Examination of Witnesses (Questions 180
WEDNESDAY 7 FEBRUARY 2001
MP, MR KEVIN
TEBBIT CMG, AND
180. Had we had to do the land entry I would
agree with your point.
(Mr Tebbit) Chairman, I will just mention that in
terms of joined-up war-fighting, the reason why we have, for example,
a rolling programme of large, joined-up war-fighting exercises,
such as Swift Sword, is to make the forces, as it were, continue
to be capable of that type of skill and operation, not just in
peace support. Could I possibly just go back on the balance of
investment issues? I think it is still quite important. There
is a real distinction between the sort of issues we face over
targeted retention problemsfor example pilotswhich
are not about the overall amount of money we have at our disposal,
it is about very difficult questions of retention and labour markets
and morale, and that sort of thing, and, at the other end of the
spectrum, this wider issue of trends. The most important trend,
if you are looking for a balance of movement from equipment, as
it were, to front-line people would be, for example, in the logistics
organisation. The business change programme we have there is needed,
because at the moment we have got over 40,000 in our logistics
181. We are just coming to that later on.
(Mr Tebbit) It is in those areas where you can look
for bearing down on people, positively, not just as a negative
182. We are just coming on to that. I have got
a brief question at this stage on the way in which we are disposing
of surplus sites. In your previous documentation you have laid
great emphasis on trying to bring your activities on to large
core sites, so freeing up other sites for disposal. The policy
there is that only in "exceptional circumstances" would
these be offered to public bodies or local authorities; in the
main you are going for the maximum gain. I would be interested
to know whether you see that as a significant change of policy.
I would also be interested to know whether or not you think that
that policy conflicts with the Government's intention of trying
to exercise some environmental control over disposal of their
own land so as to influence what happens on it. The contradiction
there, surely, is, is the environmental benefit outweighed by
the financial gain to you, and how do you balance that? Who makes
that decision? Who makes the judgment? The final question is:
are you using any of the money you get from the estate specifically
targeted to improve the existing estate? We have been told by
experts who have given evidence before us that at Aldershot, for
example, just to improve the overall accommodation for young soldiers
will take 10 years to bring it up to an acceptable level. One
could argue, and they would, that some of that resource you are
getting from the disposal should be specifically targeted to improve
what you are intending to keep. If that is so, where is that documented
and what proportion of it is in the programme?
(Mr Hoon) Let me try and start at the beginning of
your first question, because I think, actually, that will answer
most of your concerns. Clearly, it is in our interest and in the
interests therefore of all those who work directly and indirectly
for the Ministry of Defence that we maximise the return on the
disposal of surplus sites. That is not to say that we will always
look to the very highest price, we will certainly take account
of other factorsGovernment policy elsewhere and environmental
issues and so onbut, nevertheless, I think it is fair to
say that you would have to persuade me quite hard if you were
objecting to the policy that we should not try and maximise the
return for the Ministry of Defence. In doing so, it does then
increase the resources that we have to be able to do precisely
the things you are encouraging us to do. I do not entirely accept
the suggestion that it would take 10 years to improve accommodation.
We have, for example, very recently put in some accommodation
at Northwood, which was done in a very short space of time because
the kind of modern system building techniques that are available
I, personally, think are perfect for the kind of single accommodation
that is largely deficient. I want us to be rather more demanding
than you are suggesting in terms of improving single living accommodation.
183. We are more demanding. I thought it was
you who were not being more demanding, because the experts were
telling us it was the MoD who were dragging their feet. Presumably,
you are the MoD for the purposes of Parliament and if you are
not dragging your feet who is?
(Mr Hoon) I have made clear to you on previous occasions
that accommodation is an important priority as far as I am concerned,
and therefore it is an important priority for the Ministry of
Defence. A great deal of effort is being made in this spending
round in order to secure resources to improve accommodation.
184. Can you then just explain the "exceptional
circumstances"? Who would have to make that decision? Would
that be down to you?
(Mr Hoon) Ultimately, yes, but, as I say, these are
matters that we look at pragmatically. I think it is fair to say
that my approach is that I would expect to look to the maximum
return for the department of any particular sale, unless there
were compelling reasons otherwise. You indicated some of those
potentially compelling reasons, they might well be wider Government
policy, they might be environmental concerns, or there might be
specific reasons for making a contribution to other areas of the
country's life, but I have to be persuaded that that was justifiable
because in taking such a decision I would inevitably be depriving
the Ministry of Defence of resources that would otherwise be spent
185. I entirely understand that. Is it possible
for you to let us have a look at the guidelines that you use to
dispose of sites and how the judgments are made? I would also
like the answer to the question about the proportion of the assets
sold and the way in which the proportion of that money is actually
reinvested in the estate as a pre-determined policy. If that is
the case, where does that feature in any of the reports that we
have so far seen?
