Not seen the Defence Committee so rabid in a while. Re paras 8 and 9, what reasons for the outflow and what "other incentives" might work..?!
House of Commons - Ministry of Defence Annual Report and Accounts 2012-13 - Defence Committee
Overall Conclusion
1. The Ministry of Defence has made some improvements to its reporting of information since last year but much work is still needed before it meets the standards we would expect to see in its Annual Report. We have set out the areas where the MoD needs to provide more extensive information on its performance. (Paragraph 51)
2. The MoD has been reviewing its risk management arrangements and we look forward to seeing the results of its review. We are concerned that structural changes have led to a lack of clarity in aligning roles and responsibilities with risk management structures. Our major concern and, apparently the Defence Board's second strategic risk, is shortage of key personnel. This was evidenced by the increase in the number of pinch point trades, the high level of voluntary outflow and the continuing breaches of harmony guidelines. The Defence Board should take these shortages seriously. (Paragraph 52)
3. The provision of reliable management information is critical to the effective management of an organisation. It is crucial that the MoD improves its management information systems and the quality of the management information produced. In particular, the MoD should concentrate on improving its financial management information. (Paragraph 53)
4. For the seventh successive year, the Comptroller and Auditor General (C&AG) qualified the Ministry of Defence (MoD) Accounts for 2012-13. The qualifications were:
The regularity of the treatment of the impairment of the valuation of the German estate resulting from the withdrawal of UK Forces from Germany;
Non-compliance with international reporting standards on the treatment of some contracts; and
The valuation of inventory and non-current assets.
The latter two problems are likely to persist beyond 2014-15. The MoD needs a clear plan and timetable as to how and when it will achieve a clear audit opinion from the C&AG. (Paragraph 54)
Performance and risk management in the MoD
5. We welcome the MoD's implementation of the recommendation in our last report on the Annual Report and Accounts that it provide a useful commentary on the input and impact indicators. We are, however, unhappy with the quantity and quality of performance information available to us and to the public. We recommend that more information of the type provided to the Defence Board should be provided to us and put in the MoD's Annual Report and Accounts. We have identified those areas where we expect the MoD to provide information in its Annual Report and Accounts or where it should develop an improved set of indicators. These areas are set out in an annex to this Report. (Paragraph 6)
6. We are concerned that structural changes in the MoD have led to a lack of clarity in roles and responsibilities. The MoD should report to us on the results of its work looking at this problem. We also wish to know how responsibilities are aligned with risk management structures and, how it is improving business continuity arrangements. We do not accept the assertion that because the detailed Strategic Risk Register is produced as advice to the Defence Secretary and the Defence Board, that fact should preclude members of the Committee from being able to see it. The Register is an important document with several functions, and it needs to be open to Parliamentary scrutiny. At the very least, the MoD should provide us with a commentary on the reassessment of the risks presented to the Defence Board and with the new Risk Framework documentation. (Paragraph 12)
7. We recommend that the MoD should tell us what it is doing to manage the risks resulting from the volume of change presently being undertaken in the MoD alongside business as usual. (Paragraph 14)
8. We are concerned that the rate of voluntary outflow from the Armed Forces is above the long term average. The MoD should identify the causes of this increased outflow and determine what measures it needs to put in place to reduce the outflow. (Paragraph 15)
9. The MoD should support the Services in addressing shortages in pinch point trades—key shortages which leave the Armed Forces vulnerable now and in the future. The MoD and the Armed Forces should explore ways of filling these gaps by offering financial or other incentives to Service personnel to encourage those in pinch point trades to continue in service and to encourage others to undertake training in these trades or by using reservists and private sector contractors. (Paragraph 20)
10. It is unsatisfactory that harmony guidelines are still being breached for some Armed Forces personnel, in particular that over five per cent of the Army is away from home in excess of the recommended time. The MoD should provide us with the annual figures for breaches of harmony guidelines over the last ten years. We call on the MoD to set out a timetable for reaching a point where no Armed Forces personnel are in breach of harmony guidelines. (Paragraph 23)
11. As Lord Levene said in his second annual review of the Defence Reform programme, management information is critical for the effective management of Defence. The MoD should update us on its proposals to improve its management information systems in particular its financial management information systems. It should also describe in detail its planned work on costing defence outputs, in particular, operations. It should tell us the planned future level of investment in cost modelling and data and systems exploitation. (Paragraph 27)
12. The MoD has presided over significant cost increases in the Carrier Programme mainly caused by repeated changes to the requirement. We ask the MoD to confirm whether the Carrier programme is now on track and whether it now expects the programme to proceed without further significant cost or time overruns. (Paragraph 32)
Annual Report and Accounts 2012-13
13. We are concerned that the MoD is still so dependent on external accountancy support to produce its annual accounts. The amount it spent on external accountancy support to produce the accounts is excessive. We ask the MoD to provide us with a timetable setting out milestones for progress towards producing its annual accounts without significant external resources. (Paragraph 34)
14. We call on the MoD to report the finding of its review of contracts likely to be affected by the International Financial Reporting Issues Committee Interpretation (IFRIC) 4. We also ask the MoD to inform us about the cost and manpower implications of the work required to ensure compliance with IFRIC4 and provide us with an undertaking that the steps it has taken would fully addressed the grounds of the qualification. (Paragraph 43)
15. We are pleased to see that the MoD is finally taking inventory management seriously. However, there is still much work to be done. We expect to see the relevant IT systems delivered on time and making a valuable contribution to inventory management by 2014-15. In response to this Report, the MoD should tell us what further measures it needs to take to remedy the poor state of inventory control in the MoD and the timetable to introduce them. (Paragraph 50)
Areas where the MoD should provide additional information in its Annual Report and Accounts (as recommended in paragraph 6)
1. Readiness levels
2. Manning levels for each Service by officers and non-commissioned officers and other ranks
3. Pinch point trades, both operational and manning
4. Harmony guidelines for each Service highlighting any subgroups which are regularly breaching the guidelines
5. Voluntary outflow statistics for each Service by officers and non-commissioned officers and other ranks
6. Recruitment levels against targets for each Service by officers and non-commissioned officers and other ranks for regulars and reservists
7. Indicators reflecting the delivery of Defence Transformation and structural reform priorities including the new employment model
8. Performance against Future Force 2020 targets
9. Performance of DE&S including the Major Projects Report projects and the supply and maintenance of equipment, all set against robust targets
10. Performance of the Defence Infrastructure Organisation in managing the estate including that of Service personnel's accommodation set against robust targets
Other efficiency, effectiveness and sustainability measures of the MoD's performance in supporting the Armed Forces