The Ministry of Defence must deliver £10.7 billion of efficiencies over four years, with the annual target rising from £1.4 billion this year to £3.5 billion by 2028-29, according to an answer given in Parliament.
Stuart Anderson, the Conservative member for South Shropshire, asked how the department’s Total Efficiency Commitment was split across the financial years to 2029-30.
Luke Pollard, the Minister for Defence Readiness and Industry, said: “As set out in Table 21 of the Annex to the Defence Investment Plan, the Department’s total efficiency commitment of £10.7 billion is profiled across the four-year period as follows.”
The figures he gave run £1.4 billion in 2026-27, £2.6 billion in 2027-28, £3.5 billion in 2028-29 and £3.2 billion in 2029-30.
The shape of that profile is back-loaded, with more than three fifths of the total falling in the final two years. Departments commonly set targets that way because savings from reorganisation, estate rationalisation and contract renegotiation take time to land, but it also means the heaviest lifting sits beyond the current spending review period and will be inherited by whoever is in post when it arrives.
Efficiency commitments are counted against what the department would otherwise have spent, so they are a mix of cash released for reinvestment and cost growth avoided. In defence they have historically been delivered through headcount reduction in the civilian workforce, renegotiated support contracts, disposal of land and buildings, and changes to how equipment is maintained, with the Defence Equipment and Support organisation and the Defence Infrastructure Organisation carrying much of that load.
The Public Accounts Committee and the National Audit Office have both questioned the department’s record on turning stated efficiencies into real reductions, and the equipment plan has repeatedly relied on savings that were assumed and not yet banked. A commitment of this size sitting inside the Defence Investment Plan means the plan’s affordability depends on them being found. The department has separately committed to growing defence spending to 2.6 per cent of GDP by 2027 and set an ambition of 3 per cent in the next parliament, and the efficiency target is the internal counterpart to that external growth.
Soldiers on exercise shouting “bang bang”.
None of it all adds up. Officers saying the country must be ready to fight. Defence Minister resigns on principle and then as Chancellor refuses to guarantee the funds he demanded. Lame duck defence minister doesn’t say much.
Iranian backed plots being uncovered weekly. War footing, war footing, war footing. Kill ISIS but face a murder charge, and whilst on bail sent back to kill ISIS.
Topped off with National security can’t come at the cost of social security.
Sharpen sticks, if you can find a bolt hole, do so
Oh indeed. HMS Indefensible, here we come. Oars at the ready.
There is nothing in itself wrong with efficiency savings.. infact it’s a good way to stop bloat and keep things lean.
The problem is when you mandate a target… because then inevitably savings interfere with efficiency.
Keep hearing this point about Healey. He is and was just doing his job. As Defence Secretary, it was his job to ensure defence was properly funded – he felt it wasn’t being and so resigned as he couldn’t put his name to the review (which then got ~£5bn extra).
He’s now Chancellor, it’s not his job to fight for defence now (that’s Streeting’s) – his job is to manage the overall economy and purse strings, taking growth, debt, employment, inflation and ALL departments and commitments into account, do now he’s doing this as best he can.
This trick has been played out many times.
Assumptions based on “efficiencies” which are also cuts, which don’t arrive at the levels demanded. Closure of bases is a common one, until down the line it’s deferred when there’s nowhere to move to and no money for the new accommodation that unit needs to move into. Defence then spends itself to oblivion and low and behold finds itself with a black hole.
Thus another round of cuts.
Meanwhile, pieces keep being dropped from the military with no replacement in sight, Shadow and HMS Protector the latest examples.
How much is Defence getting extra again from next year? Minus 10 billion minus black hole minus the DNE eating Defence alive, minus Ukraine money, minus SIA being moved into the 2.5%, minus Chagos payments, equals ?
I think I know this one mate, it equals more managed decline across the board.
I wonder were it will end up, meanwhile it’s welfare spending extravaganza!!
Perhaps the MoD should apply for PIP payments!
Hi Daniele,
I’m afraid it all comes down to p***s poor project planning and an on-going battle of wills between politicians trying to get control of the situation and overly optimistic expectations around costs from the services trying to keep up with the US.
When I was still involved in the process there was an efficiency drive on pretty much every year. Each project was only supposed to go ahead if there were realistic project efficiencies identified. The review forms had boxes where these were supposed to be identified and explained. They were inevitably filled in with an acronym (I can’t remember it precisely) that basically said ‘to be found in the future’! Can kicking at it’s very best, but worse it was in effect a complete breakdown in discipline amongst team leaders many of whom were in uniform! Civil Servants are not innocent by any means, but until the leadership both civil and military accept that there is a very real problem around cost control, expectation management (otherwise known as the ‘conspiracy of optimism’, a term we were all well aware of) nothing will change.
