Reforming the civilian workforce

8 Mar 2019 02:34 PM

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 the recent (08 March 2019) 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.

“The Department has been wrestling over how to manage its civilian workforce for many years, but working practices remain inefficient. Despite promising noises from the Department, it is not clear to us that anything fundamental has yet changed. A lot now rests on implementing its modernisation plans successfully.”

Amyas Morse, the head of the NAO, 8 March 2019

Notes for Editors

Key facts 27,700 a 32% reduction in the number of civilian personnel between 2010 and 2015, against a target reduction of 25,000 by 2015 1,100 a 2% reduction in the number of civilian personnel between 2015 and 2018, against a target reduction of 17,000 by 2020 £87m the increase in civilian staff costs between 2015-16 and 2017-18 57,100 number of civilian staff employed by the Ministry of Defence (the Department) in October 2018 £2.5 billion Department’s spending on its civilian workforce in 2017-18, 20% of its spending on personnel and 7% of its annual budget 76,100 drop in civilian staff since 1995, from 133,200 to 57,100 220 increase in the number of the civilian staff between October 2017 and October 2018 1,650 staff shortfall in 12 key civilian trades in October 2018, 17% below the requirement £3 billion Department’s initial estimate of potential savings by 2028 from its new transformation programme

This is the NAO’s fifth report on the Department’s workforce changes since 2010. In 2012, we reported on how it was managing significant reductions in military and civilian headcount alongside developing a new operating model. In 2014, we examined the Army’s progress in implementing its Army 2020 programme. In April 2018, we reported on how the Department ensures it has sufficient skilled military personnel. In December 2018, we investigated the Army’s performance in recruiting new soldiers. This report focuses solely on civilian personnel.
Press notices and reports are available from the date of publication on the NAO website. Hard copies can be obtained by using the relevant links on our website.
The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Sir Amyas Morse KCB, is an Officer of the House of Commons and leads the NAO, which employs some 785 people. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services. Our work led to audited savings of £741 million in 2017.

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