3.2 To meet its basic purpose of defending the UK and its Overseas Territories, citizens and interests, Defence must discharge a number of core functions within an agreed financial envelope. At present, these are articulated in a number of different ways in different MOD documents. We have developed a consolidated and revised summary of the functions which is clearer, improves understanding and provides a better framework for organisational improvement. In our view, the core functions of Defence are to:
• Direct - understand the strategic context, make Defence policy and strategy, define and resource the necessary military capability and strategically direct operations and Defence Diplomacy;
• Generate and Develop - generate force elements to meet current operations and potential military tasks and develop the future force; a key enabler of which is to:
• Acquire - procure and support the equipment, systems and commodities needed in the short and long term;
• Enable - enable the other functions by performing or commissioning supporting services, such as infrastructure, corporate services and science and technology;
• Operate - use military capability on operations and other military tasks, as directed by Government; and,
• Account - manage, control and account for the resources voted by Parliament, and report on Defence activities to Parliament and the public.
3.3 Any effective operating model for Defence must set out clearly who is responsible for each of these functions, give them the authority and resources to discharge them and set out how they relate to each other and how they will be held to account for their performance. Doing so would significantly simplify the current position.
3.4 The model we propose is informed by our view that responsibility and accountability are not sufficiently aligned in the current model. In it, the Head Office delegates budgets to the single Services but continues to manage the tactical detail of how these are spent, including at Defence Board level. This micro-management makes it hard for the Head Office to hold the Top Level Budget (TLB) holders to account, and has come at the cost of the Head Office prioritising and sequencing activity at the strategic level, and translating those decisions into the financial programme.
3.5 Furthermore, the single Services do not have all the levers they require to deliver what is asked of them. Most notably, budgetary responsibility for planning new equipment is not delegated to the Services but is managed by the 'capability sponsor' within the Head Office. While the single Services have a powerful voice within this team and are in effect responsible for setting many of the requirements, they do not own the resource implications of the demands they make. There is no incentive on, or effective mechanisms for, them to balance between their demands for equipment capability or against the areas of spend currently delegated to them (including manpower and training).
3.6 We therefore propose to establish a stronger and more strategic but considerably smaller Head Office responsible, among other things, for making strategic balance of investment decisions, to align accountability and authority in the Commands, and to strengthen financial management throughout the system. This should provide the basis for better, more coherent planning, a greater responsibility throughout the system to focus on affordability, and more scope to achieve it. It will also create a more robust framework for delivering scrutiny and assurance and therefore holding to account. In our model the core functions will then be carried out as set out below.