As for the increase in spending I think it is real, but the true value does not match the declared budget. What do I mean by that? Well there has always been a conspiracy of optimism and the more that I think about it the more I believe it is endemic in every project and it’s impact is to grossly under estimate the true cost of pretty much every major defence development project (and across Government to be fair). So in effect the MoD continuously underestimates the cost of it’s projects and has always done so. Those costs should include an honest assessment of technical risk and it’s likely effect on times and costs. For awhile I was doing cost modelling for the MoD and was told that my honest attempt at an accurate cost for a new capability were unacceptable and I had to do better..! So I have experienced the problem personally.
All this means that with in MoD budget there is a real disconnect between what I will call ‘delivered value’ and total cost, where delivered value is the cost of capability actually delivered based on original estimates. So if a project delivers half the numbers than was originally planned then the delivered value in 50%. Increasing the defence budget will give an increase in delivered value, but the cost of that delivered value will also go up. So things will improve, but until someone gets a grip on the conspiracy of optimism there will always be gross waste.
I although think that ‘efficiency’ is the wrong word. Chasing efficiency has failed because efficiency isn’t the root cause. Self delusion and ignoring proper project management processes and practices are where the real problems lie. In short, honesty is needed. We would that be able to accurate identify where the real risks and costs lie and to make properly informed decisions about where and how to spend limited resources. It would lead to some hard decisions, but if they are well informed proper contingencies could be put in place rather than the enforced gapping that we have now.
In short, the budget is rising but it its too little, too slow and worst of all there is too much waste that needs real leadership to deal with. Which, of course, does not exist.
The daft thing is 5 – 7% GDP on defence to develop and maintain and effective deterrence in these dangerous times or risk fighting a war that could consume about 50% of GDP for years as per WW1 and WW2. Should be an easy choice really.
Cheers CR
A fine post mate.
Thank you, mate.
A great post.
Issue as ever is getting a high % of spend into smaller projects.
Each service has a ‘too big to fail’ project…..or in RN’s case four (SSN; SSBN; T26; T31 and maybe fleet solids) at the same time all competing for the salami. Now that is because the fleet was allowed to fall apart under many governments.
Thanks mate, coming from you and Daniele it is praise indeed and much appreciated.
You make too very good points as well. The too big to fail issue is a very real issue and in fact one that actually needs to be looked at very closely indeed. Personally, I have to accept that there are many projects that are indeed too big to fail, but I also think that occasionally one of those projects should be allowed to fail as that will send shivers down the spines of the primes, just as the name Lehman Brothers sends a chill warning to the banking industry to this day. Ajax is an obvious candidate for that role given the apparent utter futility of trying to get them to work properly..! T31 is in trouble but the contract was set up in a way that Babcock was able to push back a number of improvements were first mooted. We now know why, they were already facing significant cost and time overruns that were falling n their balance sheet. At least the tax payer as not had to pony up for their mistake, yet! I can forgive Babcock for making a mistake so long as they learn from it. We will see. The thing is this example is a good example of a big stick being built into the contract from the start and could, if the MoD learns from it, be built into future major project contracts keeping the Mod requirement fiddlers at bay and making the prime cough up for their mistakes – Ajax beware.
As for the RN’s situation, well we have said it all over the last few years. The lessons learnt folder, if it is ever complied, will be bigger than the Tax Code..!
Getting sufficient funding to the smaller projects and SME has been a real issue over decades and much of that comes down to the what is acceptable to the Treasury. The Green Book, as the collection of different coloured books are known by, sets out what is meant to be helpful guidance to public bodies procuring stuff and services. Unfortunately, guidance has a tendency to evolve into ‘law’ in that if things goes wrong you will be for the high jump if you didn’t follow the guidance and the guidance is very specific when it comes to financial robustness of suppliers requiring years of financial records. This obviously, makes it very difficult for new SME businesses to get a foot in the door. The MoD appears to have been very successful in getting these businesses through the door and more importantly actually buying stuff from them such that many are expanding. For me that is a bright beacon for hope in a pretty frightening vista.
For me the really big problem we face is that as a country we are simply not in the right mind set. We are still thinking in terms of ‘peace in our time’ when the reality is that there is a very real chance of that the current ‘grey war’ will go hot and kinetic, probably due to some miscalculation or other. Despite warnings from key figures e.g. head of MI5 and MI6 et al, too many politicians and most of our population have failed to get their heads around the real threat that we face and the fact that our conventional deterrent has withered to the point where it’s effectiveness is in serious doubt (and our nuclear deterrent hangs by a threat it seems). Until our collective mind set switches onto the threats we face and our true vulnerability even those politicians who understand the risks we face will find it very difficult to move the dial in the right direction. So everything will drift on as if it the late 90’s early 00’s..!
