Defence Reform

Jim Murphy Excerpts

Monday 27th June 2011 Commons Chamber

[The Secretary of State for Defence (Dr Liam Fox)]

Last August I asked Lord Levene to undertake a fundamental review of the way in which the Ministry of Defence 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 the members of his steering group both for that excellent report and for setting us all an example by delivering it early.

Lord Levene’s group has recommended a radical new approach to the management of defence, and I am pleased to say that I agree with him, as do my ministerial colleagues, all the chiefs of staff and my permanent secretary. We have already taken forward some of the recommendations.

No one in this Government was under any illusions about the scale of the challenge that we inherited in defence, which Lord Levene’s report confirms. We have already introduced changes to budgetary control, the reform of procurement, export promotion, small and medium-sized enterprise development and changes to our armed forces. The strategic defence and security review set 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.

However, the vision of the SDSR cannot be achieved without tackling the drivers of structural financial instability and the institutional lack of accountability in how defence is managed, and Lord Levene’s report provides the blueprint for the necessary transformation. Before I set out his recommendations in more detail, let me first acknowledge the great strength that resides within our people in defence. 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 with weak decision making and poor accountability, in which there is insufficient focus on affordability and proper financial management. Lord Levene’s steering group proposes a new, simpler and more cost-effective model for departmental management, with a clear allocation of responsibility, authority and accountability. That will build on the strengths of the individual services within a single defence framework that ensures that the whole is more than the sum of its parts. It will be 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, and budget holders should have the levers that they need in order 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-level detail.

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 will chair it and make the decisions. He will be 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 that new board, and I chaired the first meeting last week. The new group will offer the type 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 services. 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 to trying to influence policy and haggle over funding in London, which is a pointless waste of time and talent.

In the new model, the service chiefs will get clearer direction from the defence board, carry out the detailed military capability planning needed across equipment, manpower and training, and then propose how best to deliver that strategic direction. Once that is agreed, they will be given greater freedom to veer and haul between priorities within their own service to deliver what is needed in defence. They will enjoy long-denied freedoms, 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, which will be phased out as part of a general reduction in senior posts. We will work closely with the Treasury on how to deliver that major change, but I am confident that when they are properly supported, trained and directed, our people at the point of delivery are best placed to run their business, not those at the centre. Micro-management must be consigned to the past.

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 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 four-star commander. Joint Force Command will therefore be an important organisation in its own right but also have a 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 generation of officers in 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 is a fundamentally meritocratic reform. It may also be a path for service personnel who are injured on operations and unable to serve on the front line, but who are still determined to serve their country.

Fourthly, the report rightly challenges us to consider whether we maximise 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 sort of musical chairs that occurred in the past.

Lord Levene has therefore recommended that we move to a system whereby most senior civilian and military individuals stay in post for longer than at present, as a rule for up to five years. That 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 on the front line, Lord Levene has recommended that we review all non-front-line posts across defence, beginning at the 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, Lord Levene recommends that we adopt a new, more “joint” model for the management of senior military personnel to make the promotion and appointment processes more transparent and standardised, and to encourage the development of officers with strong joint credentials.

Lord Levene’s report covers far more than I have been able to address here. It is a thorough and compelling analysis that deserves close attention. I am confident that when the people in 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, as I do, the challenges that it represents.

[Mr Jim Murphy (East Renfrewshire) (Lab)]

I thank the Secretary of State for his statement and Lord Levene and his team for their work in recent months.

It is right to start by paying tribute again to our armed forces. They defend our values and secure our interests. Today, in Afghanistan, Libya and around the world brave men and women are doing just that: protecting our national security and that of others. With armed forces day still in mind, we must all reflect on and give thanks for their patriotism and sacrifice. We all have a responsibility to ensure that they have the support and equipment they need to do their job.

Reform of the Ministry of Defence is a vital element of that. Successful reform should strengthen the bottom line and bolster the front line, enhancing Britain’s ability to project force and tackle new threats, and to do so cost-effectively. It is important that efficiencies are sought for that purpose and not for reasons of strategic shrinkage by stealth.

Based on the limited details in the Secretary of State’s statement—we look forward to debating them at a later date—we welcome the focus on cyber, widening the pool of promotion, making chiefs more accountable for spending and, in principle, some of the changes in MOD structure.

On streamlining in the senior ranks, Labour Members agree with measures to balance the higher levels of the military. Of course, no two situations are the same, but as our force numbers continue to fall, it cannot be right that the US Marine corps, which is 15% larger than all our armed forces put together, has five times fewer senior officers. Efficiency must run from top to bottom. The difficulty will be in the implementation, but we support the introduction of a Joint Forces Command. A joint approach to structures is welcome as that reflects how operations are now routinely conducted.

