The Ministry of Defence has made little progress in reforming its civilian workforce. It has not yet modernised the roles that they perform and is missing its targets to reduce headcount and achieve savings by 2020, according to today’s report by the National Audit Office (NAO).
In October 2018, the Department employed 192,100 military personnel and 57,100 civilians. Civilians carry out a range of roles including as developers of policy, analysts, doctors, engineers and commercial managers. They are located across 570 sites throughout the UK and overseas.
Between 2010 and 2015, the Department met its target to reduce the size of its civilian workforce by 27,700 (32%), from 85,900 to 58,200. The Department continued to deliver its core functions, but it cannot demonstrate whether these reductions led to more efficient ways of working. Most staff left through voluntary exit schemes, but 4,550 were transferred to other government departments or their work was contracted out to private sector companies, meaning government will continue to pay for these services.
In 2015, the Department agreed to cut its civilian workforce by a further 30% by 2020, to 41,000, and to save an additional £310 million. As it lacked information about what civilian staff did and their effectiveness, it was not able to determine its future workforce requirements accurately or assess how to achieve staff reductions and agreed efficiencies as set out in the government’s Strategic Defence and Security Review.
The Department has made little progress in reducing its civilian headcount since 2015. Between July 2015 and October 2018, the number of civilian personnel fell by only 1,100, a decrease of 2%, and actually increased in the year to October 2018 by 220 staff. Several factors contributed to this, including reduction projects being put on hold, the Department’s over-optimistic assumptions on likely reductions and there being no incentive for individual defence organisations to reduce personnel, meaning many were recruiting more staff.
The Department’s associated savings target was based on introducing new projects to reduce its civilian headcount. In 2018, based on a revised methodology, it was confident of achieving £310 million of savings. The NAO has found, however, that just £19 million of its estimated savings were based on new projects and, as these were at an early stage, included unvalidated assumptions. £288 million came from projects that were already underway or planned, and did not count towards the Department’s target. In addition, civilian staff costs actually increased by £87 million between 2015-16 and 2017-18 and are expected to rise in 2018-19. HM Treasury and Cabinet Office did not sufficiently challenge the Department’s claim of progress towards its savings target.
In June 2018, the Permanent Secretary assured the Committee of Public Accounts that the Department was on track to meet its savings target. In February 2019, the Department wrote to the Committee to correct the public record and explain it would not deliver the £310 million saving by 2020. It now plans to pursue workforce efficiency savings as part of its wider transformation programme.
The defence organisations’ approaches to workforce planning have been hampered by poor management information. These organisations, which include the front-line commands and other delivery organisations, have lacked accurate information on whether jobs are being done efficiently and have not worked together to identify better ways of working. They have, though, identified a shortfall of 1,650 staff across 57 roles in 12 trades but do not have clear plans to close these skill gaps in the next five years.
Despite being aware of inefficient and inconsistent working practices since 2010, the Department has not yet modernised the functions performed by its civilian staff. In 2018, it commissioned management consultancies to identify potential improvements, with a goal of ensuring that its whole workforce is the right size and has the right capabilities. This ‘transformation portfolio’ work is at an early stage and the scale of change will depend on available funding, but the Department estimates that it could reduce costs by up to £3 billion each year by 2028.
The Department has recognised the need to reform working practices if it is to achieve sustainable reductions in civilian headcount. It has begun a significant transformation programme and created some of the conditions needed to make improvement possible, such as making funds available to invest in new technology and adopting a joined-up approach with defence organisations. However, it is still early days and the Department continues to face challenges, particularly in coordinating a programme of this scale and developing good quality information to oversee progress and monitor the impact of these changes. The Department must address these barriers if it is to achieve the modernisation that it requires, including ensuring that there is continuity of senior personnel to see these initiatives through.