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Defence: Reform

My Lords, with the leave of the House, I will now repeat a Statement made in the other place by my right honourable friend the Secretary of State for Defence. ““Last August I asked the noble Lord, Lord Levene, to undertake a fundamental review of the way in which the MoD is structured and managed. Today, I am publishing the independent report led by him. Copies of the report will be placed in the Library of the House. I would like to thank him and all members of his steering group both for this excellent report and for setting us all an example by delivering it early. The group chaired by the noble Lord, Lord Levene, has recommended a radical new approach to the management of defence and I am pleased to say that I agree with it, as do my ministerial colleagues, all the Chiefs of Staff and my Permanent Secretary. We have already taken some of these forward. No one in this Government was under any illusions about the scale of the challenge we inherited in defence. The report by the noble Lord, Lord Levene, confirms this. We have already introduced changes to budgetary control, reform of procurement, export promotion, SME development and change to our Armed Forces. The SDSR sets a clear direction for policy and will deliver coherent, efficient and cutting-edge Armed Forces fit for the challenges of the future. As a result, Britain will remain in the premier league of military powers. But the vision of SDSR cannot be achieved without tackling the drivers of structural financial instability and the institutional lack of accountability in the way that defence is managed. The report by the noble Lord, Lord Levene, provides the blueprint for the necessary transformation. Before setting out his recommendations in more detail let me first acknowledge the great strength that resides within our people. They are professional, committed and often frustrated by a system that all too frequently lets them down. Among other things, the report describes a department bedevilled by weak decision-making and poor accountability, where there is insufficient focus on affordability and proper financial management. The steering group of the noble Lord, Lord Levene, proposes a new, simpler and more cost-effective model for departmental management—with clear allocation of responsibility, authority and accountability—that builds on the strengths of the individual services, and does so within a single defence framework that ensures the whole is more than the sum of its parts. It is underpinned by a number of core themes. First, to date, individuals in defence have been asked to deliver defence outputs, but not given the means with which to do so effectively and efficiently. Authority must be aligned with responsibility. Budget holders should have the levers they need to deliver. They should then be held robustly to account. In the past, the decisions that should have been made centrally have been ducked, and head office and Ministers have delved into tactical. The Defence Reform Unit recommends a strengthened decision-making framework for defence, centred on a new, leaner defence board, based around the Defence Secretary, who chairs and makes the decisions, supported by the Permanent Secretary and the Chief of the Defence Staff, who will bring to the meeting the views of the single service chiefs. I have already established this new board and chaired the first meeting last week. This new group will offer the kind of decisive and focused strategic direction that has been so lacking in recent years. Secondly, financial management must be tightened, and a risk-aware and cost-conscious mentality must permeate every level of the MoD. The review recommends a new planning and financial model. Within that framework, we will empower the chiefs to run their individual service. Our single service chiefs are the custodians of their services—the fundamental building blocks of defence. Sadly, they are currently forced to devote far too much of their time trying to influence policy and haggle over funding in London. This is a pointless waste of time and talent. In the new model, the service chiefs will get clearer direction from the defence board, will do the detailed military capability planning across equipment, manpower and training, and propose how best to deliver that strategic direction. Once that is agreed, they will then be given greater freedom to veer and haul between priorities within their own service to deliver what is needed by defence, and they will be held robustly to account for doing so. Allowing the chiefs to spend more time with their service reduces the requirement for commander-in-chief appointments and these will be phased out as part of a general reduction in senior posts. We will work closely with the Treasury on how to deliver this major change, but I am confident that when properly supported, trained and directed, it is our people at the point of delivery who are best placed to run their business, and not those at the centre. Thirdly, the service chiefs have an established role as advocates for their service, but powerful single-service advocacy can sometimes be at the cost of joint or cross-cutting capability. The report has recommended that we create a new joint forces command. It will also manage and deliver specific joint enabling capabilities and set the framework for other joint enablers within the single services. It would include the Permanent Joint Headquarters and be led by a new 4-star commander. Joint forces command will therefore be an important organisation in its own right, but it is also has symbolic purpose reflecting our view of how conflict will develop and providing a natural home for some of the capabilities of the future, such as cyber, as well as reinforcing joint thinking, joint behaviours and the new joint generation of officers within defence. It offers a new opportunity for career progression right to the top and a challenging and intellectual career for those who otherwise may not have been attracted to defence. It may also be a way for service personnel who are injured on operations and unable to serve on the front line but are still determined to serve their country. Fourthly, the report rightly challenges us to consider whether we maximise that talent across defence. Be it in promotion, the development of key skills or helping our people choose the right career path, more can and should be done. The report has concluded that we must pursue more vigorously the principle that posts be filled by the right person with the right skills for the right length of time. Buggins’s turn must not interfere with the promotion of the right person for the job, nor can we have the musical chairs of the past. The noble Lord, Lord Levene, has therefore recommended that we move to a system where most senior civilian and military individuals stay in post for longer than at present; as a rule for up to five years. This will allow our people to establish themselves in their roles and invest the time they need to make a real difference to defence and be held to account for their performance. To ensure that we maximise delivery at the front line, the noble Lord, Lord Levene, has recommended that we review all non-front-line posts across defence, beginning at senior and management levels, including an assessment of the most cost-effective balance of regular military, reservists, civil servants and contractors. We are top-heavy and that must end. Most significantly, he recommends that we adopt a new, more joint model for the management of senior military personnel in order to make promotion and appointment processes more transparent and standardised and to encourage the development of officers with strong joint credentials. The report by the noble Lord, Lord Levene, covers far more than I have been able to address here. It is a thorough and compelling analysis that repays close examination. I am confident that when the people within defence review the recommendations they will recognise this work not as a criticism, but as a constructive critique of a department in need of reform and that they will relish the challenges that it presents””. My Lords, that concludes the Statement.