to a blank cheque, and said that HM Treasury only gave out its funds based on the …
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The Department told us that it was confident that the Dreadnought programme would not exceed its lifetime budget of £31 billion plus £10 billion contingency.38 It did not agree that the contingency amounted to a blank cheque, and said that HM Treasury only gave out its funds based on the Department driving the schedule and proving value for money.39 The Department also claimed that there had been significant improvements in management of the nuclear projects in the last two years, primarily as a result of setting up the Submarine Delivery Agency and the Defence Nuclear Organisation, which act effectively as a contractor and client. In addition, the establishment of the ‘Alliance’ relationship with industry should ensure lessons are learned and a proper partnership is in place to aid delivery.40
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Government response AI summary
The government acknowledges the committee's conclusion regarding the Dreadnought programme's budget and contingency, and states that the contingency's purpose is clearly defined and subject to HM Treasury scrutiny. Discussions are underway with HM Treasury regarding future governance and funding arrangements.
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HM Treasury
18
Conclusion
Fifty-Second Report - Ministry of Defen…
Acknowledged
On the replacement Warhead programme, the Department pointed to its 2021 action to bring the Atomic Weapons Establishment back under direct Government control, to help better control costs. In addition, it is investing in skills in the Defence Nuclear Organisation. But the Department did acknowledge that refinement of costs was …
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On the replacement Warhead programme, the Department pointed to its 2021 action to bring the Atomic Weapons Establishment back under direct Government control, to help better control costs. In addition, it is investing in skills in the Defence Nuclear Organisation. But the Department did acknowledge that refinement of costs was needed at the next Spending Review, and that the programme would benefit from having a similar contingency arrangement to the Dreadnought Programme.41 Cost reductions and savings
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Government response AI summary
The government acknowledges the committee's conclusion regarding the replacement Warhead programme, stating that the contingency's purpose is clearly defined and subject to HM Treasury scrutiny. Discussions are underway with HM Treasury regarding future governance and funding arrangements.
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HM Treasury
22
Conclusion
Fifty-Second Report - Ministry of Defen…
Acknowledged
The Department has made a number of assumptions about how much it will spend on its workforce (and other operating costs) and on its estate and infrastructure over the next 10 years. If it spends more than it currently expects to on these areas, it may have to reduce spending …
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The Department has made a number of assumptions about how much it will spend on its workforce (and other operating costs) and on its estate and infrastructure over the next 10 years. If it spends more than it currently expects to on these areas, it may have to reduce spending on equipment procurement and support.48 The Department acknowledged that there is an aspect of workforce costs that is directly relevant to the affordability of the equipment programme, but that any reduction in the Plan’s budget or contingency would need to be a decision taken in a spending review planning round.49
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Government response AI summary
The government acknowledges the committee's conclusion regarding workforce and estate spending assumptions, recognizing the importance of managing risks to affordability, detailing the EP21's affordable plan, and planning a major focus on affordability for 2022-32 in the EP22.
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HM Treasury
23
Conclusion
Fifty-Second Report - Ministry of Defen…
Acknowledged
The Department plans to make substantial reductions to its military and civilian workforces over the next 10 years. These include reducing the Army from 82,000 to 73,000; other savings equivalent to reducing trained military workforce by 6,350 (and their untrained workforce by 1,450) by 2030; and a 10% further reduction …
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The Department plans to make substantial reductions to its military and civilian workforces over the next 10 years. These include reducing the Army from 82,000 to 73,000; other savings equivalent to reducing trained military workforce by 6,350 (and their untrained workforce by 1,450) by 2030; and a 10% further reduction in the cost of the civilian workforce by 2024–25. As reported by the NAO report, the targets are already harder than expected as the uncertain economic outlook of the past two years caused by the pandemic has meant that fewer personnel have left the armed forces than normal.50 But the Department told us that the military reduction plans are now relatively mature, and the civilian reductions are broadly deliverable.51
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Government response AI summary
The government acknowledges the committee's conclusion regarding workforce reductions, recognizing the importance of managing risks to affordability, detailing the EP21's affordable plan, and planning a major focus on affordability for 2022-32 in the EP22.
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HM Treasury
24
Conclusion
Fifty-Second Report - Ministry of Defen…
Acknowledged
In addition to these reductions, the Department’s spending plans currently assume further workforce savings of £2.5 billion over the 10 years to March 2031.52 The Department told us that plans had not yet been drawn up to achieve these reductions, and they will be subject to agreement in the next …
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In addition to these reductions, the Department’s spending plans currently assume further workforce savings of £2.5 billion over the 10 years to March 2031.52 The Department told us that plans had not yet been drawn up to achieve these reductions, and they will be subject to agreement in the next spending review.53 In terms of wages, the Department admitted it does not know how it will afford the pay rises likely to be required as a result of higher inflation and wage growth in the wider economy in the next few years. The Department told us it was looking at a range of options, and now has pay freedoms to recruit more highly skilled staff, particularly in programme and project management.54 45 NAO report, paragraphs 12, 2.17 46 Q97 47 Q101 48 NAO report, paragraph 2.28 49 Q28 50 C&AG’s Report, para 2.29 51 Q102 52 C&AG’s report, para 2.30 53 Q112 54 Q115 14 Ministry of Defence Equipment Plan 2021–31
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Government response AI summary
The government acknowledges the committee's conclusion regarding workforce savings and pay rises, recognizing the importance of managing risks to affordability, detailing the EP21's affordable plan, and planning a major focus on affordability for 2022-32 in the EP22.
