nao report (hc 342 1988/89): ministry of defence: control and …€¦ · control and use of...

Report by the Comptroller and

NATIONAL AUDIT GCE Auditor General

Ministry of Defence: Control and Use of Manpower

Ordered by the House of Commons to be printed 27 April 1989

Her Majesty’s Stationery Office, London E5.60 net 342

MINISTRY OF DEFENCE: CONTROL AND USE OF MANPOWER

This report has been prepared under Section 6 of the National Audit Act, 1983 for presentation to the House of Commons in accordance with Section 9 of the Act.

John Bourn Comptroller and Auditor General National Audit Office

24 April 1989

.

The Comptroller and Auditor General is the head of the National Audit Office employing some 900 staff. He, and the NAO, are totally independent of Government. He certifies the accounts of all Government depariments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies use their resources.


Contents

Summary and conclusions

Part 1: Introduction 6

Part 2: The System of Manpower Control 8

Part 3: Organisation of the Services 13

Part 4: Service Manpower Requirements 18

Part 5: Manpower Options 24

Glossary of Abbreviations

Pages

1

31

Appendices

1. The Higher Organisation of the Ministry of Defence 32 2. The Army Command Structure 33


Summary and conclusions

Background 1. At 1 April 1988, the Ministry of Defence employed 326,300 Service personnel and 175,100 civilians, of whom 9,400 Service personnel were Locally Entered and 31,800 civilians were Locally Engaged. They could also call on some 326,000 reservists. The total cost of pay and allowances for this manpower in 1987-88 was nearly E6,OOO million, some 32 per cent of the Defence budget, of which Service personnel, including the reservists, accounted for nearly B,OOO million (paragraphs 1.3-1.4).

2. The Ministry are divided into five management areas, the Central Headquarters and the Procurement Executive, which are predominantly civilian staffed, and the three Services which employ a mix of military personnel and civilians. Contract staff are also employed. The National Audit Office (NAO) examined the Ministry’s control, organisation and use of manpower, primarily within the three Services, to determine whether, having regard to their Defence commitments:

- the Ministry have established an effective system of manpower control;

- the organisation of the Services has been adapted to take account of changes in circumstances;

- there was scope for reducing identified manpower needs; and

- there was scope for meeting identified manpower needs more cost-effectively.

The NAO did not consider, as part of this study, the impact of demographic trends on the availability of Servicemen or other forms of manpower.

3. The NAO found that in many respects the Ministry have successfully controlled manpower in what is a very complex area. Taking this into account, the NAO’s main findings and conclusions are:

On the system of manpower control

[a) Manpower ceilings have achieved significant savings, particularly in the numbers of civilians directly employed by the Ministry. They have also had some adverse effects on value for money and operational capability. In future, however, there will be more emphasis on control of manpower through operating budgets, instead of numbers (paragraphs 2.3-2.7).

(b] All three Services have undertaken some form of wide ranging review over and above the normal process of scrutinies, either to meet manpower ceilings or to increase hont-line numbers, but these reviews were not co-ordinated, did not cover the whole field, were not intended to form a part of the Services’ regular monitoring arrangements, and not all the recommended savings were pursued (paragraph 2.12).

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(c) The Office of Management and Budget was established in 1985 to provide stronger central determination of expenditure priorities and control of resources. Initially its scrutiny of the requirements was concerned mainly with variations arising from changed circumstances. The Ministry told the NAO that since the cessation of rigid manpower ceilings, procedures have been further developed and more meaningful decisions are now possible on the efficient use of available and funded manpower (paragraphs 2.14-2.16).

(d) Because of the difficulty in matching manpower resources to commitments, the NAO considered that a regular, comprehensive programme of reviews of activity should be undertaken in appropriate areas over and above the normal process of scrutinies. They also considered that the Ministry should develop their central capability for forward looking manpower planning and control linked with the Ministry’s New Management Strategy and budgetary systems (paragraph 3.4-3.6).

(e) Comparison of the Ministry’s four manpower audit groups showed differences in their level and mix of staffing, the period of the audit cycle and the percentage of Service posts inspected, with only some 159,000 out of a total of 287,000 Service posts subject to manpower audit. The NAO concluded that there should be greater consistency between the audit groups, that more tri-Service audits could be beneficial and that good practice in one Service should be reflected, where possible, in the other two (paragraphs 2.18-2.24).

On the organisation of the Services

(f) The Royal Navy (RN) have responded positively in recent years to changes in their responsibilities by modifying their command structure (paragraph 3.3).

(g) The Army’s command structure, which is more complex than those of the other Services, has remained relatively unchanged in the United Kingdom (UK) since 1973. Currently the Ministry have no plans to carry out a review of the district structure of the Army (paragraphs 3.4-3.6).

(h) The NAO noted that the Army’s regimental and corps structures have changed little since the mid-1960s, although numbers have reduced since then by 18.5 per cent. The NAO therefore believe that the Ministry should consider undertaking a review in this area (paragraphs 3.11-3.12).

(i) There are significant differences between the Services in the way they man and organise their support functions. Unlike the Royal Air Force (RAF) and the predominantly civilianised RN support organisation, the Army maintain 19 uniformed support corps. The Ministry considered that the savings from having a single support corps were unlikely to be great as compared with the impact on morale and the problem of controlling the disparate elements within the corps. However, the NAO concluded that there might be some scope for savings from changes in the corps structure, particularly among the smaller corps, and that the benefits and disadvantages of such changes should be considered as part of the review proposed at (h) above (paragraphs 3.13-3.22).

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(j) In general the RAF have reduced their command structure in line with their reduced resources and roles, but to a lesser extent in Germany. The Ministry acknowledged that there was scope for some rationalisation in Germany with the corresponding Army Command (paragraph 3.24).

On Service manpower requirements

(k) The Service manpower requirements for regular personnel for transition to war and war are assessed at unit and other levels. Although peacetime complements may be separately identified, the transition to war and war requirements form the basis for them, together with a margin for indirect activities. The margins for each of the Services differ significantly in size and content. The NAO consider that the methods of calculation of manpower margins should be put, as far as possible, on a common basis (paragraphs 4.14.4 and Table 5).

(1) The Services aim to ensure that all complemented posts can be filled by people of the required quality and with the appropriate skills and experience. Within certain constraints, career structures for both officers and other ranks are shaped to facilitate recruitment and retention; and it seemed possible to the NAO that this could result in more managerial posts than would otherwise be necessary. They noted that, for a number of reasons, the UK might have a higher ratio of senior officers to troops than many other countries. The NAO concluded that the Ministry should consider the scope for reducing further the number of career specialisms (paragraphs 4.54.9 and Tables 6 and 7).

On manpower options

(m) All the Services state that where shortfalls in manning exist, they are placing excessive demands on personnel. The NAO examination suggested that there is, nevertheless, some scope for further reductions in requirements in some areas in all three Services and this should be examined further (paragraph 4.30).

(n) The NAO were not able to establish that there was a clearly defined war role for all Service personnel but noted the progress being made by all three Services to identify the numbers, ranks and skills of servicemen required during transition to war and war. Once the information is available, the peacetime requirement for Servicemen should be re-assessed and the scope for viable alternatives to Service manpower be explored further (paragraph 4.31).

(0) Servicemen are generally more expensive to employ than the alternatives of servicewomen, civilians, contractors’ staff or reservists, but the Services have to have regard to operational considerations in their choice of manpower. The NAO noted that the use of servicemen in support areas varies significantly between the Services. They concluded that, in some areas, there is prima facie scope for increased use of the other options (paragraphs 5.1-5.3 and Table 8).

(p) The NAO identified some 3,300 servicewomen posts which, prima facie, could be occupied by civilians or contracted out, with potential savings of some ,614 million a year, although they recognised the Ministry’s view that there were wider factors to be taken into

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account. The NAO noted the steps being taken by the Ministry to consider the wider scope for employing women on tasks traditionally reserved fo’r men (paragraphs 5.4-5.9 and Table 9).

(q) Many reservists have no defined war role, and their anticipated unavailability in the period of transition to war means that many of the tasks they could perform have been assigned to regular troops. The NAO suggested that the Ministry, in conjunction with their work to define the most cost-effective mix of regular and reserve manpower, should consider the scope for increasing the number of reservists in the early selective call-out process under the Reserve Forces Act, and for their increased use for guarding and other duties in transition to war and war (paragraphs 5.18-5.15).

(r) Civilians generally cost less to employ than Service personnel and are as effective in comparable peacetime tasks. The NAO found differences between the Services in the use of civilians in the support functions, an area where there appeared to be greater scope for civilian employment. In 1987 the Ministry began a review aimed at achieving the most cost-effective mix of Service and civilian posts, although no targets for savings from civilianisation were set. They believe the scope for further civilianisation is limited by the need to carry out essential military tasks and the current difficulties they are experiencing in recruiting civilian staff in the necessary numbers. Nevertheless, the NAO concluded that the Ministry should consider the scope for further civilianisation of Service posts in the support functions, after they had defined clearly their transition to war and war requirements [paragraphs 5.16-5.30).

(s) The Ministry have contracted out many activities, mainly involving civilian posts, although they accept there is also scope in areas involving Service posts. However, deficiencies in management information made it difficult to verify resultant savings. The NAO’s examination established that there remained scope for further contractorisation, including complete functions where this is the most cost-effective method of performing a task, subject to operational considerations. It confirmed the need, recognised by the Ministry, for improvements in costing and monitoring of contractors’ performance, and the introduction of co-ordinating arrangements to ensure that the benefits from lessons learnt in one area are realised elsewhere [paragraphs 5.32-5.37).

General conclusions 4. As a major component of the Defence Budget, expenditure on manpower has been subject to rigorous scrutiny during the 1980s and major savings have been achieved or are planned, particularly on civilian posts. These savings have been offset partly by increased use of contractors. In some cases resources have been transferred from support to front-line areas. Civilian manpower ceilings have led to many of the savings, but have also had some adverse consequences. The Ministry’s system of manpower control resulted in the annual budgeting process concentrating on changes from previous years. However, the increased flexibility resulting from the change to control of running costs from 1988-89 should help the Ministry to overcome these problems. While

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more meaningful assessments are now being made, the process could be assisted by the further development of a clearer relationship between present and future manpower resources and commitments and tasks.

5. As circumstances have changed, the organisation of the Services has been substantially reviewed and adapted, the major exception being the Army’s district, regimental and corps structures. Before any change is introduced in this area, any resultant financial savings would have to be weighed against the operational disadvantages.

6. The Services’ reviews which have led to significant savings in manpower have been carried out mainly in specific areas to achieve target savings or to transfer resources to the front-line. This suggests that further savings might result from a regular programme of reviews of activities. Such reviews would have to take into account the work being undertaken to establish the requirements in transition to war and war. There is some evidence that the number of career specialisms results in more posts than are strictly necessary and there appears to be scope for more use of cost-effective alternatives to regular Service personnel. The NAO concluded that there was a continuing need to review the Services’ manpower requirements in peace and war and how these should be met, building upon the ad hoc reviews already undertaken.

