§ Mr. Heseltine
I informed the House of certain steps which have been taken to improve the efficiency of defence in my speech in the defence debate on 12 June at columns 915–16, and a fuller record was given in the Statement on the Defence Estimates (Cmnd. 9430-I). Measures which have been taken, are in hand or are planned include:
- —Increased competition for defence contracts. This has led to major savings—for example, about £60 million in the case
137 of the new RAF basic trainer and over £100 million on mechanised combat vehicles — compared with internal budgeted estimates.
- —A wide range of support operations has been contracted out, including catering, cleaning, printing, storage, transport and training tasks. In the search for better value for money, considerable efforts are being made to contract out or rationalise more work in such areas.
- —The front line will benefit from the transfer of manpower from support areas, as a result of contracting out, rationalisation and elimination of functions, in the Army, 4,000 posts will be transferred from the "tail" to the "teeth" by 1990, making it possible to man new regiments of armour and artillery.
- —Operational capabilities are also being increased by force multipliers such as air-to-air refuelling and by enhancements to our highly cost-effective reserve forces.
- —A new regime of managerial budgets, with appropriate delegation of authority, is being introduced with the aim of promoting better management of resources. The MINIS system continues to provide a framework for this and to stimulate greater awarenesss of functions, performance, targets and objectives.
- —The reorganisation of the Ministry of Defence which came into effect in January this year was aimed at the more efficient conduct of business and at substantially improving the Department's system for marketing its forward programme to the available resources. The indications are that it is working well.
- —The reorganisation resulted in savings of 15 per cent. of posts at two-star level (Major-General or equivalent) and 29 per cent. of 3-star (Lieutenant General or equivalent) posts.
- —The Department's total civilian work force numbered 174,000 on 1 April, some 74,000 lower than when this Government came to office.
- —As part of the reorganisation in January, we implemented the recommendations of Sir Henry Yellowlees' study relating to the establishment of a unified functional defence medical services headquarters.
- —Many other major efficiency studies are being progressed or implemented, covering subjects such as the defence estate, the contracts organisation, the legal services, the Ministry of Defence Police, information technology and the proof and experimental establishments.
- —Royal Ordnance plc has been established and, subject to the usual caveats of trading performance and stock market conditions, we would hope that the company could move to the private sector in mid-1986.
- —Work is proceeding to introduce commercial management into the royal dockyards at Devonport and Rosyth not later that April 1987. Quite apart from this, local management is pursuing a series of measures to improve efficiency in the dockyards, in areas such as management structure, control procedures and use of resources, which will reduce manpower numbers by 2,000 at Devonport and 400 at Rosyth. It is hoped that these savings can be achieved without recourse to compulsory redundancy.