I sense awareness might be changing, but it is not there yet.
Cheers CR
Unfortunately project management skills are in very limited supply from what I see. Relatively low pay along with an informal old pals act encouraging the employment of ex military personnel with very limited practical project management skills is then coupled with typical Whitehall bureaucracy and archaic commercial practices. The result I see is an ongoing problem with budgets that are wasted on projects that are seldom ever delivered.
The projects that proceed suffer delays, which are endless, with scopes changed to suit changing priorities and shifting budget allocations.
I have seen no improvement in the performance of the MoD in 39 years but a slow but sure hollowing out of skills and experience.
Agreed sjb1968,
However, I would say that there was a brief moment where things looked like they could improve in the late 90’s early 00’s as the MoD had introduced a system that could have worked and had training programs in place to up skill the work force. However, the system relied on a group of project scrutineers who had the responsibility of ensuring project management standards were kept to. Unfortunately, they were not given the authority and the grown ups started to undermine them. The most obvious change that basically signaled a return to the old ways was when we were told that project requirements would no longer be ‘Frozen’ but would be ‘Chilled’..! It was a licence for requirements and design creep and all that that entails.
As far as I can tell there is little left of that system and you are correct when you highlight the skills shortages are an issue. There was a program to down grade financial controllers with in the MoD who played a key Project Management role. Needless to say many left the service representing a significant brain drain that the MoD has apparently still not recovered from.
This highlights a major and very human problem for the MoD how to bring together three or four very different ways of working each with very different pressures and outlooks. There is the military who understandably want the best now or better still yesterday, then there are the politicians and I include the senior civil servants in this bracket who worry about national debt and the like, the techies both civil service types and industry who need stable requirements to be able to design and get stuff built that actually works and then there are the company executives and owners who want to make a profit. All of which can easily conflict in away that blows timescales and costs out of the water, especially if the grown ups insist on conspiring to the optimistic assessments rather than the realist and explicit risk profiles that lead to honest decisions and realistic and effective Project Management.
All of which is a gross over simplification, of course.
Cheers CR
As you say, budget management seem to be always very optimistic. There also always seem to be the issue we don’t have a budget to match our strategy or a strategy to match the budget
This was the bit no-one was talking about, but I have mentioned it. This is why, for example, Wildcat goes in 2027 with no direct replacement. NB the AAC Sqns aren’t going, just the airframe. They will be involved in some sort of TBC heavy drone capability. This is why the Army was forced to cancel training, why the reserve was told to stop RSD (training) spend last December.
The government has flat out lied to the public about increasing defence spending. 2.7%? sure, but only because they will now count the security budget. The Deputy PM appeared on the Today Programme claiming they were “investing” over £330Bn in Defence over the Parliament – which is untrue – that includes the entire budget, operations, pensions the lot. It’s not new money. The ONLY new money is the £14Bn in the DIP, which is half of what is actually needed.
To note further, the DWP civil service alone is now larger than the Army.
Politicians talk bollox and do nothing, same old….
You hope that all this focus on savings and efficiencies will work in the other direction too, that when the new increased Defence monies comes that thats not wasted either.
Another brain-dead moment from Whitehall, no matter how dangerous the World is becoming. The services need every penny to maintain what we have, let alone for new procurement.
This government continues to undermine the Military, from every direction.
From savings, which are cuts to the uniniated, to the hounding of veterans in courts for supposed war crimes and the NI bills.
I have never seen UK Defence in such a poor state. When the Chief of Staff says, we can only survive a war of two weeks and that is ignored, especially as we are giving away of what is left of our equipment to Ukraine, without replacement.
Just looking at the internal situations in France and Europe, surely has to be a warning?
Welfare before warfare funding, isnt what we should be doing. Our adversaries dont honour PIP payments.
We are approaching the 1939 moment again.
I am about as depressed as i have ever been, regarding our defense spending/situation. Whilst i agree with Daniele that this is a cyclic event that has been seen many times, this feels different. We have had decades now were we have allowed capability gaps to erode the effectiveness of our forces, equipmant that is way overdue replacement, assets/vehicles that are being asked to do “that little bit more”, well past their planned OOS dates.
When is it going to end (i know, the answer is never)? It feels like we don’t have a viable fighting force in any single field these days.
– Personnel shortages and over tasking. Service life has always been hard and has the potential to cost the individual family stability, but atleast there used to be perks. Travel, adventure training, getting to do things civi’s wouldn’t. Pride in serving. Now i’m not sure that exists, couple it with the potential for persecution decades after service, and i can see why recruitment/retention is an issue.