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Part 1: Introduction

1.1 The principal roles of the Ministry of Defence and the Armed Forces and, in general terms, the commitments which they are required to meat are reaffirmed in the annual Statement on the Defence Estimates. Each of the Services, reinforced by reservists in war, has a separate role in support of these commitments.

1.2 The Ministry’s manpower objectives are: to ensure that manpower is adequate to meet current requirements; to provide a credible deterrent to any potential aggressor in peace; to be able to respond rapidly during a period of transition to war; and to be able to deploy sufficient forces of the right type to wage any subsequent war successfully. To meet these objectives the Ministry’s policy is to employ a mixture of Service personnel, civilians, contractors and reservists. The type of manpower employed in a particular post is determined as far as possible within financial constraints by the different operational requirements of peace, transition to war and war, although the Services differ in the implementation of this policy. In peace, the Services need to train for war and be ready to undertake full scale operations at short notice. In transition to war, the period of heightened tension prior to war, the Services would move to a war footing and reserve forces would be mobilised. In war the uniformed manpower requirements would increase considerably and, in order to ensure that there is sufficient manpower to meat such a demand, the Ministry employ some Service personnel in peace on tasks which could otherwise be carried out by civilians.

1.3 Manpower totals have fallen in recant years as the result of both Government and Ministry of Defence initiatives (paragraphs 2.4 and 2.5). At 1 April 1988, the Ministry and the three Services employed 326,300 Service personnel and 175,100 civilians (Table 1).

1.4 In 1987-88, the cost of directly employed manpower, including pay and allowances and contractors’ staff used by the Ministry, but not pensions, was E5,978 million, some 32 per cent of the Defence budget (Figure l], of which Service personnel, including 326,000 reservists, accounted for nearly E4,OOO million.

Scope of the NAO investigation

1.5 This Report records the results of an examination by the NAO of the Ministry’s control,

Table 1

Manpower as at 1 April 1988

Central Staffs RN -Y RAF Procurement

Executive

1,300 17,300 18,600 64,600 32,400 97,000

157,000 40,900 197,900 92,800 19,900 112,700

1,200 32,800 34,100

Sub-total 316,900 143,300 460,300

Locally employed 9,400 31,800 41,200

Totals 326,300 175,100 501,500

Note: In this and many of the other tables in this report, figures are individually rounded, and thus may not sum precisely to the totals.

organisation and use of manpower, primarily within the three Services. The aim was to establish whether, having regard to their defence commitments:

- the Central Headquarters have established an effective system of manpower control (Part 2);

- the organisation of the Services has been adapted to take account of changes in circumstances (Part 3);

- there was any scope for reducing identified manpower needs (Part 4); and

- there was scope for meeting identified manpower needs more cost-effectively (Part 5).

1.6 The NAO acknowledged that the circumstances described in paragraph 1.2 created special problems in the control of manpower. They did not seek to question military judgements and restricted their detailed examination of tbe scope for meeting manpower needs more cost-effectively to a sample of functions in the support areas, where it appeared that alternatives to Service manpower were feasible [Part 5). A representative sample was examined as follows:

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MINISTRY OF DEFENCE: CONTROL AND “SE OF MANPOWER

Figure 1

Divisions of the Defence Budget by principal headings

Equipment

pJ Forces Pay and Allowances

q Forces Pensions

c] Civilian Pay

Works and Miscellaneous Stores and Services

11%

- Supply, and repair and maintenance - which are representative of support activities in which some personnel will have a high risk of exposure to opposing forces and will have to work at an increased level of activity during hostilities;

- Administrative transport, veterinary services and pay - where work would continue in hostilities, but only a limited number of personnel would be exposed to high risk; and

- Education - which is representative of that part of the infrastructure which only functions in peace.

The NAO were informed that the areas of lower risk are a scmrce of manpower available for redeployment in transition to war and war.

1.7 The NAO carried out their main examination during the latter part of 1986 and 1987. There followed a lengthy period of discussion with the Ministry on the findings from the examination. During that time the Ministry set in hand a number of reviews of their systems of manpower control, some of which are still in progress. Details of these initiatives are noted in the relevant Parts of this Report.

1.8 In the cowse of their examination, the NAO did not consider the impact of demographic trends on the availability of servicemen or other forms of IlMlp0W3.

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MINISTRY OF DEFENCE: CONTROL ANI? “SE OF tX4NE’OWER

Part 2: The System of Manpower Control

2.1 This Part considers the system of manpower control operated by the Ministry. The NAO examined all the main features, which are: Parliamentary control: manpower ceilings; the determination of requirements: operating budgets; central control of resources; and manpower audits. They also considered the outcome of a major review of their manpower control systems commissioned by the Ministry in 1983.

Parliamentary control

2.2 The Armed Forces Act provides the statutory basis upon which the Services are established. The actual maximum number of personnel who may be maintained by each Service is presented in the annual Ministry of Defence Votes A for Parliamentary consent. Since these figures are invariably much higher (some 13,000 higher for 1988-89) than the numbers provided for in the annual Supply Estimates, the latter provide in practice a tighter control.

Treasury control and manpower ceilings

2.3 While the Treasury retains overall responsibility for total numbers and gradings of civilian personnel in Government departments, they have delegated extensive powers to individual departments, including the Ministry. Within the Ministry, Service and civilian manpower plans are issued centrally by the Office of Management and Budget (paragraphs 2.14-2.17) to Service and other management areas on the basis of resources allocated by Treasury. Control of numbers and grades within these plans is exercised by the management areas. In addition, in the case of civilian manpower, an overall coordinating responsibility is retained centrally by the Principal Establishment Officer.

2.4 Up to 1987-88, the Treasury controlled civilian manpower through manpower ceilings which were introduced in 1979 in line with Government policy on reducing Civil Service numbers. Successive annual reductions in the Ministry’s ceilings, sometimes imposed by Defence Ministers in addition to Treasury cuts, reduced civilian numbers, excluding locally employed staff, from 247,660 in April 1979 to 143,300 in April 1988. These reductions were imposed by means of pro-rata cuts in targets and were met largely by reducing staffing levels,

contractorisation and privatisation, and some improvements in efficiency. Recruitment bans were used in some years to ensure that planned targets were met on time.

2.5 Following a period of growth in the numbers of regular Service personnel excluding Locally Entered, from 315,000 in April 1979 to 333,755 in April 1981, Ministers set ceilings for Service personnel which led to a fall in numbers of regular personnel to 316,900 by April 1988. Figure 2 shows changes in civilian and Service numbers since 1975.

2.6 Although manpower ceilings have successfully reduced the manpower directly employed by the Ministry, the NAO found that they had some adverse effects on value for money. Civilians, who are generally less expensive than Service personnel, have suffered the largest cuts. Some Service personnel, particularly in the Army, have been employed on tasks previously undertaken by civilians. Ad-hoc recruitment bans and pro-rata cuts have led to imbalances in skill and grade structures, with the effects being felt for some time after the resixictions have ended. Some work was contracted out to permit manpower reductions to meet ceilings without sufficient weight being attached to the value for money aspects of the proposals (paragraphs 5.31- 5.37).

2.7 The Treasury, partly in recognition of these problems, replaced civilian manpower ceilings in April 1988 with a running cost regime. This changed the emphasis from control of manpower numbers to control of cash. The Treasury will continue to monitor the Ministry’s forward manpower plans to ensure that the relaxation of central control on civilian numbers does not lead to large increases.

The Ministry’s review of their manpower control systems

2.8 In 1983 the Ministry commissioned an internal study, assisted by consultants, to “make recommendations on whether changes to the Ministry’s manpower control systems would make for more economical, effective and efficient use of manpower”. The main recommendations were that:

[a) the primary determinant of manpower levels should be the cash available in the light of competing demands;

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MNEIXY OF DEFENCE: CONTROL AN,, USE OF MANPOWER

Figure 2

Manpower trends in MOD 1974-1988

1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1

Year (Figures at 1 April)

0 Navy + Army 0 RAF A Civilian

(b) manpower,like otherresoums,should be budgeted for, controlled through, and be a principal component of, a system of operating cost budgets; and

(c) all manpower (Service, civilian, Reserve etc) should be regarded as a single resource.

2.9 The intention was that each management area would, through the annual budgeting process, review its manpower requirements and determine its programmes and priorities in the light of the anticipated availability of suitable manpower and cash. Thereafter, the Ministry would analyse these programmes, considering their sufficiency to undertake tasks and the possibility of reduced overall resources, and make proposals to bring manpower and funding into balance. The report was accepted in principle and most of its major recommendations were implemented. Implementation of others is proceeding but will not be completed until the

Ministry’s New Management Stiategy (paragraph 2.13) is in place in the early 1990s. The main changes since the study report was published in 1984 are described below.

Determination of the overall manpower requirement

2.10 Each Service determines its operational requirements and the level of support required to maintain units at an acceptable state of readiness. The manpower implications of these decisions are determined mainly through the scrutiny of requirements in the budgetary processes and the audit and complementing of individual units. The total Service manpower requirements include the staff needed for the various levels of command up to the Service Boards; posts within Ministry of Defence Headquarters designated as Service manned; 4,000 liaison, training and NATO posts overseas; and

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various margins (paragraphs 4.34.4). Once established, operational units are subjected to complementing and other ad-hoc reviews. The complements of support units are subject to the manpower audit procedures described in paragraphs 2.18-2.24.

2.11 In attempting to match estimated requirements for Service and civilian manpower to resources and manpower ceilings, each Service assumes a shortfall. The RNbear the majority of shortages ashore in order to keep the most important ships fully manned. The Army operate a priority system for all ranks and attempt to restrict shortages to non-operational areas. The RAF aim to fill all officer posts and airmen aircrew posts and, except for a few high priority posts, carry any shortfall over the ground airmen trades, generally at the ‘lowest rank level possible. Shortfalls in civilian staff are met by improvements in efficiency or by deferring or dispensing with lower priority tasks.

2.12 In recent years each Service has undertaken some form of wide ranging review of its manpower utilisation over and above the regular process of programme and manpower scrutinies. The aim was to minimise the requirement for Service personnel in support areas to enable front-line requirements to be met. The more important of these reviews, which all identified scope for substantial savings, are described in Pact 4 [paragraphs 4.16, 4.21, 4.26-l.27). They were not coordinated and not all the recommended savings were pursued. The Ministry told the NAO that the reviews were not intended to form a regular part of the Services’ monitoring arrangements or cover all areas.

