Departmental Efficiency (Hansard, 10 July 1984)

§ Mr. Pattie

There has been a continuing programme of work in the Ministry of Defence to improve efficiency in the Department. Over the last five years, many hundreds of studies have been completed, ranging from internal audit and staff inspection to multi-disciplinary management audits and Rayner efficiency scrutinies, 20 of which have been carried out. For the coming year, a full range of audit, inspection and other efficiency studies are in hand, including full-scale management audits of the Royal Maritime Auxiliary Service, the defence contracts organisation and a major Defence ADP bureau. In addition, we will continue to seek to improve efficiency in the Services' support and training organisations, thus allowing resources to be shifted to the front line to strengthen our fighting capability. In the Royal Navy, for example, it is expected that the numbers of men employed ashore will have been reduced by 25 per cent. between 1981 and 1988, with a further fall of 15 per cent. thereafter. Similarly, the Army is planning to redeploy 4,000 — or 3 per cent. — of its manpower from the support area to the front line, and the RAF is implementing a range of measures to transfer manpower from training and support units to operational stations.

The study programme, together with the introduction in 1983 of the management information system for Ministers and top management—MINIS — has led to numerous improvements in organisation and procedures designed to increase efficiency. Most notably, earlier this year the Secretary of State published a consultative document (MINIS and the Development of the Organisation for Defence—Defence Open Government Document 84/03) outlining his proposals for radical changes to streamline the defence organisation. Detailed plans for their implementation will be presented to the House shortly.

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Another important element in the Department's efficiency strategy has been the development and introduction of responsibility budgets for individual managers. These are designed to achieve greater accountability and devolution of management responsibility. MINIS and responsibility budgets are the two main planks of the Department's contribution to the Government's financial management initiative (FMI). Details of the MOD FMI programme was set out in Cmnd. 9058, "Financial Management in Government Departments". A further White Paper is to be published in July giving details of progress.

The Department is also seeking greater involvement of the private sector to increase efficiency and effectiveness. Major examples include the forthcoming privatisation of the royal ordnance factories; the contracting out of catering and cleaning, which is producing an annual saving of £12 million; and the opening up to competitive tender of a range of aircraft servicing work. Further details of this area of activity are given in Cmnd. 9227-I, "Statement on the Defence Estimates 1984."

Given the diverse nature of the activities carried out by the Ministry of Defence, it is to be expected that there are a wide variety of performance indicators in use in the Department. Volume 2 of the Statement on the Defence Estimates 1984 gives a number of these, ranging from student/staff ratios in service colleges to percentage bed occupancy in service hospitals. The introduction of responsibility budgets will put increased emphasis on the further development and use of performance indicators.

One major indication of the effect of the Department's search for efficiency is the reduction of the number of civilians employed by the MOD. Between 1979 and 1 April 1984, the number of United Kingdom based civilians in the Department has fallen by 47,700 to 200,000, a reduction of nearly 20 per cent. The consequential reduction in overheads is illustrated by the increasing proportion of the defence budget spent on equipment, which has risen from 40 to 46 per cent. in the same period.