Read full response →
HM Treasury
25
Conclusion
Fifty-Second Report - Ministry of Defen…
Acknowledged
The condition of the Department’s estate is set to continue to decline despite an additional £500m to be spent on ‘preventative’ maintenance until March 2025.55 Service accommodation remains in a very bad way which risks harming recruitment and retention of personnel with key skills. The Department told us it recognised …
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The condition of the Department’s estate is set to continue to decline despite an additional £500m to be spent on ‘preventative’ maintenance until March 2025.55 Service accommodation remains in a very bad way which risks harming recruitment and retention of personnel with key skills. The Department told us it recognised the need for investment in the estate and that it was a priority. It said that the imminent accommodation strategy would include a clear articulation of standards for service personnel and families.56 55 NAO report, paragraph 2.33 56 Q16, Q24 Ministry of Defence Equipment Plan 2021–31 15 3 Financial capability and Departmental culture
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Government response AI summary
The government acknowledges the committee's conclusion regarding the condition of the Department’s estate, recognizing the importance of managing risks to affordability, detailing the EP21's affordable plan, and planning a major focus on affordability for 2022-32 in the EP22.
Read full response →
HM Treasury
26
Recommendation
Fifty-Second Report - Ministry of Defen…
Acknowledged
In order to produce a Plan which is effective, realistic and affordable, the Department needs to have in place the right arrangements and capabilities, many of which have previously been absent or incomplete. With such a financially complex Plan, it is vital for the Department’s people to have strong financial …
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In order to produce a Plan which is effective, realistic and affordable, the Department needs to have in place the right arrangements and capabilities, many of which have previously been absent or incomplete. With such a financially complex Plan, it is vital for the Department’s people to have strong financial skills. And necessary to underpin success is the need for a culture in the Department which is open, collaborative and innovative so that complex problems can be solved imaginatively and decision-makers can have a clear- eyed view of what is happening.57 Financial skills
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Government response AI summary
The government agrees with the Committee’s recommendation and mentions that the department monitors progress of NAO Value for Money recommendations including Equipment Plan report recommendations and provided an update on the Equipment Plan PAC recommendations through refreshed Treasury Minutes published on 9 June 2022. Further …
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HM Treasury
27
Conclusion
Fifty-Second Report - Ministry of Defen…
Acknowledged
Strong financial skills are necessary at all levels for good management of the many hundreds of complex projects which make up the Plan. Yet, according to HM Treasury, the Department languishes in the third quartile of government departments in terms of financial capability. And the proportion of professionally trained financial …
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Strong financial skills are necessary at all levels for good management of the many hundreds of complex projects which make up the Plan. Yet, according to HM Treasury, the Department languishes in the third quartile of government departments in terms of financial capability. And the proportion of professionally trained financial staff in the Department has only increased from 41% to 43% since 2019, against a target of 60%. In July 2021 the Department had 350 vacancies in jobs in finance across the Department.58
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Government response AI summary
The government acknowledges the committee's conclusion regarding financial skills, committing to improving financial professionalism by training personnel, supporting professional development, and working towards the Government Finance Function ambition of ensuring at least 60% of the finance profession are qualified.
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HM Treasury
28
Recommendation
Fifty-Second Report - Ministry of Defen…
Acknowledged
We were interested as to why there had been so little progress since last year. The Department acknowledged “we are not where we want to be”, but told us that things were going in the right direction, and that there was a ‘sea change’ in the Department’s sense of cost …
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We were interested as to why there had been so little progress since last year. The Department acknowledged “we are not where we want to be”, but told us that things were going in the right direction, and that there was a ‘sea change’ in the Department’s sense of cost control this year. The Department said that many staff were currently undertaking qualifications and that 54% of finance staff were either qualified or studying for qualifications. At senior levels the proportions of qualified staff were higher, including 85% of Senior Civil Service finance staff. He also noted that an initiative to roll out a finance career framework later this year would provide more granular information on where gaps lie. Taken together he said, “we are getting people with the right qualifications in the right roles”.59 The Department’s culture
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Government response AI summary
The government agrees with the Committee’s recommendation and is committed to improving financial professionalism by training personnel, working with professional bodies, and supporting professional development.
Read full response →
HM Treasury
29
Conclusion
Fifty-Second Report - Ministry of Defen…
Acknowledged
We found that our witnesses did not readily acknowledge the poor state of affairs of current procurement. The Chief Executive of Defence Equipment and Support told us that, while he did not pretend his programmes were perfect, there has been significant improvements in controlling their costs, making efficiencies and delivering …
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We found that our witnesses did not readily acknowledge the poor state of affairs of current procurement. The Chief Executive of Defence Equipment and Support told us that, while he did not pretend his programmes were perfect, there has been significant improvements in controlling their costs, making efficiencies and delivering to time.60 This is at odds with the Infrastructure and Projects Authority’s assessment of the Department’s performance, where, in its latest report, it rated the majority of large defence equipment projects as either red or amber.61
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Government response AI summary
The government agrees with the Committee’s recommendation and will monitors progress of National Audit Office’s (NAO’s) Value for Money recommendations, promote critical acquisition behaviours and culture, use management information, and forge closer links with industry.