Operating budgets

2.13 The Ministry introduced Staff Responsibility Budgets in 1985 to allow line managers sane discretion as to the grade mix of their staff up to a certain level, subject to a number of external constraints. My predecessor’s Report on the Financial Management Initiative (HC 588 of 1985-86) referred to the problems which the Ministry were meeting in achieving the objectives of Staff Responsibility Budgets. The NAO did not carry out further examination of that area during this study. However, the Ministry inforn+ed them that, as part of their New Management Strategy being implemented in the early 199Os, they were developing a hierarchical system of running cost budgets, operating in all parts of the Ministry and the Commands, which is intended to subsume the present Staff Responsibility Budget system. The new system would provide line managers with much greater responsibility for the resources under their control, including manpower.

Central control of resources

2.14 In January 1985, the then Secretary of State made organisational changes, including the introduction of a new Office of Management and Budget to provide “much stronger central determination of priorities for expenditure and control of resource allocation”. The new structure is shown at Appendix 1. The Office of Management and Budget became responsible for the inspection and audit of the Ministry’s activities, including manpower audit, and for work designed to further rationalisation and standardisation between the three Services and other parts of the Ministry. Whilst the Defence Staffs are responsible for the formulation of operational procedures and prepare their initial requirements for both manpower and material, the Office of Management and Budget scrutinise all major proposals, including equipment programmes and manpower bids.

2.15 The Ministry undertake each year a “Long Term Costing” of planning assumptions for the Defence programme for the next 10 years. The objective is to construct the most coherent and effective defence programme within the resources available. The planning assumptions which underpin the process are issued by the Office of Management and Budget in accordance with priorities developed in conjunction with the Defence Staffs. Alternative planning assumptions are made: to take account of policy options under consideration; to identify potential adjustments needed to meet budgetary constraints: or to reflect shifts in programme priorities within the funds available. As part of this process, the Office of Management and Budget produce overall assessments of manpower requirements and propose ways in which they should be balanced within available resources.

2.16 The Office of Management and Budget’s involvement should provide an independent check on the assessments of manpower requirements made by management areas, including those for the three Services. The NAO noted that, in the early years of the Office’s existence, their scrutiny was concerned mainly with manpower variations caused by operational or organisational changes. Nevertheless at the same time, improvements were being made to ensure that the numbers allocated to management areas took account of their stated requirements. The Ministry informed the NAO that, with the cessation of rigid manpower ceilings, the procedures had been developed further and nmre meaningful decisions were now possible on the efficient use of available and funded manpower.

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2.17 The NAO also noted that the results of specific Studies of the sort referred to in paragraph 2.12 were taken into account in the Long Term Costing process. The NAO acknowledge the achievement of those reviews, but believe that there should be a more systematic approach to the consideration of manpower utilisation and that a regular programme of reviews of activity should be undertaken in appropriate areas. This would provide a better basis for the assessment of manpower requirements by the Office of Management and Budget since it was difficult to match the resources required with commitments. The NAO further consider that the Ministry should develop their central capability for forward looking manpower planning and control, linked with the New Management Strategy and budgetary systems (paragraph 2.13).

Manpower audit

2.18 The Treasury have defined the role of “staff inspectors” in Government Departments to include the audit of the cost-effective use of manpower covering: the need for work; the numbers and grades required to perform the work; and the organisation of manpower. The Treasury exercise oversight of manpower audit by requiring an annual report of the Ministry’s audit activities, and by participating in some of the audits.

2.19 Within the Ministry, manpower audit was carried out on an individual Service basis until 1981, when it was placed with internal audit and the Management Services Organisation under the overall control of a Director General of Management Audit, who is part of the Office of Management and Budget (paragraph 2.14). There are four manpower audit Directorates, covering the three Services and central and Procurement Executive staffs. However, the three single-Service Directors are dependent upon their relevant Service Board for resources to carry out manpower audits and are responsible to those Boards for certain other manpower functions.

2.20 A Management Audit Board was established in 1982 to endorse strategy and annual plans for inspection and audit and to receive reports from the Director General of Management Audit. It meets twice a year, to discuss and approve general strategy and planned programmes, and to consider the previous year’s performance and reports and proposed action on problem areas.

2.21 Comparison of the four audit groups (Table 2) showed differences in the levels and mix of staffing, the period of the audit cycle and the percentage of Service posts inspected. In general, posts which are established for combat or other operational duties are

excluded from audit; in consequence, some 128,000 out of a total of 287,000 Service posts are not inspected, the proportion of such posts varying substantially between the Services. In the light of the differences between the Services shown in Table 2, the NAO questioned whether manpower audit techniques could beneficially be applied to a greater number of Service posts. The Ministry told the NAO that they considered that the scrutiny of tasks through manpower audit was an inappropriate means of determining requirements for combat and other operational manpower, which were a function of the fighting task and the design of equipment. Combat manpower requirements were, however, scrutinised closely in the Defence programming and equipment planning processes.

Table 2

Manpower audit groups

% Years Central

Headquarters (Including the

Procurement Executive) Nil 27 27 100 16

RN 1 17 18 47 10 Army 9 14 23 34 10 RAF 10 11 21 96 4

I11 Figures are based on audit reports issued during the three years to 31 March 1988. [*I With some minor exceptions all civilian posts are inspected.

2.22 There are material differences in the methods used to reach agreement to the Audit Groups’ recommendations. In the Army, auditors have recourse to an Army Establishments Committee to resolve disagreements. In the RAF the auditors, aided by their complementing authority for Service posts, ace expected to resolve disagreements at the time of the audit. For the RN and Central Headquarters, agreement is sought through subsequent negotiations with line management. In all cases responsibility for implementing agreed recommendations lie with the relevant Service or Central Departments and line managers.

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2.23 Although the level of joint work being carried out was generally increasing, most manpower audits were based on a unit by unit examination within each audit area. The NAO concluded that this primarily single-Service approach may have contributed to mme different and possibly uneconomic manning policies in the support areas (paragraphs 5.16-5.30). The Ministry accepted that a joint approach to the audit of certain areas of support could be beneficial.

2.24 As part of its proposals for the control of manpower through operating cost budgets, the study of the Ministry’s manpower control published in 1984 (paragraphs 2.8-2.9) recommended that there should be a small unified manpower audit cell under the Director General of Management Audit covering all manpower resources. A 1986 study into the future

conduct of manpower audit in the Service Departments similarly argued the case for moving to a unified manpower audit capability coincidentally with the introduction of comprehensive budgetary systems. The Ministry foresee the need for change and propose to link this with the introduction of their New Management Strategy in April 1991. The NAO consider that, in line with the views expressed to Management Audit Board meetings in September 1986 and April 1987, every effort should be made during the change to adopt a more consistent approach to staffing, coverage and the handling of audit recommendations. The Ministry accept that good practice in one Service should be adopted, where possible, in the other two and that an increase in the number and scope of t&Service audits could contribute to this objective.

MINISTRY OF DEFENCE: CONTROL AND USE OF MANPOWSR

Part 3: Organisation of the Services

3.1 This Part examines the organisational structures of the Service Departments and the Services and considers whether these have been adapted to take account of changes in circumstances.

The Service Departments

3.2 Within the Ministry’s central organisation matters are dealt with on a tri-Service basis. Single- Service matters are dealt with through the Navy, Army and Air Force Service Executive Committees. Each Service Department is responsible for ensuring the combat readiness and efficiency of its individual Service. They report through their respective Boards, who provide military advice to Ministers. They translate central policy and financial directives into specific measures for their Service. The three Service Executive Committees will continue to look for ways to increase their efficiency, including further delegation, where practicable, of authority for day to day administration to Commanders-in-Chief and below.

The RN command structure

3.3 Below the Navy Department the Naval organisation consists of four military commands and a predominantly civilian manned support organisation. Reporting to the commands are a number of Flag Officers responsible for types of ships, aircraft, sea areas and ports, and functions such as training. With the withdrawal of the RN from locations throughout the world the number of commands has reduced from twelve prior to 1964 to the present four but the Ministry were unable to identify the corresponding staff reductions. A number of studies have been undertaken into the command structure, the most recent in 1985. These did not produce any radical proposals for change at that time but the Ministry informed the NAO that existing responsibilities within the command structure and the Ministry remain under review.

The Army command structure

3.4 The Army command structure (Appendix 2) is more complex than those of the other two Services, because of the Army’s size and variety of tasks performed and their separate district, regimental and corps structures. Below the Army Department the

command organisation consists of two principal headquarters, Headquarters UK Land Forces and Headquarters British Army of the Rhine. At a lower level there are headquarters in Northern Ireland and various overseas locations.

Headquarters UK Land Forces and the district structure

3.5 The UK command structure underwent several major revisions up to 1973, since when it has remained relatively unchanged, with Headquarters UK Land Forces controlling ten mainland Districts. The District headquarters, which employ a total staff of around 1,900, handle much of the administrative work of the Army units in their area and are responsible for planning Military Home Defence and overseas reinforcement in transition to war and war, training, security and military aid to the civil community.

3.6 Each District headquarters is commanded by a General and employs between 143 and 291 Service and civilian personnel. The NAO noted that audits of the manpower complements of Wales District Headquarters in 1984 drew attention to some lightly loaded posts. The Ministry informed them that a saving of six posts was subsequently implemented but they had no current plans to carry out a review of the regional structure to determine, amongst other things, whether all ten mainland Districts are still required.

Headquarters British Army of the Rhine and the subsidiary command structure

3.7 Headquarters British Army of the Rhine is a theatre headquarters collocated in peace at Rheindablen with Headquarters RAF [Germany) and the equivalent NATO commands. For operational reasons, the Army’s area of operation is divided into three zones, each with its own headquarters employing around 770 staff between them. In the event of war two of these, together with Headquarters British Army of the Rhine and other units, depots and installations would jointly form the British Support Command.

3.8 Headquarters British Army of the Rhine employs 730, predominantly Service, personnel and has responsibility in peace for establishing and

13


maintaining theatre policy, operational and logistic planning, and administratinn, in~hlding quartering, discipline and welfare. There have been several reviews of the role of Headquarters British Army of the Rhine in peace and war and its relationship with other headquarters and the Ministry. The most recent in 1984 considered three options:

(a) disband Headquarters British Army of the Rhine and relocate functions in either the Ministry, Headquarters UK Land Forces or Headquarters 1 (British) Corps, the operational command Headquarters of one of the zones;

(b) create an autonomous British Support Command/Division capable of supporting Headquarters 1 (British) Corps in peace and war, with a corresponding reduction of Headquarters British Army of the Rhine;

(c) restructure Headquarters British Army of the Rhine so that it would be better able to carry out its peace and war tasks with the minimum of upheaval in changing from one to the other - under the current arrangements some 50 per cent of staff would either change job or location on mobilisation without time to adjust.

