def060418 - No. 37

Session 2005-06, 20 April 2006

Publication of Report

Publication of Report


The Ministry of Defence met only three of its seven Public Service Agreement (PSA) targets in 2004-05, according to a report published by the Defence Committee today (Sixth Report of Session 2005-06, Ministry of Defence Annual Report and Accounts 2004-05, HC 822).

MoD met three of its seven Public Service Agreement (PSA) targets and a fourth target covering value for money was on course to be met, but it only partly met its target covering recruitment and retention. The high operational tempo resulted in breaches of Harmony Guidelines, which are aimed at ensuring that Armed Forces personnel are given sufficient time to recuperate from operations, undertake training and spend time with their families. 

All three Services are suffering from critical shortages in various specialist trades, including aircrew and medical personnel. MoD considers that the impact of these shortages on the deployment to Afghanistan are manageable. The Defence Committee intends to monitor this closely.

In 2004-05, MoD reported £400 million of savings in the operating costs of the Defence Logistics Organisation. These are substantial savings, but the Committee found that not all of them could be validated.

Losses reported in 2004-05 decreased compared with the previous year, but still amounted to over £400 million. Losses of over £100 million were incurred in the procurement of four transport ships and further losses could arise. A loss of almost £150 million related to a building at AWE Aldermaston which did not meet the requirement for which it was designed.

The Committee also reports that MoD spent some £5 million on sending ration packs to the USA for victims of Hurricane Katrina. Most of these were impounded by the US Department of Agriculture and never reached their intended target.

 The Chairman of the Defence Committee, Rt Hon James Arbuthnot MP, said:

“MoD’s Annual Report for 2004-05 describes the wide range of activities for which the Ministry is responsible.  There is much of which the Ministry, and the Armed Forces, can be proud.

But MoD’s performance against the targets it has set itself has been mixed. Targets covering recruitment and retention, and equipment procurement, were only partly met.

We remain concerned about the overstretch of the Armed Forces. Short-term breaches of Harmony Guidelines can be managed, but MoD must tackle the underlying causes as long-term overstretch will impact on operational effectiveness. All three Services are suffering worrying personnel shortages in key areas, including aircrew and medical personnel.

Public finances have to be managed wisely, and it is regrettable that losses totalling a quarter of a billion pounds were reported on two projects-one for four transport ships and the other for a building which has never been used. Lessons need to be learned to avoid such waste in the future.”


1. Committee Membership is as follows: Rt Hon James Arbuthnot MP (Chairman), Mr David S Borrow MP, Mr Colin Breed MP, Mr David Crausby MP, Linda Gilroy MP, Mr David Hamilton MP, Mr Mike Hancock MP, Mr Dai Havard MP, Mr Adam Holloway MP, Mr Brian Jenkins MP, Mr Kevan Jones MP, Robert Key MP, Mr Mark Lancaster MP, John Smith MP

2. News Release: No. 37


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