Let me consider the changes to the defence board. Single service orientation must not be an impediment to decisions about equipment and acquisition programmes, which must be tied solely to defence policy objectives. However, does not the fact that the Secretary of State has chosen to act on inter-service rivalry after the strategic defence and security review demonstrate, at least in part, the problem of that inter-service rivalry?

Of course, there are strong arguments in favour of the reform of the defence board, but last week, unfortunately, the Prime Minister told service chiefs:

“I’ll do the talking…you do the fighting”.

Unfortunately, today’s announcement of the removal of the three service chiefs from the defence board will be seen by some as a structural confirmation of that strident sentiment. It is beyond doubt that there is now at least a partial fracture in the relationship between Ministers and service chiefs, and the Secretary of State must make the case more carefully in the next few months than his boss has done in the past few days. Will the Secretary of State therefore confirm that service chiefs were wrong when they said that services are running hot and will be unable to sustain the current tempo of operations in Libya beyond September? Will he tell us how he will better incorporate military advice into those new decision-making procedures?

On MOD finances, I agree with the Secretary of State when he says that successful MOD operations are dependent on the defence budget being on a stable footing. However, today in the media, for hours on end, the Secretary of State blamed the previous Administration for the cuts that he has chosen to make. Let me remind the House that he agreed with each of our spending decisions on defence, and called for even greater spending on a bigger Army, Navy and Air Force, and more equipment for all three services. Is not the truth that, owing to the rushed and arbitrary decisions taken in the defence review, the Government have created their own black hole? They saw efficiency savings where they could not find them, and are engaged in events that they did not foresee.

The Secretary of State has his own financial legacy to deal with. In opposition, he spent just as much time demanding more as he has spent in government providing less. Will he therefore answer the following questions? First, will he tell the House whether there is any truth to reports that the mismatch between the MOD’s assumptions and the spending settlement is up to £10 billion, which would be a greater overall cut than was made in the SDSR? Secondly, will he confirm that there are to be further cuts to the size of the Army in this Parliament? Thirdly, will he say what work will cease within the MOD in order to cut the number of civil servants by 25,000?

On procurement, the positions that the Government currently hold of using open competition on the open market, buying off the shelf and promoting exports, are inconsistent. Will the major projects board have as its remit the maintenance of a competitive, highly skilled UK defence industry? In that spirit, what sovereign capabilities does he believe the UK should maintain and promote over the longer term?

In conclusion, the Opposition welcome much of today’s statement, and we look forward to scrutinising it in detail and discussing it in the House. However, the Secretary of State must know that there is real disappointment not about what is in the statement, but about something that is not in it. On this, the 100th day of operations in Libya, in which forces are using equipment that the Government had previously planned to scrap, it is surely now time once and for all to have a new, post-Arab spring chapter of the defence review. Such an announcement would be welcomed on both sides of the House and throughout the country.

[Dr Fox]

I am grateful to the right hon. Gentleman for his broad welcome of the report and its contents. It is an important report and it is very detailed, and there will be opportunities for the House to debate it more fully, not least because the Government will want to look at some of the report’s more detailed recommendations and tell the House how we intend to implement them.

I was particularly keen that the shadow Defence Secretary accept the proposal for the Joint Force Command, which he has done. The command is a good way forward for our armed forces, and represents a strong consensual basis for moving forward on defence policy in the UK. Of course, we are all aware of the contribution of our armed forces—today, many of us would like in particular to pay tribute to the RAF Regiment and its contribution.

On the right hon. Gentleman’s specific questions, the defence board proposal is not a reaction to anything that has happened in the short term. This has been 10 months in gestation. Lord Levene and his team, including the vice-chief of the defence staff and the second permanent under-secretary, were very clear that we needed a simpler, more manageable defence board. It is of course fed by both the ministerial committee and the chief of staff committee, through the Chief of the Defence Staff and the Minister for the Armed Forces, into the committee representing other ministerial and the chiefs’ views.

When it comes to plans for the Army, we have no plans to reduce its size in this Parliament. On the 25,000 cut in the civil service, I regret that we are having to make reductions of that size, but we recognise that we have to do it to deal with the financial legacy that we inherited from the previous Government. However, we believe that we can make the cut while maintaining our full function. We believe that the best way to help the British defence industry is to support British defence exports.

Finally, on the question of Libya, when we make statements about Libya we must be careful about the messages. Colonel Gaddafi and his cronies will be listening to the messages we send, and the only message that we should send is that we have the military capability and the political and moral resolve to see through the task that the international community has begun. Anything else would risk civilian lives in Libya.