Defence: Organisational Structure (Hansard, 12 March 1984)

§ Lord Trefgarne
My Lords, with your Lordships permission, I should like to repeat a Statement being made in another place by my right honourable friend the Secretary of State for Defence about the future development of the organisation for defence. The Statement is as follows:
"This Government have increased significantly the defence budget reflecting the priority we attach to national security. By 1986–87 defence expenditure is planned to be 23 per cent. higher in real terms than in 1978–79. The threat we face from the Soviet Union and the growing costs of defence technology fully justify this policy. At a time of rising defence expenditure, it is particularly 500 important that we satisfy the public—who bear the cost of defence—of our determination to ensure that the resources made available are put to best effect.
"We must ensure that the resources are applied to enhance the fighting effectiveness of our armed forces and there can be no place for unnecessary bureaucracy and overheads.
"As Defence Secretary, I introduced a new management information system—MINIS. Using this, I have carried out a review of the organisation of the Ministry itself and of staffs outside the front line. I have been much impressed by the quality of the staff, both military and civilian, working in these areas. But the organisation for defence foreshadowed in the 1963 White Paper has only partly been carried through: the Ministry has a more federal structure than envisaged then and lines of accountability are blurred. There is overlap between the Ministry and commands. As a result, the organisation is less economical than it should be.
"In judging the appropriate management structure for the department my overriding aim has been to strengthen the fighting effectiveness of our forces. Nothing must he done which would weaken the separate identities and traditions of the three fighting services. They play a vital part in the morale of our front-line units. Nor do I see any need to change the constitutional framework provided by the Defence Council and the three service boards. Within this framework, I wish in future to draw a clearer distinction between the central formulation of advice on defence policy, operations and resource allocation and the management of the services themselves.
"I intend to create a combined defence staff, responsible under the Chief of the Defence Staff and the Permanent Under-Secretary, for advising me on defence policy, military priorities and the conduct of military operations. This staff would incorporate the relevant parts of the naval, general and air staffs. I also intend that it should bring together my military and civilian advisers into an integrated structure.
"In resource allocation and finance, I wish to see stronger central determination of priorities and clearer budgetary control through the creation of an office of management and budget under the Permanent Under-Secretary. This would be coupled with clear financial delegation to identified managers through a system of responsibility budgets.
"Mr. Speaker, under my proposals the management of each service would be the principal concern of the single-service chiefs of staff, supported by the executive committees of each of the service boards. The boards and their executive committees would be responsible for administration rather than policy, as was indeed envisaged in the 1963 White Paper. I wish to see the maximum delegation of day-to-day administration to commands outside the Ministry itself.
"In future, I would look to the Chief of the Defence Staff and the Permanent Under-Secretary as my two principal advisers. The Chief of the Defence Staff would continue to be advised by the service chiefs of staff who would be responsible to 501 him: the Chiefs of Staff Committee would continue with its present membership. I also propose that the Chief Scientific Adviser and the Chief of Defence Procurement should in future be responsible to me through the Permanent Under-Secretary.
"Mr. Speaker, I have today placed in the Vote Office copies of a consultative paper which I am circulating in my department. It is my intention to improve efficiency and to achieve significant savings. I will report further to the House when I have completed my consultations."

§ Lord Bishopston
My Lords, the House will he grateful for the Minister's repetition of the Statement which was made in another place and for enlarging on the progress made so far on the aspects which were envisaged in the Defence White Paper of 1983 on defence management and defence policy generally. The House will recognise the importance of the Statement, but clearly it is one which will justify a much closer look later on and, undoubtedly so, during defence and other debates which will be coming in the next few months. We recognise that with such substantial spending—the figure of 23 per cent. has been mentioned as the increase between 1978–79 and 1986–87—it is essential to ensure maximum efficiency and economy. Other important aspects are those concerning defence procurement because the administration is only one small but necessarily vital part of defence spending.
In the Statement which the Minister has made and in aspects of defence procurement and other defence policies it is important to look not only at the monetary aspect but also at the economic, the social and the manpower aspects. In defence procurement, this could have its effects on procurement policy in relation to the entire future of the British aerospace industry. Also, the House may be tempted to ask the Minister what kind of savings he envisages may be made as a result of the system which is intended to provide greater efficiency and economy—what this may result in in terms not only of cash but also of manpower.
Another important aspect is to ensure not only the minimum amount of spending, the minimum amount of resources and the minimum amount of manpower, but also the better use of these things, especially on the manpower sector. I believe that the House will want to study the Statement in greater depth. We welcome the work of the Select Committee which has already expressed some comments on the background of the Statement and we welcome the Minister's openness in coming forward with these matters. It involves enormous spending and accountability at a time when all our resources and demands in other sectors are so telling upon our economy.