3.9 Options (a) and (b) were rejected at an early stage because “severe operational penalties would result”. The Army Organisation and Manpower Committee had taken the view that the report’s recommendation that there should be no transfer of function between the Ministry, Headquarters British Army of the Rhine and Headquarters 1 (British) Corps was not substantiated in detail, and that it might be necessary to reexamine this area in the future. In the event the study concentrated on option (c) and made over 100 recommendations, including many aimed at improving the transition of the headquarters organisation from a peace to a war footing.

3.10 The Ministry told the NAO that in tbe course of tbe present review of Theatre Command Control and Communications to find further manpower savings by 1991, the relationship between the various headquarters would be addressed and the possibility of future internal reorganisation was not therefore ruled out. The NAO noted, however, that this review would not consider the possible overlap of administrative functions between the headquarters in Germany and the Ministry in London.

Regimental and corps structure

3.11 Unlike the RN and the RAF, the Army operate a regimental structure for combat arms and a corps structure for support services (Table 3).

Table 3

Uniformed regular personnel in the Combat Arms and Support Services of the British Army at 1 April 1988

Combat Arms Infantry Royal Engineers Royal Artillery Royal Corps of Signals Royal Armoured Corps Army Air Corps

Support Services Royal Electrical &

Mechanical Engrs Royal Corps of Transport Royal Army Ordnance

COlp Army Catering Corps Royal Army Medical

Corps Royal Military Police Royal Army Pay Corps Royal Pioneer Corps Intelligence Corps Royal Army Dental Corps Royal Army Educational

Corps Army Physical Training

Corps Royal Army Chaplain’s

Department Royal Army Veterinary

Corps Small Arms Schools

corps Military Provost Staff

corps Army Legal Corps Worm& Royal Army

Corps Queen Alexandra Royal

Army Nursing Corps Staff Posts not related to

Corps Lohg Service List

Total trained

Personnel under training Total

37,700 13,300 12,500 11,900 10,300 1,600

87,300

14,100 9,100

7,800 4,500

3,400 2,200 2,100 1,600 1,200

450

450

400

150

150

150

100 50

4,300

1,500

800 800

55,300 142,600

14


3.12 In view of the contribution made by regiments to cohesion, fighting spirit and morale in battle, the Army regard them as the key to their operational effectiveness. Regiments also provide a link for welfare and recruiting purposes and they are the basic tactical units. Their size varies according to their role from 350 to 900 men. The NAO noted that the regimental and corps structures have remained largely unchanged since the mid 196Os, although the Army has reduced since then from 194,000 to about 158,000 personnel and there have been changes in disposition and tasks. Having regard to that, the NAO believe that the Ministry should consider undertaking a review of these structures.

3.13 The 19 support corps (Table 3) range from the highly specialised, such as the Army Legal Corps, to the large logistic corps. Each corps is completely autonomous and maintains separate headquarters, administrative and personnel organisations. The following points arose from the NAO’s examination of the composition and purpose of the relevant corps in the areas selected for examination (paragraph 1.6).

[a] General

3.14 As the RN and the RAF provide their support functions without separate organisations, the NAO asked the Ministry why the Army should not organise their logistic functions along similar lines with a single corps. The Ministry explained that the savings to be secured were unlikely to be great as compared with the impact on morale and the problem of exercising taut and effective control cwer the disparate elements within the corps. However, the Ministry had not attempted to quantify the likely savings.

(b) Royal Army Pay Corps

3.15 The Ministry informed the NAO that the majority of Royal Army Pay Corps Service personnel were currently deployed in field force units which had a war role. Although the NAO accepted that at local level Army personnel had a role to play in the administration of pay and allowances and other related duties, they questioned whether there was scope for greater use of civilians, particularly at Central Pay Offices, and whether the resulting mnnhnr of personnel would justify a separate corps

with its related infrastructure costs. If some of the tasks involved could be substantially performed by civilians and others merged with other military duties, the savings could exceed El0 million per annum.

(cl Royal Army Educational Corps

3.16 Close integration is required between the related functions of Service education, which is concerned with general knowledge and understanding, and training, which is related to specific skills. The Services employ nearly 700 Service personnel, mainly officers,and 3,700 civilians in education and some related functions, including library facilities and teaching servicemew’ children. An Army study commissioned in 1983 noted that there was the possibility of some confusion as to whether members of the Corps were primarily soldiers or educators. They found that efforts had been made to ensure each Royal Army Educational Corps member had a transition to war and mobilisation role, but they suggested that if the Corps did not exist, those appointments would be made from elsewhere in the Army or dispensed with.

3.17 Most organisations visited by the Army study believed they could meet their own special education needs from within their own instructional ccmrses. However, the study strongly supported the involvement of regular officers in education with full integration into the Army as far as possible and believed manpower ceilings would prevent widespread civilianisation. The Ministry decided the operational implications in transition to war and war of any civilianisation needed further study, but recommended that the scope for contracting out or civilianising particular activities should be examined. This resulted in planned savings of 84 Royal Army Educational Corps posts, of which around 76 were achieved at April 1988. The NAO considered that, with the ending of civilian manpower ceilings, the Ministry should consider reviewing the scope for further savings horn civilianisation and closer integration with military training.

(d] Royal Army Veterinary Corps

3.18 The RN and the RAF rely on civilian contractors to provide most of their veterinary and animal tmining support in peace. The Army, with 1,300 dogs and 600 horses, have the Royal Army Veterinary Corps comprising 31 officers, 117 other ranks and 39 civilians. In war their operational veterinary role is confined largely to duties associated with dog units. The Ministry informed the NAO that despite numerous internal studies over 30 years, no more efficient or cost-effective service than the Royal Army Veterinary Corps’ had been identified. The NAO accepted that the Ministry had given the subject much thought and winding up the Royal Army Veterinary Corps would only be justified if financial savings ensued. They considered, however, that the

15

MINISTRY OF rJEFENCE: CONTROL AND “SE OF MANPOWER

Ministry should review further the availability and cost of civilian vets and the arrangements of other large usws of animals. For example, the Metropolitan Police support over 200 horses in the London area using private veterinary surgeons at an annual cost of about E15,000, compared with the London-based Royal Army Veterinary Corps staff with annual costs of about EEO,OOO who support some 400 horses.

[e) Women’s Royal Army Corps

3.19 The Services have varying degrees of integration between servicemen and women. The Women’s Royal Naval Service and the Women’s Royal Air Force are integral parts of the RN and the RAF respectively and women and men are recruited and posted using the same system and, with few exceptions, share the same training facilities. The Directors of the Women’s Royal Naval Service and the Women’s Royal Air Force each have a small Directorate to advise the Ministry and the Service on policy. In the Army, although most servicewomen are posted to assist regiments and corps, the Women’s Royal Army Corps provides separate management and administrative systems for its members, as do other corps in the Army.

3.20 Recruit training at the Women’s Royal Army Corps training centre at Guildford, which has annual operating costs of around E4 million, mirrors the system of other corps. Women’s Royal Army Corps officers’ training is centralised at the Royal Academy, Sandhurst, and specialist training of servicewomen is carried out at the appropriate trade training school. In the Ministry’s view, any further integration of the Women’s Royal Army Corps and their training facilities could involve heavy capital expenditure.

3.21 The Ministry considered that while only 20 per cent of Women’s Royal Army Corps officers and 26 per cent of servicewomen were employed permanently by other corps, it remained sensible to provide a separate career structure and management for the remainder. However, the Army were considering a significant extension to the numbers of Women’s Royal Army Corps personnel directly managed by other corps.

3.22 The Ministry also considered that the central focus of the Women’s Royal Army Corps was currently best equipped to deal with alterations to the duties of servicewomen flowing from the contracting out and civilianisation of functions, and to provide an efficient system to allow their transfer between trades and corps. However, the NAO noted that the Army study on the future role of women would take account of the possibility of the greater integration of

the Women’s Royal Army Corps. The NAO suggesied that the need for and the cost-effectiveness of retaining separate training facilities for the Corps should also be reviewed.

The RAF command structure

3.23 Below the Air Force Department, the RAF are divided into three commands:

(a) Strike Command was formed by the merger of Bomber, Fighter and Coastal Commands in 1968 and incorporated Air Support Command in 1972. It controls all RAF operational air elements within the UK and overseas, with the exception of RAF Germany, through three Groups and 25 major Stations.

(b) Support Command is responsible for training and logistic support, and has 36 major Stations. Ii was formed progressively from the former Maintenance, Training and Signals Commands in the 1960s and 1970s; the present organisation was adopted in 1977.

(c) RAF (Germany] was formed in 1959. It is part of NATO’s Second Allied Tactical Air Force.

Within this structure, the apportionment of RAF Service and civilian manpower as at 1 April 1988 was as follows:

Table 4

RAF manpower as at 1 April 1988

Ministry of Defence and others 8,492 5,105

Strike Command 45,146 4,973 Support Command 18,458 9,785 RAF (Germany) 11,753 37 Untrained manpower 5,676 -

Manning and training margin 3,766 -

Total 93,291 19,900

3.24 As with the RN, the RAF have reduced their command structure in line with reduced resources and roles in all areas, although to a lesser extent in Germany. In the 1950% the RAF Command in Germany controlled two Groups, with 35 Squadrons at 11 airfields. In 1988 it had 15 Squadrons at four

16

MINISTRYOFDEFENCE:CONTROLAND"SEOPMANPOWER

airfields. This reduction has not been matched by a Committee were concerned that certain administrative corresponding reduction in the Command structure, functions are duplicated by the collocated Army because of its NATO role and overseas location; its Headquarters. Whilst pointing to the positive steps current size is about 700 personnel. As already noted already taken, the Ministry acknowledged that there in their recent Report on British Forces Germany was a continuing need for rationalisation between the (49th Report, Session 1987-881, the Public Accounts two Services.

17

MINISTRY OF DEFRNCE: CONTROL AND USE OF MANPOWER

Part 4: Service Manpower Requirements

4.1 This Part reviews in more detail the methods used to determine the total Service manpower requirements which were summarised briefly in paragraphs 2.10-2.12. The Services assess the numbers of regular personnel required for transition to war and war at unit and other levels, allowing for the expected availability of reservists. These form the basis of the peacetime complement, to which are added: the extra staff undergoing training; an allowance for leave and other indirect activities; and allowances for the maintenance of career structures and home to overseas and sea to shore ratios. This Part also considers the Services’ own reviews which have led to reductions in requirements; and the scope for further reductions.

Determination of Service complements at unit level

4.2 The Ministry informed the NAO that, although differing requirements dictate that each Service adopts a somewhat different approach to manpower control, all three Services base their control arrangements on a system of authorised complements for each unit or establishment. The complement identifies all posts in the unit or establishment by rank, grade, trade or specialisation. It is determined by reference to the formal task of the unit or establishment either, as in the case of front-line units, through an assessment of the military requirement, or by manpower audit. A number of techniques are used in this process, including the use of “scales”. The NAO examined the procedures for reviewing these scales and found that the consequential revision of complements following scale changes had, in a number of cases, produced staff savings. The NAO did not critically examine the scales themselves.

