MoD cutting staff without planning for future, says NAO

The MoD is shedding 29,000 civilian workers and 25,000 armed forces personnel by 2015 to meet spending cut targets of £2.7bn and close a £38bn budget deficit. But the auditors said the ministry was letting staff go before it had properly planned how it would operate in the future.

It would struggle to continue with its current level of operations without ‘profound changes’, the NAO’s report warned.

Continuing the same level of activity with fewer staff would carry an increased risk, the auditors said, and they had not seen enough detail to determine whether the department was ‘making sufficiently substantial changes’ to maintain its functions.

So far, the redundancy programme itself was ‘running well’, in accordance with good practice and consistent with value for money, the report found. Total redundancy costs would be around £900m, the report said, but the job losses would save £4.1bn.

But any delays to the redundancies could reduce the potential savings. For example, a hold-up of three months to the second round of military job losses cost £100m in projected savings, which led to another 5,000 job losses by 2015.

Auditor general Amyas Morse said: ‘The Ministry of Defence is in the difficult position of needing to maximise financial savings by cutting headcount before it has detailed plans for how it will operate in the future. The department has acted decisively, but runs the risk that it will lose skills that it needs, worsening the current skills shortage.

‘A more targeted approach is needed to restructure the workforce and retain the skills that will be required in future.’

Responding to the report, Defence Secretary Philip Hammond said: ‘The scale of the financial black hole in the MoD’s budget… meant action was needed urgently. We recognise the risks the NAO identifies and are actively managing them.

‘MoD civilians contribute to every aspect of defence in the UK, internationally and in theatre, and these necessary changes will be achieved mostly through reductions in recruiting and by not replacing those who leave. As with the military, compulsory redundancy programmes will only be used as a last resort.’

Prospect, the trade union representing over 7,000 civilian specialists working in the MoD, urged the department to pause and take stock of its cuts programme.

National secretary Steve Jary said: ‘The report vindicates everything the union has warned against in the last year. Prospect has consistently warned MoD that it was travelling pell-mell along a route that would end in the department dangerously denuded of the skills it needs to function as an intelligent customer.

‘Of all the departments of state, MoD has the greatest need to ensure it has the right skills in the right place and at the right time in order to supply the armed forces with the equipment it needs.’