Dr Liam Fox outlines reform of the Ministry of Defence
In his speech Dr Fox began by describing the background to the changes, highlighting the fact that the country faces a legacy of debt - the interest on which for the next year alone will exceed the budget of the Ministry of Defence.
He said that it was a 'disgrace' that there had not been a Defence Review for 12 years, despite our Armed Forces being committed to conflicts in the Balkans, Sierra Leone, Iraq and Afghanistan and with enormous changes in the global security picture.
Dr Fox said the Strategic Defence and Security Review (SDSR) will not simply be a random selection of cuts but an objective process by which the shape of the Armed Forces required will be reached by the end of the decade. He said:
"This flexible, adaptable posture will maintain the ability to safeguard international peace and security, to deter and contain those who threaten the UK and its interests, and where necessary to intervene on multiple fronts. It will also, crucially, keep our options open for a future in which we can expect our highest priorities to change over time."
"First, the cost-saving in years zero to five, five to ten, and beyond ten. Second, the capability implications - what capability will be lost as a result of this decision and what other assets do we possess that might give us the same or a similar capability? Third, the operational implications - what operations that we currently carry out, or are likely to carry out, will we be unable to undertake as a result of this change? Fourth, the ability to regenerate the capability, at what cost and in what timeframe. And fifth, the risk in the real world that this capability currently protects us from or is likely to protect us from in the foreseeable future."
On this he said there are two broad principles that would be followed. The first is a structural reform which will see the Department reorganised into the three pillars of Policy and Strategy, the Armed Forces, and Procurement and Estates. The second is a cultural shift which will see a leaner and less centralised organisation combined with devolved processors which carry greater accountability and transparency.
He stressed that a logical management structure would be 'foreign policy leading to a defence strategy, then portfolio management which identified capability gaps, followed by specific programme identification and finally physical procurement'.
The new three pillar structure is designed to make this easier and to stop the constant over-specification and then re-specification of programmes which has led to cost overruns and programme delays. The work will be led by the Defence Reform Unit. Dr Fox described this as 'a heavy-hitting steering group of internal and external experts [who] will guide the hard thinking and challenge preconceptions'.
Lord Levene will chair this group and will be supported from outside the MOD by Baroness Sheila Noakes, George Iacobescu, Dr David Allen, Bj÷rn Conway and Raymond McKeeve. In turn, it will be supported by a civil service implementation team with a remit to complete their blueprint for reform by September 2011.
Dr Fox also announced that there will be a review of how the Armed Forces undertake the tasks of force generation and sustainability: "We need to challenge some of the fundamental assumptions which drive force generation, such as tour lengths and intervals, taking into account the varying pressures on our personnel resulting from widely varying missions to see if we can update our practices and produce greater efficiency while implementing the military covenant."
Meanwhile, the Defence Reform Unit will work with the Chief of the Defence Staff and the Service Chiefs to find ways of giving greater devolution for the running of the Services themselves. He said the Department must get away from the over-centralising tendency that has become the hallmark of the MOD in recent years and said they will also consider whether the current senior rank structure across the Services is appropriate for the post-SDSR world: "We cannot demand efficiency from the lower ranks while exempting those at the top," Dr Fox said.