Margins for indirect activities

4.3 When they have determined their manpower requirements, the Services add a margin to allow for unavoidable absences from productive duty such as training, long-term sickness and leave after overseas service, and for non-effective time between appointments. These are usually expressed as a percentage of the complemented posts. The elements included within the margins and the manner of their calculation varies widely between the Services. Table 5, which expresses these margins as percentages of

complemented posts in 1988, reflects the different approaches.

Table 5

Service margins at 1 April 1988

RN 14.4 per cenW AMY 3.5 ,I 9, RAF: Officers and Airmen Aircrew 5.6 9, 1,

Ground Trades 5.0 I, I,

~1 Including specialist training ashore.

4.4 The NAO accepted that over and above the differences in the method of calculation, differences in deployments and methods of operation could justify different Service margins. They noted that RN training is likely to be concentrated on shore at specialist establishments rather than in situ with units, as in the Army and the RAF. The NAO considered that the method of calculating manpower margins should be put as far as possible on a common basis, with any unavoidable differences clearly identifiable and open to examination.

Career structures

4.5 The recruiting, training and personnel management policies of the Services are aimed at ensuring that all complemented posts can be filled by people of the required quality and with appropriate skills and experience. Within certain constraints imposed by complementing and other considerations, career structures for both officers and other ranks are provided to attract and retain the right people.

Officers

4.8 In all three Services promotion at lower ranks is based on time served, subject to being qualified for and recommended for the next rank. At higher ranks, promotion is based on selection from those who are qualified on both age and merit grounds and are recommended for promotion. For example, within the Army, promotion up to the rank of Lieutenant Colonel is generally based upon the Army Board’s target that for officers there should be a 70 per cent chance of promotion to that rank by the average age of 40.

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Other Ranks

4.7 For other ranks career structures are maintained within specialisms and promotion is normally selective. The number of specialisms is shown in Table 6. The maintenance of a large number of specialisms could unnecessarily increase the manpower requirement; and a preliminary report of an RAF study of career specialisms within engineering suggested that the number of specialisms could be reduced by a third, with significant savings in manpower requirements. A similar study was being carried out on the RAF’s supply structure. The Ministry informed the NAO that a study was underway in the RN into the merger of the Seaman and Weapons Engineering Branches, as well as other smaller scale initiatives of a more routine nature; and the NAO noted that the Army kept their number of specialisms under periodic review. The Ministry agree that the more fundamental type of review carried out in the RAF and the RN could be extended to other specialisms in all three Services.

Table 6

Specidisms as at 1 April 1988

RN&RM 10 77 &my 25 165 RAF 23 111

(*I Excludes personnel in the Women’s Services and the Nursing Services.

Officer to Other Ranks ratio

4.8 Table 7 shows the ratio of officers to other ranks in the three Services. Information was not available in the Ministry for a valid comparison to be made between the UK ratio of officers to other ranks and those of other Armed Forces. The Ministry cited a number of reasons for this. First, the UK was among a minority of NATO, Warsaw Pact and other leading nations in having no conscript forces, which involves a different approach to training, the application of professional experience, career development, recruitment and retention. Second, the UK is alone in NATO in not having reserve headquarters or reserve generals; no new post or headquarters is created on mobilisation. Third, the ratio within defence ministries of Service officers (especially at a senior level) to civilians differs widely between countries. Fourth, it is necessary to make allowance for the differing numbers of officers of each nation seconded to international bodies or, in some cases, to other

parts of the public service. For these reasons the UK might have a higher proportion of officers, particularly of senior rank, than many other countries.

Table 7

Ratio of Officers to Other Ranks at 1 April 1988

RN&RM 9,800 52,400 1:5.3 Army 16,300 135,500 1:8.3 RAF 14,700 72,300 1:4.9

‘l’ Excludes personnel in the Women’s Services and female members of the Nursing Services.

Managerial posts

4.9 Because of the need to maintain the career structures described in paragraph 4.5, it seemed possible to the NAO that this could result in more managerial posts than would otherwise be necessary. In peace several thousand officers are employed in the Ministry of Defence including the Procurement Executive. The information available did not enable the NAO to establish whether all these and other Service personnel had a designated war role.

The Services’ systems for determining personnel requirements

4.10 The following paragraphs contain the results of the NAO’s examination of the systems for determining the numbers of Service personnel required, and the reviews carried out by the Services themselves. The NAO examined the employment of Service personnel in peace, and their transition to war and war roles in the six selected areas [paragraph 1.6). They sought to establish that the requirements had been clearly determined in accordance with approved criteria.

Royal Navy

4.11 RN ships declared fully operational are complemented for war at all times, but not always fully manned due to manpower shortages in particular trades. During transition to war these ships and others in a lesser state of readiness would be brought up to full manning by drafting in trained Service personnel from shore establishments. Posts in such establishments are classified as being needed in “peace”, “transition to war” or “war”, or a combination of the three. Selection of personnel to

19


man ships would take account of the classification of the posts they were occupying. The NAO did not question the definition of posts as between categories. They noted, however, that neither the definitions nor the war complements were subject to independent scrutiny by manpower auditors as in the case of the RAF. The Ministry told them that a review of the war complement was nearing completion, and a new computerised system which would allow a better assessment of the regular Service manpower requirement for transition to war and war was about to be intmduced.

4.12 At 1 April 1988 the RN employed 47,000 trained male Service officers and ratings (excluding chaplains and medical personnel). Of these, some 26,000 were required to man RN ships, submarines and aircraft. The remaining 21,000 were shore based and principally involved in training, command and control, and support. Only 2,200 of the total of 7,400 male officer posts had permanent sea-going duties in peace although a further ZOO peace appointments involved limited sea time. A review of senior naval officers by the Ministry’s Internal Audit in 1987 showed that nine of the 83 Commodores and above and only 19 out of 355 Captains were currently in sea-going jobs. In the light of the current review of the RN’s overall requirement (paragraph 4.11), the NAO did not seek to confirm the need for Service personnel to fill all the shore based posts.

4.13 In determining requirements, manpower specialists have regard to the time personnel spend in overseas posts 01‘ at sea. The Ministry told the NAO that although the RN complement on the basis of the requirements of the post, if a serious imbalance develops between sea and shore posts and this leads to accelerated wastage then, in appropriate cases, the process of civilianisation or contractorisation of shore posts is slowed down to avoid further degradation of the sea: shore ratio which currently stands at 54:46 (a marked increase on former average levels of service at sea).

4.14 The NAO noted that, in evidence to the Defence Committee in March 1988, the Ministry stated that about 40 per cent of “sea-time” was, in fact, spent in UK ports. This would distort the actual sea: shore ratio. They also noted that the Ministry’s 1983 review of manpower control (paragraph 2.8) suggested that sea: shore manpower planning should be replaced with “sea pay for sea service”, which had been introduced in the United States Navy with a net saving of manpower and benefits in improved retention and increased enthusiasm for sea service. The Ministry have not yet adopted this concept. They told the NAO that, notwithstanding the period of “sea-

time” spent in ports, they were concerned at the number of man leaving the Service because of too much sea service. The problem had been addressed in the form of a recently introduced “Longer Service at Sea” bonus and other compensations.

4.15 The RN manpower calculations provide for 21,000 servicemen for manning the surface fleet in war. The peacetime complement of the surface fleet is approximately 19,000, to allow for unavailability of ships due to refit, repair or maintenance. The NAO noted that the average utilisation of the fleet in peace was below 60 per cent and estimated that about 14,500 servicemen would be required to crew the ships when at sea provided that there is the ability to transfer between ships when they return to port. The NAO questioned whether, given the difference of some 4,500 between manpower requirements based on ship usage and those based on ship availability, there is a case for a review of the RN’s surface fleet manpower requirement in peace. However, the Ministry pointed out that, to maintain availability at little or no notice for operational reasons and to avoid the large increase in training which would be necessary to operate different types of equipments, the ships’ companies must be kept intact even when ships were undergoing repairs or maintenance. To meet the surface fleet requirement in war of 21,000, the RN would call upon their peacetime complement of 19,000 servicemen and make up the balance of 2,000 from the 21,000 shore-based personnel referred to in paragraph 4.12.

4.16 A 1981 study of the scope for manpower economies in naval training proposed changes involving the closure of some shore establishments and a saving of over 1,400 Service posts. However, significant changes in circumstances, including the implications for the RN of the F&lands operation, affected the manner in which detailed recommendations have been implemented. The underlying principles of the study have been applied, with the result that three major training establishments have been closed, and further closures involving transferring training from shore to sea are under consideration. There has been a 25 per cent reduction in the number of training days and a reduction of 1,864 in the number of uniformed personnel engaged in naval training, against the original target of 1,400.

4.17 Other reviews and changes since 1981 have resulted in reductions in both Service and civilian manpower. The changes include: the closure of the Naval Base at Chatham; the reduction and reconstitution of Portsmouth Dockyard as a Fleet Maintenance and Repair Organisation; and tbe

20

transfer of Gibraltar Dockyard to the commercial sector. The number of Naval depots and ranges has also been reduced. The RN’s support organisations are largely civilian-manned and, overall, the changes described in this and the preceding paragraph have resulted in a reduction of 7,200 Service personnel (9.8 per cent) and 14,200 civilians (21.5 per cent). These figures exclude changes arising from the transfer of 16,500 former Royal Dockyards staff to commercial management.

4.18 The NAO’s examination of the selected areas (paragraph 1.6) confirmed that savings had been made in the RN supply, repair and maintenance, and transport organisations. However, the NAO asked the Ministry about the justification for the separate Royal Marine pay function maintained independently of the RN pay function, since both use the same pay system and documentation and direct computerised input facilities are being introduced in units. The Ministry told the NAO that they considered some form of integration, although possible, would not be cost- effective (see also paragraph 5.18).

4.19 Naval tasks extend far beyond sea-going duty and include such areas as defence policy formulation and analysis, intelligence, operational requirements and ship procurement; and tbe RN are committed to an efficiency squeeze, the effect of which will be to reduce the manpower ceiling from 1 April 1988 to 1 April 1993 by one per cent per annum. However, taking account particularly of the doubts expressed above concerning sea: shore ratios, the proportion of officers with sea-going duties and the peacetime complement of the fleet, the NAO concurred with the findings of the Ministry’s own review (paragraph 4.14), that there might be some scope for savings in Naval manpower additional to the significant savings already made.