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HM Treasury
30
Conclusion
Fifty-Second Report - Ministry of Defen…
Acknowledged
We were interested to understand why information about project performance does not always seem to flow freely and openly through the Department. The Permanent Secretary told us about the Ajax programme’s Health and Safety Report’s identification 57 C&AG’s report, para 3.3 58 Q116; C&AG’s report, para 3.17 59 Qq 149, …
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We were interested to understand why information about project performance does not always seem to flow freely and openly through the Department. The Permanent Secretary told us about the Ajax programme’s Health and Safety Report’s identification 57 C&AG’s report, para 3.3 58 Q116; C&AG’s report, para 3.17 59 Qq 149, 116 60 Q49 61 Qq 38–44; Letter to the Committee from the Permanent Secretary, 21 March 2022. 16 Ministry of Defence Equipment Plan 2021–31 of “a number of serious failings in which information around the project was flowing between constituent parts of the organisation and up to senior decision makers”.62 This failure appears to have even affected the open flow of information to Ministers, who have now called for a judicial inquiry into what officials told them. We noted that the Permanent Secretary is recusing himself from the terms of reference of the inquiry as he was involved in the decision to approve the contract for Ajax when he was in the Department some years ago.63
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Government response AI summary
The government agrees with the Committee’s recommendation and will monitors progress of National Audit Office’s (NAO’s) Value for Money recommendations, promote critical acquisition behaviours and culture, use management information, and forge closer links with industry.
Read full response →
HM Treasury
31
Conclusion
Fifty-Second Report - Ministry of Defen…
Acknowledged
We asked about the lack of tolerance of those involved in projects to voice their concerns without facing serious repercussions. The Permanent Secretary told us that “there are some particular challenges within the uniform chain of command about how you raise concerns” and he wanted the Department to have “the …
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We asked about the lack of tolerance of those involved in projects to voice their concerns without facing serious repercussions. The Permanent Secretary told us that “there are some particular challenges within the uniform chain of command about how you raise concerns” and he wanted the Department to have “the kind of safety culture where people feel able to raise concerns and have those concerns acted on”.64 He mentioned in particular his worry about the autumn 2021 people survey results for the Department, in which 10% of staff said that they have been subject to or witnessed bullying, harassment or discrimination, up from 9% in the previous year.65
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Government response AI summary
The department monitors progress of National Audit Office’s (NAO’s) Value for Money recommendations including Equipment Plan report recommendations and Acquisition Reform agenda includes work to promote critical acquisition behaviours and culture. Further detail of progress with the recommendations and how this translates to changes to …
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HM Treasury
32
Conclusion
Fifty-Second Report - Ministry of Defen…
Acknowledged
Departmental reform efforts have made limited progress. We note the NAO’s finding that the current Defence Transformation Programme, of which a key element is to change both processes and culture within the Department, is already behind schedule. A July 2021 internal review of the programme found that improvements were needed …
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Departmental reform efforts have made limited progress. We note the NAO’s finding that the current Defence Transformation Programme, of which a key element is to change both processes and culture within the Department, is already behind schedule. A July 2021 internal review of the programme found that improvements were needed on nine of its 12 projects, as well as its overall governance and coherence.66 The resistance to change can be seen directly in the way the Plan is managed, where only approximately half of the NAO’s recommendations made since 2015 have been implemented.67
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Government response AI summary
The government acknowledges the committee's conclusion regarding departmental reform, committing to monitoring progress of NAO recommendations, promoting critical acquisition behaviours and culture, improving management information, and forging closer links with industry through the Supplier Partnering Programme.
Read full response →
HM Treasury
33
Recommendation
Fifty-Second Report - Ministry of Defen…
Acknowledged
The Permanent Secretary insisted that progress is being made on changing behaviour and culture, but admitted that such changes “are not quick”. He also said that reducing the level of bullying, harassment and discrimination within the Department is a matter of personal priority for him. This is encouraging but he …
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The Permanent Secretary insisted that progress is being made on changing behaviour and culture, but admitted that such changes “are not quick”. He also said that reducing the level of bullying, harassment and discrimination within the Department is a matter of personal priority for him. This is encouraging but he undoubtedly faces an uphill task.68 62 Q136 63 Q140 64 Q143 65 Q152 66 NAO report, paragraph 3.22 67 NAO report, paragraph 3.21 68 Q152 Ministry of Defence Equipment Plan 2021–31 17
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Government response AI summary
The government agrees with the Committee’s recommendation and mentions that the department monitors progress of NAO Value for Money recommendations including Equipment Plan report recommendations and provided an update on the Equipment Plan PAC recommendations through refreshed Treasury Minutes published on 9 June 2022. Further …
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HM Treasury