By Hannah Bolton - 9th February 2012
The latest National Audit Office (NAO) report has criticised the Ministry of Defence for drastically cutting personnel without ‘fully understanding how it will operate with significantly fewer staff’.
The Ministry of Defence has come under pressure to make rapid financial savings following the identification of a £38bn funding gap in the ten-year defence budget announced in 2010. Additionally, the 2010 spending review required the department to make financial cuts of some 7.5 per cent (approximately £2.7bn) by 2014-15 as part of a wider effort to reduce the deficit across all government departments.
As such the Ministry of Defence is reducing the size of its civilian workforce by 29,000 and the armed forces by 25,000, amounting to a reduction of over 54,000 personnel. It is estimated that this will cut costs by £4.1bn between 2011-2012 and 2014-2015. In order to meet these headcount reduction targets the department has acted decisively to put in place a redundancy programme and a Voluntary Early Release Scheme.
The NAO report acknowledges that the department has had little choice but to make significant reductions to its workforce and to make these cost cuts early if it is to meet spending review targets. The report examines how effectively, given the speed of the reductions, the department is managing workforce changes without impacting negatively on the delivery of its strategic objectives.
While it is noted that the department’s approach to cuts has followed good practice and has thus far been consistent with value for money, Amyas Morse, head of the National Audit Office, feared the Ministry of Defence had made cuts in personnel prematurely without ‘detailed plans for how it will operate in the future’.
The NAO report strongly recommended that the department should make the development and implementation of a detailed operating model a matter of priority. Greater emphasis is also required on transforming the way the department works to ensure it can continue to meet its strategic objectives with significantly fewer staff. The NAO has, as yet, seen insufficient detail to determine whether the department is making adequate changes to the way it operates to be able to ensure this.
The report also raised concerns that the department has not identified further potential savings measures, should the headcount reduction not deliver the required financial savings. The department now also has to reduce Army personnel by a further 5,000 by 2015, but has not yet clarified how it plans to make these cuts.
There are fears that such a drastic reduction in personnel risks worsening the current skills shortage in both the MoD’s military and civilian workforce, and that this skills gap will become more acute in the future. The department has continued to recruit military personnel but at much lower levels, leading to concerns that skills will not be maintained. The report urges the department to be vigilant over increasing skills gaps in the medium to long term.
Amyas Morse suggested that ‘a more targeted approach is needed to restructure the workforce and retain the skills that will be required in the future’.
Dods Parliamentary Communications Ltd
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