4.20 The peace and war complements of Army service-manned, front-line units are approximately the same. In the support areas, peace complements include a relatively high proportion of civilian staff, but war complements make increased use of Service manpower through the use of reservists and the redeployment of Service personnel from non- operational tasks. The Army use a computer-assisted individual reinforcement plan which is updated on a quarterly basis to calculate manpower requirements on mobilisation. The Ministry told the NAO that, although the overall requirements had not been reviewed prior to 1987, the process of verifying the transition to war and war liability of operational establishments, including Home Defence

headquarters, as well as the requirements for redeploying regular personnel in other war establishments, had now been completed at command level and was under consideration in the Ministry before implementation during 1989. The Ministry are considering also the results of a further study into the logistic sustainability of Home Defence.

4.21 In late 1983, the Army Board noted that, with the reduced manpower ceiling proposed for I April 1987, serious shortages of manpower, particularly in the front-line, would arise with the introduction of new equipments in the late 1980s. This led to the “Lean Look” studies in 1984 (Open Government Document 85/03), which aimed to redeploy 4,000 male Service posts from training and support areas to front-line units between 1987 and 1990. The studies identified potential savings of 4,176 servicemen, 370 servicewomen and 2,393 civilian posts. At the time of the NAO examination, the Army were taking action to save 3,564 serviceman, 367 servicewomen and 2,177 civilian posts.

4.22 The NAO’s examination of selected areas showed that: staff savings of 28 per cent in the Army supply organisation had included some Service posts; a review of the Royal Electrical and Mechanical Engineers’ static workshops following the Public Accounts Committee’s 16th Report Session 1981-82 led to the closure of two workshops, reorganisation of the remainder, a reduction of 605 civilian posts, some redeployment of Service personnel and increased contracting out; and the “Lean Look” study will save 600 Service and civilian posts in transport by 1990, although a proposed further reduction of 450 posts will not be implemented because of severe operational and training penalties.

4.23 The NAO also noted that, in 1985, the then Secretary of State decided not to go as far towards centralisation of the Army pay system as had been recommended by a Rayner Study Team in 1983, because of concern that over-centralisation would result. However, he requested that the scope for staff savings should be examined. A limited reorganisation followed which reduced staff numbers in Army Pay Input Centres by 305 from 1,140 in 1983 to 835 in 1987. This compared with the Rayner recommendation that staff numbers should be reduced to 700 following reorganisation. The Ministry subsequently informed the NAO that numbers are expected to reduce to 600 by April 1989.

4.24 The Ministry informed the NAO that their current practice was for establishments to be set on the basis of an assessment of the tasks to be undertaken. However, in assessing bids for increased

21


resources, account Gas taken of the manpower likely to be available. Nevertheless the NAO noted the apparent inability to match commitments to resources and the fact that some of the information used to determine the Army’s requirement for war had not been reviewed recently. The main deficiencies were a lack of clarity on the role of certain units and the need to review the detailed definitions within the database relating to the roles of reservists and redeployed regular personnel in transition to war and war. However, the review mentioned in paragraph 4.20 should define war complements more clearly. When these studies are completed, it should be possible to identify whether there is scope for possible further savings in Army manpower.

Royal Air Force

4.25 Because they would operate mainly from known locations in war, the RAF have been able to develop separate peace and war complements for each unit, as well as the plans and procedures needed to ensure that personnel can readily be transformed from peacetime to wartime duties. The Air Force Department assess the total war complement, and the numbers of personnel available to fill it, every six months. Following such an assessment in 1987, a full review of the RAF war manpower requirements and of the means of determining them was set in train and is now largely complete. During the review over 30 per cent of RAF unit war establishments were individually staff inspected and there was a shortfall of RAF regular personnel against anticipated war requirements, primarily as a result of the increase in the guarding task, which the RAF would expect to make up with reservists in war. However, within the overall shortfall there were substantial surpluses of highly trained personnel, especially in the engineering skills. Current reviews, both of the engineering trades and of the guarding requirement, should enable the RAF to bring their peacetime strength in individual trades more into balance with wartime requirements, thereby identifying the scope for increased efficiency through the civilianisation and contractorisation of peacetime tasks.

4.26 A 1981 review of RAF support areas identified significant potential manpower savings arising mainly from contracting out repair tasks The NAO noted that a trial of a revised concept for aircraft servicing had suggested potential savings of up to 1,000 Service personnel. The Ministry informed the NAO that significant savings were being achieved by applying this concept to all aircraft entering service, and that it was proposed to extend its use to existing in-service aircraft in due course.

4.27 The NAO noted that the 1,063 Service and 99 civilian posts saved up to 1 April 1988 f?om contractorisation of first or second lime repair tasks were expected to increase to total savings of 2,184 Service and 235 civilian posts by June 1991, compared with the 2,335 Service and 155 civilian posts originally identified. The 1981 review also suggested that if all third line repair work was contracted out, potential savings of 5,000 posts could be achieved. This was not implemented because unlike the RN and Army, the RAF decided on operational grounds that they must retain some predominantly military third line capabilities. A number of other recommendations were still being considered at the time of tbe NAO’s examination.

4.28 The NAO’s examination showed that the RAF had a greater proportion of Service personnel in the support organisations than the RN or the Army. In addition, the RAF’s supply organisation, which is organised on a different basis, has not to date reduced staff numbers on the same scale as the other Services. Nevertheless, following a consultancy study, the Supply Management part of the RAF’s supply organisation has been the subject of a major reorganisation, involving the collocation and integration of separate functions and the intioduction of a more streamlined management structure, which is expected to save more than 100 posts. Apart from the review of engineering trades and the programme of contracting out (paragraphs 4.25 and 4.261, there has been no major reorganisation of RAF engineering and repair tasks. Reductions in manpower requirements have, however, been made in the course of normal audit and scaling work.

4.29 The NAO concluded that the RAF had achieved manpower savings mainly in support areas, which had been used to strengthen operational areas. The NAO noted, however, that work was in hand to refine and revalidate the RAF’s war requirements and that the needs of the front-line would be considered against these revised requirements. In the NAO’s view, this work should also enable the scope for any further savings to be identified.

Need for further review

4.30 All the Services claim that, where shortfalls exist (paragraph 2.11). they are placing high levels of overstretch on personnel and are a cause of premature retirement. Nevertheless, the NAO examination suggested that there might be some scope for further reductions in requirements in some areas and that this should be examined further.

4.31 The NAO noted that considerable progress had been made recently in determining the number, rank and skills of servicemen required by each of the

22

MINISTRYOFDEFENCE:CONTROLANDLJSEOFh4ANPOWER

Services in transition to war and war. Nevertheless Part 5. The NAO also concluded that there was a they concluded that, once the transition to war and war requirements had been properly formulated,

continuing need for review of the Services’ manpower

there could be scope for further civilianisation or requirements in peace and war and how these should

contracting out. The results of the NAO’s be met. These reviews could build upon the ad hoc

examination of these possibilities are described in reviews already undertaken (paragraphs 4.16, 4.21

and 4.26).

,’

.^_. ~.,_ ,.

23


Part 5: Manpower Options

5.1 This Part considers whether the Ministry meet their manpower requirements in the most cost- effective manner having regard to the options available and their transition to war and war commitments. The options considered for front-line operational tasks are regular servicemen and reservists; for other tasks they also include servicewomen, civilians and contractors’ staff. Regular servicemen are the most expensive alternative (Table 8) but are available to undertake a wide variety of tasks.

Table 8

Comparative costs of Service and civilian personnel

Officers Major General/Grade 3 Colonel/Principal Major/Higher Executive

58,579 51,518 47,892 27,990

Officio 33,752 18,575 Other Ranks Sergeant/Administrative

OffiCW

Corporal/Administrative 17,175 10,797

Assistant 15,280 8,492

01 Staff costs comprise pay, additional pay, ERNIC and pension and gratuity liability.

Source: Ministry of Defence Ready Reckoner of Staff Costs, 198&89.

In calculating savings arising from substituting civilians for individual Service posts, the Ministry use staff costs. However, for larger numbers there could be additional significant savings because of the possibility of reducing overheads and training costs.

5.2 Each Service decide their own manning policy. The Ministry told the NAO that, as a general rule, servicemen were employed only where a task required military experience, discipline and training, where working conditions differed significantly from civilian norms, or where employing civilians rather than servicemen could threaten an essential operational capability.

5.3 The NAO examined whether, in the six selected areas (paragraph 1.61, servicemen were employed only on those tasks which could not be performed by the other options, taking account of the Ministry’s criteria, or, if not, that there was a clearly defined war role for the postholder. The NAO found that the use of servicemen varied significantly between the Services. In some areas there was prima facie scope for the increased use of civilians, reservists and servicewomen, although some servicewomen’s posts could be filled by civilians, as illustrated in the following paragraphs.

The Women’s Services

5.4 The Women’s Services employed the following numbers of personnel, excluding the nursing element, at 1 April 1988 (Table 9).

Table 9

Numbers of personnel as at 1 April 1988

Women’s Royal Naval Service

Women’s Royal Army Corps

Women’s Royal Air Force Total

294 2,656

512 4,220 792 5,012

1,598 11,888

The Ministry told the NAO that servicewomen undertake those support tasks requiring a degree of military expertise, training and discipline; many require mobility and flexibility of employment which the Ministry consider can be expensive factors when exercised by civilians and could not be guaranteed to the same extent. The policy of successive Governments has been that women should not fill direct combat posts, although since 1980 they have been authorised to bear arms for self-defence and, in certain cases, for the defence of installations. In determining Service pay, account is taken of the net disadvantages of Service life as compared with civilian life. Currently this equates to 10 per cent for servicemen. Since 1 April 1988 the corresponding payment to women has increased from 7.5 per cent to 9 per cent.

5.5 Women’s Royal Naval Service personnel are primarily employed ashore in a variety of tasks. They

24

MINISTRY OF DEFENCE CONTROL AND USE OF MANPOJ,VER

are interchangeable with male personnel and on of women in the Army, including the Reserve Forces, occasion may spend short periods at sea. In late 1988 was also underway. The RAF had recently examined the RN decided that their servicewomen should be the limit on the number of airwomen they employ in armed for security and self-defence purposes. The the light of an increase in the level of productive NAO noted the apparently low military content of service and had decided that the number will be 1,385 Women’s Royal Naval Service jobs, including progressively increased over the next five years, from secretaries, administrative personnel, telephonists and the present ceiling of 5,000 to 10 per cent of the total dental assistants which, prima facie, could be trained ground trade strength, or around 7,000 posts civilianised. base on current forecasts.

5.6 As part of the “Lean Look” study (paragraph 4.21) the Army Board approved a revised policy on the employment of servicewomen. Under this they may not be employed in peace in posts which they cannot fill in war, nor in establishments where their presence would reduce operational flexibility and effectiveness. They must be capable of performing the full range of individual duties for men in the same post. Although Women’s Royal Army Corps personnel are not employed where the primary task is combat, they may be assigned to support tasks for which the bearing of arms for self-defence is necessary. But they are usually employed on support and administrative tasks which, prima facie, could be filled by civilians. The NAO identified 1,700 such posts.

