Delivering Security in a Changing World
Future Capabilities

Chapter 3
Organisation and Efficiency

3.1 In the Budget, the Chancellor of the Exchequer announced that the Ministry of Defence, in common with other Departments, was committed to a target of efficiency improvements amounting to at least 2.5% of the total Defence budget for each of the three years of the Spending Review - amounting to a target of £2.8bn by 2007/08.

3.2 It is indeed vital that we spend money wisely and make every pound count towards our defence objectives.  We have constructed a robust efficiency programme that meets this target, and we are determined that the target will be met, and if possible exceeded.

3.3 Following Spending Review 2002, the key business change programmes in the Department have been brought together into a single, coherent and prioritised Defence Change Programme with strong central direction and guidance.  The Programme aims to maximise investment in the front-line by modernising business systems and processes in all the areas that come together to produce operational capability.  We are also developing an MOD-wide Business Management System to provide us with a framework for delivering continuous improvement in all Departmental business processes.  This will enable us to drive further gains in efficiency and effectiveness, releasing more resources to the front line.

3.4 The Defence Change Programme, together with other savings identified by the thematic workstrands, form the Department’s response to the cross-Government Efficiency Review.  The programmes within the Defence Change Programme have been thoroughly reviewed, and plans are now in place for these programmes to deliver efficiency benefits in excess of £1.4bn (compared with 2004/05) by 2007/08.  Major items include:

• The Defence Logistics Transformation Programme, which aims to improve the operational effectiveness, efficiency and flexibility of logistics support by revolutionising the delivery of support to all three Services.  It incorporates the continuing work on the 'end-to-end' review of Air and Land logistic support, which examined how best to streamline support across organisational boundaries, from industry to the frontline.  A successful demonstration phase validating the recommendations in the review was completed in April 2004.  Work continues to develop options for the future support of military aircraft.  We are also taking a new approach to the management of the Defence land vehicle fleet by adopting industry best practice, enabling a reduction of over 2,000 vehicles.
  
• The modernisation of military and civilian human resources management, which will deliver an enhanced service at lower cost through new systems and harmonised and simplified personnel policies and processes.  These programmes will deliver considerable financial savings, chiefly through a leaner administrative function, as well as significant practical benefits, including improved tracking of Service personnel deployed on operations.   For example, the rollout of the Joint Personnel Administration remains on track, starting in 2006.  This will enable marked improvements, replacing legacy human resources systems and saving some 1,400 military and civilian posts.
  
• The Defence Information Infrastructure (DII) programme, which will provide a single modern information infrastructure across the Department, replacing over 300 separate information systems across 2,000 locations worldwide.  This programme is an essential enabler for other modernisation programmes.  It is also a fundamental component of Network Enabled Capability.
  
• Defence estate modernisation through rationalisation, more effective contractual arrangements to raise its condition and through building new accommodation for Service personnel.  Our aim is to rationalise onto fewer, larger sites over the next twenty years.  As part of this we will be examining our future requirements for airfields, with a view to making substantial reductions.  All proposals will be subject to the normal consultation processes and the details announced once the outcome of the work is available.

3.5 An important element of the thematic workstrands was to look at opportunities for achieving efficiencies through the rationalisation and relocation of headquarters and supporting staffs.  The Royal Navy will merge the Fleet and Naval Personnel headquarters in Portsmouth.  The Army is considering the scope for collocating its Land and Adjutant General headquarters.  The RAF is planning to collocate its Strike and Personnel and Training Commands.  Investment appraisals of the various options will be carried out in the near future to determine the most suitable locations of these collocated headquarters.  We will reduce the number of MOD buildings in Central London to two; have already reduced the numbers employed in Central London to 4,900, and will continue to seek further reductions.  We are considering the scope for moving elements of the Defence Logistics Organisation (DLO) to Bristol alongside the Defence Procurement Agency.  We expect to reduce the number of DLO maintenance locations and make greater use of capacity freed up on operational bases that need to be retained.   Changes in fast jet numbers will allow us to close RAF Coltishall airfield by December 2006 and the reduced requirement for Air Defence squadrons will permit Tornado operations at RAF Leeming to cease from 2008.

Manpower Implications

3.6 Transforming and restructuring the Armed Forces to meet the challenges of the 21st Century will inevitably lead to reductions in manpower.  Royal Navy manpower will reduce from 37,500 to around 36,000 by April 2008, reflecting force level reductions and efficiencies.  Once full normalisation in Northern Ireland is achieved, the bulk of the manpower from the Northern Ireland task will be available for contingent operations, allowing effective re-balancing across the Army structure and ensuring longer intervals between tours.  Under these circumstances, we would expect to see an army of around 102,000, with significantly more capacity to meet the challenges of concurrent operations overseas than it has today.  RAF manpower will reduce from 48,500 to around 41,000 by April 2008.  This takes into account planned manpower savings arising from the introduction of new aircraft types.  It also includes savings from various existing efficiency programmes such as End to End Logistics, and from the implementation of multi-and adaptive skilling, whereby individuals will be trained to undertake a variety of specialist tasks across their career, increasing flexibility.  It recognises changed assumptions relating to the requirement for RAF personnel for contingent operations.  Civilian numbers will reduce by more than 10,000 by April 2008, largely as a consequence of changes introduced as part of the Defence Change Programme.

3.7 The reductions will take place over a number of years.  For some of our people the changes will mean re-training.  Some will leave as a result of the natural turnover of personnel but unfortunately some will need to be made redundant.  We will do all we can to minimise such measures while preserving the effective age structure of the Services.  We do not underestimate the impact that these changes could cause at an individual level.  We will do everything possible to ease the difficulties while investing in the skills of our people at every level.  It will take some time to work these measures through, but we will announce details as soon as possible.  All these changes will be subject to consultation in the normal way.

Chapter 4: Conclusions »

Last Updated: 26 Jul 04