Army 2020 inquiry into transition to new structure

Army 2020 is an ambitious programme of change and restructuring which responds to the Government’s need to reduce public spending, including on defence. It seeks, for the first time, to integrate fully a regular Army of 82,500 with a larger and more frequently used Army Reserve of 30,000. This represents a significant change from pre-2010 levels of some 102,000 trained regular soldiers and 19,000 trained reserve soldiers. The Department projects that this revised force size will reduce the cost of the Army by £10.6 billion between 2011–12 and 2021–22.

The Department did not test feasibility, or adequately consult the Army, before deciding to reduce the regular Army and increase the Army Reserve. We recognise that the decision to reduce the size of the Army was driven by the need to make financial savings in a time of austerity. However, it is remarkable that the Chief of the General Staff was not involved in all stages of the decision-making process given the magnitude and importance of the change required, and its impact on the service which he commands. We were also surprised to learn that the Department did not test the feasibility of recruiting and training the number of reserve soldiers it needs by 2019. The Department is confident that it can still recruit and train the required number of reserves by 2019, but we remain to be convinced given that its confidence is based on unevidenced assumptions. Recommendation: For future significant reviews of the armed forces, the Department should involve relevant stakeholders fully in the decision-making process, and ensure adequate testing of the feasibility for proposed actions.

Shortfalls in Army recruitment are increasing the risk of capability gaps emerging in some parts of the Army’s structure. To achieve the ambition of Army 2020, the Department needs to grow substantially the size of the Army Reserve. It also needs to reduce the size of the regular Army while at the same time recruiting enough regular soldiers to sustain the future Army structure. However, the Army’s recruiting partner, Capita, missed its regular soldier recruitment target by 30% in 2013–14 and it recruited only around 2,000 reserves against a target of 6,000. A huge step up in performance is required if the Army is to hit its ambitious target of recruiting 9,270 new reserves in 2016–17. The size of the regular Army is reducing faster than originally planned but the size of the trained Army Reserve has not increased in the last two years because more people have left the reserve than joined. 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. Recommendation: The Army should establish clear trigger points for enacting contingency measures if recruitment and retention rates are not improved and gaps emerge in the Army’s structure.

The Army lacks a fully developed contingency plan or clear criteria for using it if gaps emerge in the Army’s structure. Army 2020’s smaller Army will be even more 5 vulnerable to the under-manning that was common before the recent conflicts in Iraq and Afghanistan, so it is wholly unacceptable that the Department’s current ‘Plan B’ is to get ‘Plan A’ to work. The Army has some mitigating actions it can take if recruitment performance does not improve, such as calling up ex-regular personal with a service liability or extending tour lengths for regulars, but it has not worked these into a fully developed contingency plan. The Army also acknowledges that some of its proposed mitigating actions could work in the short-term but may have long-term negative consequences, or be difficult to put into action. For example, extended tours of operational service for regulars would meet a short-term need to cover any gaps that emerge in the Army structure, but could lead to lower morale and more people leaving the regular Army, thereby exacerbating the problem. Additionally, the Army is not able to say with certainty that all those with a service liability are available to be used. Some 40% of the records the Army holds on these individuals do not contain details of medical fitness that would determine whether they could be used on operations. Recommendation: The Department should evaluate the options available to it to address any gaps in military capability, assess their potential short-term and long- term impact on the Army, and develop a strategic contingency plan to respond.

The Department’s approach to recruitment has put planned savings at risk and is not delivering value for money. The Army signed its contract with Capita before the Department took the decision to substantially increase the size of the Army Reserve. As a result, the Army’s recruitment contract with Capita was not established on the basis of a clear understanding of the scale of recruitment challenge. The Army’s poor management information also meant that it passed Capita 12,000 potential candidates for recruitment at the start of the contract rather than the 55,000 Capita had been led to expect, and half of the 12,000 were contacts from more than a year earlier and so were not all realistic prospects. The operation of the contract and the application of its performance regime were then undermined because Capita did not get the IT infrastructure it needed to deliver its contract, primarily because the Department and the Army failed to integrate their separate contracts with two suppliers. The Department acknowledges that this was unacceptable, and at least £70 million of the planned £267 million savings from the contract have already been lost. The Department has also had to pay Capita as though they met all of their recruitment targets in 2013–14 despite, for example, falling 4,000 short of its 6,000 target for reserve recruits. Recommendation: The Department should ensure that it is able to hold Capita to account for its performance in delivering the Army recruitment contract, by finalising and agreeing an interim performance regime.