§ Lord Mayhew
My Lords, is the noble Lord aware that no doubt there are savings to be made and useful administrative improvements from this kind of centralisation of the Ministry of Defence? But is he not also aware that there is a great danger?—the danger 502 being that the centralised structure may seek to impose on one of the three services an operational role which that service, with its superior, specialised knowledge, feels to be unfeasible. The noble Lord referred to 1963 when a similar step towards centralisation was made. Does he recall that on that occasion we had a perfect example of what I have said when the new centralised structure attempted to impose on the Navy the task of maintaining a presence East of Suez throughout the 1970s and into the 1980s with no seaborne air power, scrapping the carrier fleet? Is he aware that now no one will not say that, on that occasion, the Navy was right in resisting that role and that the centralised structure was wrong to try to impose it on the Navy?
May I ask the noble Lord what safeguards the Secretary of State has devised for preventing this from happening again? In particular have the single service chiefs still the right of access to the Prime Minister? I recall that in 1963 the then Chief of Naval Staff exercised his right of access to the Prime Minister to explain his service's view that what the Cabinet were trying to impose on the Navy was unfeasible. He was right; and he was right to exercise his right in that respect. I ask, and I believe that both sides of this House should ask, the Government for assurances on this very important point.

§ Lord Mottistone
My Lords, before the noble Lord sits down, may I ask whether his recollections of events of 1963 were not, in fact, of events of 1966?

§ Lord Mayhew
My Lords, I was referring to the reforms carried out in 1963, reforms which had traumatic effects in 1966.

§ Lord Trefgarne
My Lords, I am grateful to both noble Lords for their reception of this Statement. In answer to the noble Lord, Lord Bishopston, I must say that it is not yet possible to state the precise amount of savings that will flow from these proposals either in terms of money or in terms of manpower. At this stage, these are outline proposals only which are submitted for consultation purposes. The consultation process during the coming months will put flesh on the bones of these ideas. After that process, it will be possible to make a more accurate estimate of the savings that will flow from them.
Turning now to the remarks of the noble Lord, Lord Mayhew, I can tell him that the specialist knowledge, which we agree is absolutely essential for taking decisions of the kind he has referred to, will in future reside in the central staff organisation to which I have referred. At the same time I can assure the noble Lord that the service chiefs will retain their special access to the Prime Minister.

§ Viscount Trenchard
My Lords I wonder whether my noble friend can tell me whether the role of other Ministers will be mentioned in relation to this centralisation, including such things as the centralisation of defence procurement? Are they mentioned, and how do they fit in with the apparent absolutely central staff relationship? Secondly, may I ask him whether the central staff will be in addition to the staffs of the three services or whether, if I understood him correctly, this is a movement of the individual services staff to the centre?

§ Lord Trefgarne
My Lords, if I may answer the last question first, the single service staffs will continue as before but with a rather different role and not necessarily in the same form as at present. This is one of the things which will emerge from the consultation. I hope I have answered my noble friend's point.

§ Viscount Trenchard
My Lords, would my noble friend answer my first question?

§ Lord Trefgarne
My Lords, I apologise for omitting to answer my noble friend's first question. The ministerial responsibility in the Ministry of Defence, as in any other departments, resides in the Secretary of State himself. The position of other Ministers is that they carry out such tasks as he may delegate to them, and that position will remain. I should add also that Ministers will retain their membership of the Defence Council and, I think, of the service boards.

§ Lord Kennet
My Lords, would the noble Lord not agree that while the general thrust of the Statement seems very sensible, it is rather hard to make out exactly what is and what is not new in the situation he has outlined? The Statement says: I intend to create a combined defence staff under the Chief of Defence Staff". We have had a Chief of Defence Staff for a good many years now. I assume therefore that we have had a defence staff of which he has been chief for a good many years. How much of the single service staff manpower is going to be moved into the new defence staff? Am I right in assuming that under each of the service chiefs there will continue to be a general staff, a naval staff and an air staff? How much smaller will they be than the new Central Defence Staff, and in what respect is the latter new?
Secondly, the Statement says that the chief scientist and the defence procurement boss will report to the Secretary of State through the Permanent Secretary in future. Through whom did they report to him before now?

§ Lord Trefgarne
My Lords, if I may again take the last point first, the personnel to whom the noble Lord refers have hitherto reported direct to the Secretary of State and not through the Permanent Under-Secretary. The answer to his first question is that the new central staff will be a greatly enhanced body, with a new advisory and consultative role with regard to my right honourable friend.

Baroness Vickers
My Lords, may I ask my noble friend whether the royal ordnance factories and the naval dockyards are to come under this review? I ask that because there is considerable anxiety now about their future role, and especially over the closing of Chatham Dockyard, so that they really do not know at the moment what jobs they have to do in each dockyard.

§ Lord Trefgarne
My Lords, the royal ordnance factories, of course, are the subject of legislation which is currently going through Parliament and which will no doubt come to your Lordships' House before long. The dockyards will remain part of the Navy Department as before.