(Mr Hoon) All I say is that it is not a pre-determined
policy. It would not be sensible to have such a pre-determined
policy because asset sales, for example, are inevitably going
to fluctuate year on year, according to the particular sites that
become available. There cannot be a fixed amount because it will
depend on all sorts of factors quite outside our controlthe
property market being the most obvious one. Equally, it also follows
that it will depend on where those sites are and when they are
available for sale, because clearly a Central London site is going
to realise an enormous amount of money compared to some of our
remote rural sites, where, frankly, the only use may well be for
housing, and only then if a local authority judges it appropriate.
It may be that, in fact, some of the rural sites cannot be used
for any purpose at all because of planning restrictions. So the
amount that that is likely to realise will be very modest compared
to a Central London site. If we have a big Central London site
that appears in our accounts for any given year it would be foolish
to say that that was a pre-determined way of making those spending
allocations. Again, the accounting officer may know a bit more.
(Mr Tebbit) I would only add one or two points. Firstly,
the decisions on disposals of estate are taken jointly by the
budget-holders who own their land (there are 11 top budget-holders)
and by our estates organisation chief executive, who clearly has
an incentive to maximise asset use. We get better incentives because
with the introduction of resource accounting and budgeting there
is a capital charge and depreciation on this, the budget-holder
is paying 6% year on the valuation of his estate and therefore
he has incentive to get rid of stuff. Otherwise, quite apart from
the central policy directions about this, we have targets, as
you know, of £700 million worth of asset sales over the four-year
period, and we are on track for that. We do not apply those simply
to single living accommodation, it goes across the whole of the
budget, and the estate, of course, is all of our operations as
well as just housing. So we do not have a fixed figure, but I
would be very surprised if the budget the Secretary of State tells
me to implement next month does not include a seriously large
hike in the amount of money we devote to single living accommodation.
We are also looking at better ways of spending money wisely through
prime contracting, through grouping and bulking our contracts
to get better value for money, along best practice lines.
Mr Hancock: That is good news.
186. What still rankles, Secretary of State,
is that the Treasury took £1.5 billion over the sale of housing
to Nomura. Perhaps we should claw some more of that back. When
you see the size of the problem and the amount of money that the
Treasury got and the amount that is being handed back, there is
a good source of funding to improve the housing estate.
(Mr Hoon) You tempt me to make a cheap political point
about who is responsible for that!
187. Have you found the agency structure inside
the MoD provides you with useful management information on cost
generation and so on?
(Mr Hoon) What is impressive about the agency structure
is it does give, in particular, organisations an identity that
allows them then to manage their activity more effectively than
perhaps would be the case if they were part of a very large organisation
like the Ministry of Defence. I have tried to visit a number of
the agencies, although there are now 37 of them so we have a considerable
number, in order both to understand what they do and how they
do it but also to get a sense of whether we are demanding enough
of them, and I have been very impressed by what I have found.
The fact they have the ability to manage their own affairs has
given them a sense of purpose and direction that I suspect they
might not have had as part of a much larger organisation.
188. You would expect that and I would too,
but do you really believe they are delivering the goods in the
way you would have expected? This government did not introduce
the system, of course, but do you believe it is delivering the
goods that the previous government thought it would?
(Mr Hoon) Having to put myself in the position of
a Conservative minister is a strain that I will not ask of myself
but all I would say is that I came to this somewhat sceptical.
The Labour party had not necessarily enthusiastically endorsed
the concept of agencies and, therefore, coming into government
I was keen to see whether they would work or not. As I indicated
to you earlier, I am prepared to recognise that giving this kind
of identity to particular government functions and activities
has been a success because it has given the people who work in
those agencies a real sense of ownership of their own activities
in a way that would not otherwise have been the case. That has
meant that, in a sense, they also are able to look outwards with
more confidence than perhaps they would otherwise, winning business
away from their traditional sources of work.
189. Are they as accountable to you as they
would have been if they had been departments or sections of departments?
(Mr Hoon) Ultimately yes, because ultimately they
are responsible to the Ministry of Defence, and I think the test
of this is that you as a member of Parliament can ask me as Secretary
of State a question and demand, ultimately, that I give you an
answer. Now, in the process it may well be that you get an answer
in the first place from the agency but the likelihood is that
you will get far more detail from that process than you would
by simply asking a Secretary of State a question across the whole
range of activity. I think a good test of accountability, therefore,
is the extent to which a member of Parliament can get information
about that particular function.
190. Do you intend to expand the number of agencies
or contract them or remain the same?
(Mr Hoon) We have actually reduced the number in recent
times. I gave you the figure of 37: there were at one stage 44
agencies within the Ministry of Defence, and that is partly because
we have looked at, particularly in the logistics area, better
ways of organising delivery. Particularly in logistics in the
past we had tended to see vertical organisation of the agencies
but in a sense what we have now with the DLO is a much more horizontal
approach looking right across the department at common functions,
particularly between the three services, to try and find ways
of organising their work more efficiently. That really explains
the reduction in the number. All I would say is that I judge these
areas pragmatically. It seems to me that we should not be approaching
the concept of agency on anything other than a "Does it work?"
basis and, if it does work, then I have no idealogical objection
191. I think your eulogy of agencies will form
the basis of my first question to the Baroness, and simply add
"Why then flog them?"
