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Armed Forces: Future Defence Policy

My Lords, in his Statement about the Bernard Gray review on defence acquisition, Mr Ainsworth said of the review’s recommendations: ""We accept most of them and work is in hand, as part of a wider defence acquisition reform strategy, to implement the changes we agree are needed".—[Official Report, Commons, 19/10/09; col. 648.]" Something has to be done about the mismatch between the MoD’s procurement aspirations and available resources, but this problem has not suddenly arisen in the last six to 12 months. Mr Gray’s report shows the massive and unsustainable scale of the expenditure bow wave way back in 2005, let alone now in 2009. Thirteen months ago, some of my noble and gallant friends and I met Mr Hutton, then the Defence Secretary, to discuss the growing pressures on the defence budget and issues of procurement. I asked him directly, "Is it not time to have a defence review?". "No," he replied, "we know where we are and it is not necessary". In which case, why was the procurement budget being so cavalierly overloaded? Now, over a year later, there is serious talk of a new defence review. The Minister has described the preliminary work. However, due to the timings of the electoral calendar, there is little hope for a further 18 months or more of a completed defence review emerging and enjoying firm government endorsement, with future funding levels, one would hope, approved. Meanwhile, there is no sound basis for procurement decisions or cancellations. UORs apart, defence acquisition is in limbo. Even UORs add long-term liability to the core defence budget. If ever there has been a crying need for firm, determined, knowledgeable ministerial leadership on these issues, it has been in the past few years. I do not have to single out individuals, because what we have had in the MoD is institutionalised mismanagement. What organisation with a budget of well over £30 billion a year would seek to direct its efforts at decision level with individuals who hold appointments for a short time or on a twin-hatted basis? What organisation would attempt to resolve this with confusing additions and overlaps in responsibilities? The MoD’s ministerial quartet bizarrely became a quintet a year ago; now it is a sextet. Surely this is institutionalised mismanagement, apart from sending all the wrong signals about overweight headquarters when we are at war. Let me return to Mr Gray’s informative and instructive review. If the MoD was all powerful, with a known and guaranteed level of funding, it might work. But how can his proposals deal better with things that lie without the MoD’s control and are too often the root cause of its poor performance? The first and most obvious issue is whether any forecast level of funding will be allowed to remain from year on year for the 10 or more years that are perceived to be necessary to manage a large acquisition programme. All my experience since I was a wing commander in the CDS office in the mid-1960s has been that defence spend is always being challenged or squeezed. We have had a litany of reviews, cuts, savings, efficiencies, leanings and reductions in output costs, some compounded year on year. In the past decade, following the SDR of 1998, there has been a series of reorganisations, changes in responsibility and wholesale moves and amalgamations of headquarters. Each new iteration has been hailed as a panacea. Bernard Gray’s is but the latest and in many ways it is a persuasive and well presented case. However, it banks on a well preserved forecast of funding for a decade ahead. Is that realistic after all our experience in this field? Will other government departments allow it, let alone the Treasury? If not, Gray is dead meat. My second concern is about the impact of collaborative programmes where, say, a change of government leads to reappraisal, and almost certainly to delay. Although not the only reason for the Eurofighter/Typhoon’s extended development timescale, the "wobbly" thrown to the programme by the incoming German Government in the early 1990s was beyond our control and had serious adverse consequences for the final programme cost. My third concern is about the problems of reviews and change. After a year or more of deep discussion and consideration with staff at many levels, the plan is hatched and approved, and direction is given to get on with it. This will be complex, with adjustments made to ways of working, to chains of command, to relocation of staff and so on. To be effective, sound leadership and direction have to be maintained, unbroken, over a period of several years. However, too often a further "review" is started during the bed-down process. The attention of those who should be overseeing the progress of the previous change is caught up with and distracted by working on or contributing to the new study, sometimes with a loss of confidence in the earlier proposition. If this sounds abstract and theoretical, Ministers must read the horrific account in the review of the fatal Nimrod accident in Afghanistan. Perhaps I may quote one paragraph, which the noble Lord, Lord King, has already mentioned. Paragraph 21 reads: ""The MOD suffered a sustained period of deep organisational trauma between 1998 and 2006, beginning with the 1998 Strategic Defence Review. Financial pressures and cuts drove a cascade of multifarious organisational changes, which led to a dilution of the airworthiness regime and culture within the MOD, and distraction from safety and airworthiness issues as the top priority. There was a shift in culture and priorities in the MOD towards ‘business’ and financial targets, at the expense of functional values such as safety and airworthiness"." Although Mr Haddon-Cave’s remarks are focused on airworthiness, the lesson to be drawn is clear. Prior to the Nimrod accident in 2006, there was a massive restructuring of single-service logistic support into the DLO and, almost without waiting to see how that would turn out, the DLO was thrown together with the DPA to form DE&S. To all that upheaval was added an unrealisable savings target of 20 per cent. I hope that Ministers pause for thought about further organisational turbulence until a new SDR is agreed and the subsequent tsunami of cuts and changes have erupted. Mr Ainsworth in his Statement referred to an ongoing wider acquisition reform strategy. It seems that the tumbrels of change are rolling down the corridors of the MoD at an ever faster pace. I hope that Ministers will heed the advice of the Chiefs of Staff on these organisational changes.