5.7 Government policy precludes Women’s Royal Air Force personnel from serving in direct combat posts in the RAF Regiment and as pilots and navigators although their employment in the latter roles is under review. They are currently employed on other flying duties, as Air Loadmasters and Air Stewards; and will fly as mission crews in the airborne early warning aircraft. In ground branches 98 per cent of posts are open to female officers and 78 per cent are open to airwomen. From 1 April 1984, all Women’s Royal Air Force personnel have received firearms training and may be employed on armed duties in defence of personnel and installations within station boundaries. Notwithstanding this, the NAO identified 238 posts filled by Women’s Royal Air Force personnel which, prima facie, could be filled by civilians.

5.9 The tasks on which women were currently employed in many cases had a very low military content. In all, the NAO identified some 3,300 servicewomen posts which, prima facie, could be occupied by civilians or contracted out with a potential saving of some El4 million a year [paragraphs 5.5-5.7), although they acknowledged that wider factors must be taken into account. The Ministry stated that some of the servicewomen in question had war roles or would substitute for male personnel in transition to war or war. They pointed out that other factors such as mobility, geographical location, unsocial hours, discipline, flexibility or expertise might militate against the employment of civilians, although the situation was kept under review. The Ministry also stated that, in some areas where servicewomen were employed, corresponding civilian expertise was not, at present, available or, contrary to the general trend, commanded salary levels above Service rates of pay.

Reservists Numbers and cost of Reservists

5.10 The NAO considered the extent to which the Ministry took account of reservists in assessing their regular manpower requirements. The total reserve strength increased from 242,500 at 1 April 1976 to 326,000 at 1 April 1988 (Table 10).

Table 10

Strengths of Reserve Forces at 1 April 1988

5.8 The NAO noted that, because the Ministry considered the work to be too physically demanding, servicewomen were excluded from some tasks performed by women in other organisations. For example, women are employed as fire-fighters by local authority fire brigades, as dog handlers by the Metropolitan Police and as pilots by some commercial airlines. The Ministry told the NAO in 1988 that they were reviewing the employment opportunities of women in all three Services. The recommendations of the recent comprehensive study into widening Women’s Royal Naval Service employment are currently under consideration. An Army study to review the employment, deployment and organisation

RN 27,100 9,800@’ 36,900 AMY 167,700@1 84,200’c1 251,900 RAF 35,400’d’ 1,800 37,200

Total 230,200 95,800 326,000

@I includes the Royal Naval Auxiliary Service (3,000). *I only 104,000 Army regular reserves are available

for deployment. cc’ includes the Ulster Defence Regiment (6,400) and

the Home Service Force (3,100). Id1 includes some 10,000 over the age of 60.

25

MINISTRYOFDEFENCEzCONTROLANDUSEOFMANPOWER

5.11 Reservists receive pay and bounties amounting to El42 million annually. The additional annual cost of Service and civilian staff engaged in the training and adminiStration of reservists, and other associated running costs, is over BOO million. The Government are committed to making more use of reservists, particularly volunteer reserves, which they believe is the most cost-effective way of enhancing the front- line capability of regular forces. The Ministry plan to expand further the size and role of their volunteer reserve strength. They are considering the most appropriate mix of reserves and regulars, taking into account the lower costs of the former but the greater availability and higher level of training of the latter.

Restrictions on the use of Reservists

5.12 The Government rely on the powers available under Section 10 of the 1980 Reserve Forces Act for the early call-out of reservists. The NAO noted that before the necessary Orders were implemented and the reservists available, regular troops would carry out tasks which would be assigned to the reservists. The unavailability of the reservists before formal call- out would increase requirements for regular forces in transition to war and hence in peace also.

5.13 The Ministry pointed out that the decision to call up reservists would have high international and domestic political significance and be taken in very sensitive circumstances. The early availability of reservists in transition to war could not necessarily be relied on. The NAO agreed but suggested that it might be worth considering the scope for increasing the number of reservists in the early selective call-out process allowed under the Act, notably for Military Home Defence. The Ministry informed the NAO that they were examining the scope for the introduction of a greater measure of flexibility.

Scope for increased use of Reservists

5.14 III transition to war and war, reservists would reinforce the regular forces by either adding directly to their number and capabilities, or taking over their support and Military or Maritime Home Defence functions to allow the regular forces to concentrate on front-line tasks. The Ministry recently reviewed Military Home Defence tasks and resources and concluded that there was a current shortfall in the manpower allocated to this area. The NAO noted that there was no defined war role for certain categories of reservists, in total some 65,000 in all three Services, although they would be liable to recall for appropriate duties should circumstances so require. The Ministry told the NAO that the definition of roles was proceeding.

5.15 The NAO noted that the transition to war and war roles, which were the justification for employing significant numbers of servicemen in the support areas in peace, included the guarding of military and other establishments, outloading tasks and Military Home Defence duties. The NAO considered that there might be scope for increased use of reservists for guarding key points and other duties requiring limited training, thus releasing regular forces for higher priority and more specialist tasks. The Ministry intend to keep the possibility of allocating more reservists to Home Defence roles under review over the next few years as additional reservists become available, but the likelihood was that most of these would be required for existing commitments.

Civilians

5.16 For non-operational tasks and where the criteria for Service manning (paragraph 5.2) do not apply, the Ministry have the option of employing civilians or using civilian contract staff. The Public Accounts Committee in their First Report of Session 1984-85 on “Maintenance of major RAF equipments” noted that, although there were few specific comparisons of productivity between servicemen and civilians, the Ministry acknowledged that, in almost all cases, civilians were undoubtedly cheaper man for man than servicemen. As indicated below, the NAO’s examination in 1986 and 1987 of the allocation of posts between servicemen and civilians showed that: there were differences between the Services in the use of civilians for functions such as supply, transport and veterinary services; the case for employing Service personnel rather than civilians was not clearly established in some areas; and Ministry of Defence reviews had already identified scope for replacement of some Service posts by civilians or contractors.

Royal Navy

5.17 The RN employ a greater proportion of civilians than the Army and the RAF. The RN Supply and Transport Service is an almost entirely civilian organisation. Nevertheless there appeared to be some scope elsewhere for further civilianisation. Studies carried out by the Ministry in 1985 and 1986 estimated that more than 1,000 RN posts at Fleet Maintenance Groups might be civilianised. However, the RN deferred review of the possible greater use of civilians or contractors until the effects of the introduction of commercial management into the Royal Dockyards had been assessed.

5.18 Regardless of whether there is a need for a separate Royal Marine pay function (paragraph 4.181,

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the NAO noted that civilians would be cheaper to employ than the 55 trained fighting men currently employed folly or partly on pay duties. The Ministry stated that in transition to war or war the marines concerned would have a military role and be replaced on pay duties by Women’s Royal Naval Service or reservist personnel. The NAO accepted that this arrangement allowed strength to be maintained near the war requirement without also paying civilians for pay duties, but they noted that possible civilianisation of some posts was nevertheless to be considered. The RN believed that some other civilian pay jobs could now more economically be done by Naval personnel as an adjunct to their other work.

5.19 The NAO also noted that the RN accepted that forther limited savings might be possible by using more Retired Officers and civilians in some education and related posts, provided that other duties and transition to war needs were not adversely affected. The NAO considered that this might apply also to the other Services. The Ministry are considering the possibility of rationalising and civilianising some education-related functions, such as children? schools and libraries.

5.20 The NAO noted that the Army, although maintaining a policy of civilianisation wherever practicable, had found that cash limits and reducing civilian ceilings in recent years had limited the opportunities for converting Service to civilian posts. The Ministry informed the NAO that there were also difficulties associated with recruiting civilians at the current pay levels which acted as a restraint in the pursuit of a policy of civilianisation.

5.21 Unlike the RN, the Army use roughly equal numbers of Service and civilian personnel for administrative transport duties in their Royal Corps of Transport and also have a mix of personnel in their supply organisation, the Royal Army Ordnance Corps. A 1986 Army study of administrative transport considered whether it was cost-effective to replace Service drivers by contracted-in civilians. It noted that a substantial military element was needed for mobilisation purposes but that Service drivers cost E3,OOO a year more in basic pay than contracted-in drivers and E5,OOO a year more than directly employed civilians. The study considered the differences were more than compensated by not paying overtime to servicemen but the NAO noted that the difference was equivalent to about 17 hours overtime a week. In their view it was unlikely that this level of overtime was necessary on a continuous basis.

5.22 The Army run priority freight and container services in the UK and to Germany, with close links to the RAF priority freight service. The Army’s justification for use of Service drivers on this function was the need to operate in transition to war and war and the substantial overtime payments and possibility of industrial action which would arise with a civilian system. The NAO noted: that the RN’s civilian- operated freight system would also operate in transition to war and war, and minimised overtime by operating a strict control on urgent requirements outside normal hours; and that the British Army of the Rhine freight distribution service relied on civilian drivers although it was under military control.

5.23 Since most of the supply functions within major storage depots are computerised and stock is ordered using standard NATO code numbers, it appeared to the NAO that specific military knowledge was not required to perform the associated stores duties. The Ministry believe that Royal Army Ordnance Corps’ depots in the UK require some Service personnel for transition to war and war roles. However, the NAO noted that additional servicemen were being retained in the depots in order to gain general experience or in case of short notice redeployments.

5.24 The Army’s “Lean Look” exercise in 1984

(paragraph 4.21) examined the role, organisation and structure of the Royal Army Pay Corps. Most of the recommended savings in 210 servicemen’s posts were to be achieved by more use of civilians (158) and servicewomen (37). The army expected to achieve 154 of these savings by 1990 but 42 were not actioned because the Army considered that suitable civilians would not be available.

Royal Air Force

5.25 It is the RAF’s policy to achieve the most cost-effective manpower mix from their resources. However, the NAO noted that there were some significant areas where this policy had not been implemented in full, such as aircraft equipment stores and repair of ground and air equipment; where the RAF, like the Army, had been constrained in the past by Government policy on civilian numbers. More recently, the RAF have been able to institute civilianisation pr0gmmnw.s involving some 1,000 posts, and they accept there is scope for further civilianisation. They point out that civilianisation is constrained by recruiting difficulties in some areas and that in many cases, additional training and apprenticeships may be required to replace Service personnel. The NAO considered that there would be off-setting savings in not retraining Service personnel

27


on two year postings. Given that the current studies of requirements for Service personnel in transition to war and war (paragraph 4.25) indicate that there may be scope for reducing the numbers of Service personnel, the NAO considered that the RAF should extend their existing civilianisation programme.