The Department prevented full Parliamentary scrutiny of its Army 2020 plans by withholding information from the National Audit Office. The Department claims it has evidence to support its confidence that it can increase the trained strength of the Army Reserve to 30,000 by 2019. We were shocked to read in the National Audit Office’s report that it was unable to test these assumptions because the Department 6 failed to make evidence available for audit. As a result, we can have no assurance that the Department’s planning assumptions for reserve recruitment are reasonable and based on evidence. The Department was also unable to explain why, despite agreeing the facts in the National Audit Office report, defence officials subsequently briefed national newspapers criticising the evidence in the report. Recommendation: The Department should fulfil its obligations for accountability to Parliament by making all evidence available for scrutiny in a timely manner and follow established convention in commenting on National Audit Office reports. 7 1 Planning for Army 2020

Army 2020 includes plans for a regular Army of around 82,500, which represents a 20% reduction from its previous size of 102,000. The Army told us that its smaller size will make it more vulnerable to the levels of under-staffing that were common before the recent conflicts in Iraq and Afghanistan.14 Having heard about the risk of gaps emerging in the Army structure, we asked the Army what contingency plans they had in place. The Army was able to describe two of the mitigating actions it could take if recruitment performance does not improve, such as calling up ex-regular personal with a service liability or extending tour lengths for regulars.15

Regular reserves are soldiers that have a legal liability to serve having completed their term of service in the regular Army. This liability lasts for five years but does not apply to people who have been made redundant.16 The Army has just started running a programme 7 Qq 55, 57, C&AG’s Report para 1 8 Ministry of Defence, Future Reserves 2020: The Independent Commission to Review the United Kingdom’s Reserve Forces, July 2011. 9 Qq 55–57; C&AG’s Report para 1.13 10 Q 70 11 Qq 55, 57; Ministry of Defence, Future Reserves 2020: The Independent Commission to Review the United Kingdom’s Reserve Forces, July 2011 12 Q 170 13 Qq 3, 45–46; C&AG’s Report para 15 14 Qq 70, 182; C&AG’s Report para 2.1 15 Qq 16–17, 23–30, 79–81, 94–98, 105–107 16 Qq 17, 19, 93 9 to establish contact with regular reserves to develop a pool of people it could call upon to fill gaps in the Army structure but recognised that actually calling up, training and mobilising regular reserves will require political backing.17 Additionally, the Army is not able to say with certainty that all those with a service liability are available to be used; some 40% of the records the Army holds on these individuals do not contain details of medical fitness that would determine whether they could be used on operations.18

The Chief of General Staff also suggested that gaps could be mitigated by extending the tour lengths for regular soldiers from the current six months to nine or twelve months. He recognised, however, that while this option would cover recruitment shortfalls in the short- term, it could have potentially negative consequences in the long-term. For example, a longer-term increase in the number of people who choose to leave the regular Army due to the impact increased demands could have on morale, thereby exacerbating the problem.19

Overall, the Army gave us no assurance that these actions represented a fully developed contingency plan. Given the significance of the potential gap in defence capability that could result, we find it unacceptable that the Department’s current ‘Plan B’ for Army 2020 is to get ‘Plan A’ to work.20 17 Qq 26–29 18 Q18; C&AG’s Report para 2.42 19 Qq 97–99, 101 20 Q182; C&AG’s Report para 31 10 2 Managing risk in the transition to Army 2020

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

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

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 21 Qq 23, 60, 64; C&AG’s Report para 14 22 Q 60; C&AG’s Report para 2.24 23 Q 181; C&AG’s Report para 16 24 Qq 51, 53, 74, 122, 181; C&AG’s Report para 16 25 Qq 50, 122; C&AG’s Report para 16 26 Qq 7, 64, 97 11 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

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

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

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 27 Qq 7, 183 28 Qq 111–115; C&AG’s Report para 1.20 29 Qq 74–75 30 Q 129 31 Qq 146–147; C&AG’s Report, paras 17 and 2.15 32 Qq 116–118 33 Qq 155, 157–158; C&AG’s Report, para 18 34 Qq 153–163 35 Qq 161, 163 12 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

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

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 36 Qq 39–40; C&AG’s Report, para 16 37 Qq 119–120; C&AG’s Report para 9 38 Sponsored Reserves are nominated employees of a company/ organisation with whom the Armed Forces have signed a contract for the delivery of a Sponsored Reserve capability. Sponsored Reserves have special liabilities for reserve service, military training and call out. 39 C & AG’s Report, para 2.29 40 Qq 1, 190–193 13