– Navy losing vessels left, right and centre. RFA being scaled back. Frigate numbers desperately low and no chance of even a meager rise in numbers until the early 30’s. No native amphibious capability. Only a handful of shared airframes for the carriers and limited helicopter numbers. No air to air refueling capability. Crowsnest replacement still unfunded. Type 45’s replacement cancelled (no i don’t think that will stick long term either……but still). Subs limited to 7 SSN’s but these can’t be serviced and are largely sitting idle in dock.
– Army, nothing has changed here since i was a wee nipper. Out of date and unservicable kit. Not enough of it and kit that isn’t really up to the task. Ajax? Cavalry repacement vehciles? Wildcat and Puma retirement without a ready replacement.
– Airforce, desperate lack of airframes. Largely outsourced refueling. 5yr capability gap in airbourne early warning (and counting). Maritime survaillance had a decade long capability gap. MQ-9A being retired before MQ-9B is operational. Medium lift capabilty reductions (C130 – A400 numbers, although i accept the A400 is far superior)
Long rant over, I apologise….
Don’t, it needs saying.
Too many try to defend the undefendable.
The sooner a majority want action and see what an utter shambles our political class is who have caused this something may change.
Three guesses where the cuts are going to be. It won’t be paperwork, that’s for sure. Labour at it’s worse. Cancel, cut, delay,postpone.
Ain’t that the truth.
👍😒
And there we go, more cuts covered as “efficiencies” which is already counted in the bullshit we are told regarding increasing of the budget. There is no more fat to cut, the military is wafer thin, with no depth, missing or minimal capabilities and no ability to regenerate or build up prior and during any conflict. While we all know the MOD wastes billions in procurement in its insane arrogance of making off the shelf kit “British” and throwing good money after bad. The MOD and HMG reduce whole platform types to save cash, with the nonsense about a change of capabilities etc, all the while throwing billions at other more ideological departments in the effort at maintaining its voter base and therefore their position at the trough. Then they have the absolute neck to extend peoples reserve liability in an effort at increasing the figures on the cheap, and to crow about the numbers! Well my straw poll this weekend, during a rugby competition at St Josephs, with the dozens of ex mil lads their (RN and RAF as well) only one, yes one (RAF guy) said he would respond to not only next years “reserve call out test” (not sure what that will entail, maybe just reporting to your local reserve location to sign and show you aren’t actually in a fucking wheelchair) or in fact told to report prior to conflict. Not sure if these socialist clowns in charge understand the thoughts of the vast majority of ex mil in this country but their arrogance and presumption they can continue to treat the community like shit and expect us to jump when they demand, is yet another error of judgment by the out of touch lizards in charge. Rant over…..er, sorry stand by for more of the same, I/we are getting to the end of our tether.
Well the MOD is an organisation is a big waster of the funds allocated to it. Perhaps cutting the many Civies who take prime roles and deliver absolutely nothing to start with. We need more people in uniform with the kit that works and is supported to defend the British People. Pity the governments we have had the last few decades would rather we are simply taken over from within. Sorry as a Veteran I see little in the UK Armed Forces to be proud of these days. Those in uniform have enemies both foreign and domestic to deal with. Go to War? Only war that matters is the Civil War that will clean out the imported trash from the 3rd World and their supporters before its too late. All we have had for years is cuts cuts cuts and it continues. So where exactly does all the taxpayers money go? And lets kick out the WOKE too. We are nothing but a joke on the World stage…………………….
Only one thing will work to sort out the shambles that is the MoD. A complete change of culture is required.
No.10 North shows the way. Set up a new MoD, starting small, located adjacent to a regional transport hub. Bring in retired civil servants from, for example, Denmark (which has an outstanding civil service) to train and organise an entirely new delayered staff; pyramid structure, not a pillar!
Gradually move responsibilities across allowing the current MoD to wither on the vine as employees retire or move to other departments.
The situation really is that dire. I believe the Head of the Civil Service is already thinking along those lines though the reforms, in true style, are described entirely differently as representing devolved administrative responsibilities!
An internal review of MOD(CS) some years back found… 10% had no definable role, 50% spent the day justify their existence, only 40% produced a definable output.
The old joke ‘how many people work in the civil service?
‘About half of them’ really is true.
So cuts then, gapping equipment, delaying things, state normal, That is Labour cutting defence not increasing it, Any rise is on paper only, One day we may regret this and then it will be too late and our young will be killed because we do not have the kit, the ammo and numbers.
They said welfare before defence, they meant it,
Heads in the sand. On the brink of actual war across the eastern frontier of Nato we should be steadily rearming, not making cuts to forces already too small even for peacetime.