(Mr Hoon) And I am sure in your normal very fair way
you will also say I used a pragmatic test to determine my approach
Chairman: We have yet to be exposed
to the pragmatism; we know what the financial arguments are. One
topic we are all vying to ask concerns defence medical services
and there the government cannot have all of the blame. One of
the best reports this Committee ever produced was in the period
of the last government on the demolition of defence costs studies
15, and the consequential catastrophic decline of the defence
medical services. Laura Moffatt, who knows a thing or two about
changing bedpans, will add her professional experience to this
192. Secretary of State, you said earlierand
I totally agree with youthat one of the areas where we
can look to share our capabilities with other nations is in defence
medical services. When we go abroad and see our units working
together, if there is a common language then, on the whole, it
is about health and medicine, so I think it is an area that we
can usefully exploit. I do have to say that I completely and utterly
agree with the way in which this government has tackled the issue
of defence medical services and I believe that we have the right
ethos now to develop the service butand there is a "but";
of courseas somebody who has worked in the health service
for 25 years, you can create structures and provide equipment
reasonably easily, but the difficult part is making sure you have
the people with the skills and the expertise to be able to take
advantage of that. We have a really good structure and a way forward
with the centre for defence medicine and with the MDHUs, which
I believe are functioning extremely well, but it is the same problem
as in the health servicegetting the people in place to
do those jobs.
(Mr Hoon) I do not particularly disagree with that;
I would simply, though, invite you to recognise that there is
a connection between structures and people
193. I did.
(Mr Hoon) particularly in medicine because
one of the problems, not simply for defence but for the National
Health Service in general, is ensuring that the structures are
of, for example, an appropriate sizeand this has been a
particular difficulty for us in terms of both recruitment and
retentionso that doctors and consultants, for example,
can maintain the necessary professional standards in order to
be able to continue to practise in particular disciplines. It
is not simply a problem of defence medical services but for the
National Health Service generally. It does mean, for example,
and I certainly have to face this problem in my constituency and
I am sure the same is true of many colleagues, that smaller structures
do pose difficulties in terms of retaining particular kinds of
skills because, if doctors or consultants are not gaining sufficient
experience in particular disciplines, then they will lose their
professional accreditation and necessarily want to move. In a
sense that is a problem we have had to face up to in defence medical
services as much as the National Health Service will generally.
194. I completely agree and I am going through
that pain in Crawley at the moment about not having accreditation
for particular specialties. Moving on from that point and referring
back to the performance report, it clearly indicates that you
feel that we are on course to be able to solve many of these problems.
Is the evidence there to say that we are on course?
(Mr Hoon) You have taken a far more optimistic interpretation
of what we put in the report than we have!
195. It does say "on course", "on
course", "on course"?
(Mr Hoon) "On course" but I would say that
there is still a lot to do. I am not pretending that there is
anything other than a great deal of effort that has to be made
in order to deliver effective medical services, so we are starting
from a very low base. There have been some signs that measures
taken in very recent times are beginning to be successful but
I would want to see sustained improvement over a number of years
before I am confident of being able to say to you that there are
the kind of medical services available to the armed forces that
I would like to see.
196. And I think we would have loved to have
seen a starred bit below this that says "The Secretary of
State says that we are nearly there but not quite yet"?
(Mr Tebbit) I would add that last time when I was
here I said I thought we had stabilised and were beginning to
make a bit of a difference. We did check the figures after that
and it is very small beer and not enough but we have managed to
increase the trained defence medical services strength over the
last year by 74. It is by no means enough but have turned the
corner, and on the TA we had 200 professionally qualified people
moving into the TA last year, its first year, and now we are moving
into the second year. It is by no means enough but it is a mark
of the efforts that we are making and at least it is encouraging
people. They are seeing it getting a little bit better than it
was; they can see a trend.
197. Further on in that same report, in paragraph
72, you speak of the new fast track system for referral for serving
personnel and that is down as "achieved". I wonder what
measures you took to make sure that that happened and is achieved?
(Mr Tebbit) In detail, we have taken contracts with
particular institutionsI cannot remember which ones nowto
make sure we can get them referred.
198. Could you write to us about it and let
(Mr Tebbit) Yes.
199. We were very pessimistic when we said some
years ago that we could sense the decline of the defence medical
services and that we doubted whether it would ever recover, so
somewhere between that pessimism and Laura's optimism you think
we are nearer one side of the continuum than the depressing side?
(Mr Hoon) All I would say, using Kevin's phrase, is
that I believe we have turned the corner; that the measures we
have taken are beginning to show some signs of improvement, but
I want to see those signs of improvement sustained year-on-year
rather than as a result of a single year's statistics.