5.26 The Public Accounts Committee’s First Report of 1984-85 (paragraph 5.16) recommended that the Ministry should undertake wider comparisons of the costs and efficiency of civilians and servicemen engaged on maintenance work, as the basis for a fundamental review of whether the operational benefits, quantified significantly more than was then the case, of employing the high proportion of servicemen in the RAF outweighed the potential financial benefits of more civilianisation. The NAO’s examination indicated little progress on this but confirmed the apparent potential for civilianisation among the 6,400 RAF third line repair posts, since at this level the RAF use mainly Service personnel for major overhauls in specialist workshops whereas the RN and the Army use mainly civilians. The NAO noted that any action on this would await the outcome of the RAF’s review of their war requirements (paragraph 4.25).

5.27 About 65 per cent of RAF drivers are Service personnel. The balance consists of civilians and contractors’ staff. The RAF are concerned about the numbers of regulars available for motor transport tasks in war and they are examining the scope for increased use of reservists. A 1982 study recommended the formulation of a policy for employment of civilian drivers to ensure the most cost-effective Service: civilian mix. This had not been pursued because of pressure on civilian numbers but the Mini&y told the NAO they would progressively civilian& RAF transport posts as opportunities arose.

5.28 RAF pay is administered centrally by the Director of Personnel Management (Automatic Data Processing) (RAF]. He has 400 staff (including 150 Service personnel), of whom 110 (including about 60 Service personnel) are involved in pay duties. Although the NAO noted that most of the Service personnel had been allocated a war role, they considered there was, prima facie, some scope for further civilianisation in the pay function.

5.29 The Ministry accept that in some cases civilians are more productive than Service personnel at their primary task and in general are less expensive in terms of basic pay, allowances and training. In June 1987, while the NAO study was in progress, the Ministry decided to undertake a review of the means

of making more cost-effective use of manpower, including further contractorisation, aimed at achieving the best mix of Service and civilian posts. The Ministry decided not to set a specific target for savings, although the possibility of setting a target for substantial savings from civilianisation of Service posts was considered.

5.30 The Ministry consider that there is limited further scope for civilianisation because, in addition to their primary role, many servicemen have essential military tasks which would still be required if the post was civilianised. Servicemen are also expected to work on demand, often at night or at weekends when civilian employees would attract overtime payments. Moreover, the Ministry pointed out, that notwithstanding these conclusions, its ability to further civilianise Service posts is currently curtailed by its inability to recruit civilian staffs in the necessary numbers: at 1 January 1989 its civilian strength was 2.2 per cant below the planned figure for 1 April 1989. The NAO, whilst accepting these points nevertheless consider that, because of the potential savings from lower costs and greater productivity, the Ministry should continue to explore the scope for the civilianisation of Service posts, particularly in the support functions, after they have clearly defined their transition to war and war manpower requirements.

Contracting out

5.31 The Ministry define contracting out as where the private sector provides a service which the Department needs and which was previously performed in-house. Although the Ministry have contracted out functions for many years the scale of contractorisation increased considerably following the issue of the former Secretary of State’s management principles which stated that, in general, the only work to be carried out within the defence support organisation was that which was essential to retain in-house for clearly proven operational reasons, or where there was significant financial advantage to the taxpayer. He believed this policy enabled the Ministry to concentrate on their essential business; encouraged competition; obliged managers to focus on cost- effectiveness; and reduced the size of the public sector.

NAO examination

5.32 The support functions contracted out by the individual Services include aircraft servicing, academic teaching and research, range support services, stores depots, driver training, catering, cleaning and laundry. The contracts are awarded after competition and are for a fixed period with a

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termination clause. The NAO did not examine performance on individual contracts and in general it was too early at the time of the investigation to examine trends in prices after expiry of the first contracts, the bulk of which had been placed following the issue of the Secretary of State’s management principles (paragraph 5.31).

5.33 At 31 March 1988 the Ministry estimated that, since 1979, the contracting out of Defence support services, excluding the Royal Dockyards, had resulted in savings of some 13,260 mainly civilian posts and net annual savings of over E49.2 million. The NAO found that deficiencies in central management information made it difficult to verify these savings. The Ministry’s castings were a measure of the difference in rasourca costs between doing a job in-house or by contract. In some cases, Service personnel might be redeployed as part of the transfer of resources from support to front-line tasks. The NAO noted that: improvements were seldom made to in-house arrangements before they were costed and compared with contractors’ bids; and the significant redundancy costs arising from contracting out were not quantified in all cases.

5.34 The NAO found that to date the contractorisation effort had largely been directed towards civilian posts in ancillary functions, as these were most likely to be suitable for contractorisation and because of civilian manpower cuts. There had, however, also been several examples of contracting out work previously done by Service personnel and the Ministry accept that there is scope to extend the policy to more areas involving Service posts. It is Ministry policy to continue using contractors in transition to war and war. Each of the Services has negotiated dormant contracts for use on mobilisation and recent contracts have specified the contractors’ obligations in war.

5.35 Within the overall policy set by Ministers the Services have discretion as to the activities which they contract out, resulting in some inconsistencies between them in essentially identical areas. For example, the RAF are the only Service to run a major store using contractors’ staff but, unlike the other Services, they do not use such staff on security duties. The RAF use contract drivers for administrative transport at some units, while the Army and the RN employ their own drivers. The Ministry told the NAO that they do not consider that commonality is automatically an objective in itself because the needs of the Services are often different. However, they have action in hand to develop co- ordination of the contracting out programme and the

cross-fertilisation of ideas between the Services (paragraph 5.42).

5.36 The NAO noted that in a few cases, such as the RAF accommodation stores depot, complete functions or areas had been contracted out. In most cases, only parts of an area were considered; in others a complete function was considered but only part was contracted out. For example, a private helicopter operator offered to undertake the full range of search and rescue operations currently performed by the RN and the RAF, at an annual saving of around E24 million. The offer was not taken up, partly for operational reasons, but the RAF identified some aspects of the work as possible candidates for contractorisation and one contract was let.

5.37 The NAO also found there were no centrally approved guidelines on the procedures for monitoring contractors’ performance or costs. Monitoring was not being carried out or was being done on an ad-hoc basis and was of variable quality. In the NAO’s view there was a need to monitor the overall costs of a particular activity since the contract normally covered only labour.

Multi-departmental review

5.38 In 1986 the Treasury and the Prime Minister’s Adviser on Efficiency commissioned a review in six departments, including the Ministry, to assess: the ways in which departments identified services which might be contracted out; how they tested and evaluated the possibilities: and how they controlled the delivery of services and ensured that value for money was obtained.

5.39 The internal Ministry report which preceded the main report concluded that “in recent years the sustained drive to contract out services had produced useful cost and manpower savings without affecting operational performance”. It was, however, critical of certain aspects of the arrangements. While noting that the absence of rigid central controls was in line with the Ministry’s policy of delegation, it recommended better co-ordination. It considered that there was a need for clearer guidance on the type of activity to be offered for competition and for a strategy for retaining essential tasks in-house.

5.40 The report also found: that many Ministry of Defence managers considered that more attention should be given to increasing internal efficiency before tenders were invited; that they needed more help with placing and controlling contracts; and that the primary aim of contracting out was seen as a means of achieving manpower reductions, occasionally at greater cost. In this connection the

29

NAO noted eight contracts which had been let at a net additional annual cost to the Ministry of nearly E200,OOO to save 52 mainly civilian posts. The Ministry told the NAO that this flexibility in cost was strictly limited and had been withdrawn pending the issue of revised guidance reflecting the conclusions of the multi-departmental review.

5.41 The report concluded that, if the Ministry’s efforts on contracting out were to continue, they would soon have to move out of the area of simple domestic support into increasingly complex subjects, perhaps involving multiple activity contracts covering a number of sites or establishments. It proposed a strategy for competition in the Ministry to ensure better value for money and more consistent results from the limited resources available. This proposal was endorsed in the main multi-departmental review report which acknowledged that the Ministry of Defence had contracted out more mainstream activities than any other Department, but recommended that the policy should be restated to place clearer emphasis on value for money. The Secretary of State endorsed this in February 1987,

confirming that cost-effectiveness and efficiency should be the determining factors in contracting out decisions.

Current initiatives

5.42 The Ministry responded to the report by setting up a study to establish the extent to which contracting out had been applied in a systematic way across the Services and, in particular, to ensure that lessons learnt from one area were available to others. They told the NAO that, as a result, a more formalised structure of responsibility and reporting has been introduced. Responsibility for competition programmes has been formally allocated to management areas but progress is monitored by the Director General of Management Audit [paragraph 2.19) who reports periodically to the Permanent Under Secretary and Ministers. Additionally central guidance has been issued emphasising the importance of value for money criteria. This stresses that the efficiency of the in-house activity should be established and taken into account where the area is exposed to competition. A more complete and comprehensive central record of competition activity is being assembled and a new and more detailed guidance document for use by line managers has recently been published. This takes into account the revised systems of control; gives more detailed costing advice: and stresses the need for closer and more relevant monitoring of contractors’ performance and costs. The Ministry are also examining the feasibility of placing a number of common support activities at several units under the same contractor.


Glossary of Abbreviations

NAO National Audit Office

NATO North Atlantic Treaty Organisation

RAF Royal Air Force

RM Royal Marines

RN Royal Navy

UK United Kingdom

31

iWNIST&tY OF DEFENCE: CONTROL AND USE OF MANPOWER

Appendix 1

32


Appendix 2 The Army Command Structure

-.-.--.-.. NO details ofstructure show”

---------. Link between corps and locatIon

. . . . . . . . . . . . . . . . ..-AMC -

. . . ..-..----.------AMC -

. . . . . . . . . . . . . . . . ..-AMC -

CORPS RAMC RADC RAPC RAVC WRAC MPSC R&P RAEC ALC RAChD RCT RAOC

ACC RPC

Royal Army Medical Corps Royal Army Dental Corps Royal Army Pay Corps Royal Army Veterinary Corps Womens Royal Army Corps Military Provost Staff Corps Royal Military Police Royal Army Education Corps Army Legal corps Royal Army Chaplain’s Department Royal Corps of Transport Royal Amy Ordnance Corps Royal Electrical and Mechanical

Engineers Army Catering Corps Royal Pioneer Corps

BRANCHES DGAMS Director General Army Medical Services P in C Paymaster in Chief DAVRS Director of Army Veterinary & Remount

services DWRAC Director of Womens Royal Army Corps PM (Army) Provost Marshall (Army] DA (Ed] Director of Army Education DALS Director of Army Legal Services CG Chaplain General DGTM Director General of Transport and

Movements DGOS DGEME

Director General of Ordnance Services Director General of Electrical &

Mechanical Engineering DACC Director of Army Catering DAPL Director Army Pioneers and Labour

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nao report (hc 342 1988/89): ministry of defence: control and …€¦ · control and use of...

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