Five key takeaways from defence secretary John Healey's IfG speech

1. Preparation in opposition pays off

As John Healey admitted in his speech at the IfG, the Labour manifesto’s section on defence went “little noticed” last July. But, as he added, the manifesto pledged specific defence reforms and underlined the need for “stronger leadership, clearer accountability, faster delivery, less waste and better value for money.”  

Labour has faced criticism from some quarters for being unprepared in some respects for the switch from opposition to government, but Healey – who is one of just a handful of cabinet ministers to have held office the last time Labour was in power – appears to have done the hard yards in the run-up to the general election. 

There may not be, as Healey accepted “any bonus points in politics for administrative and managerial reform”, but just like the improvements to the spending review process set out by Treasury chief secretary Darren Jones in a speech at the IfG in January, Healey’s blueprint to make the Ministry of Defence (MoD) work more effectively is a long-term improvement plan – and Healey insisted he wanted to remain at the MoD throughout the parliament – rather than an instant poll-boosting announcement. Tuesday’s speech showed the value of new ministers entering government with a clear set of priorities about system improvements as well as policy change.

2. Clarifying accountability at the top of the MoD is a high priority

The defence secretary said that his department is “mired in process and procedure” and “added complexity where simplicity is needed”. Anyone who has worked with the Ministry of Defence will recognise that picture, and Healey’s prescription of creating clearer accountability is the right one.

Encouragingly, he was able to announce specific organisational changes, including a slimmer “new quad” to run the department made up of the chief of the defence staff, the MoD permanent secretary, the national armaments director and the chief of defence nuclear. Still a complex picture, but this is progress, especially as Healey said that budgets would be rationalised to align with the quad’s responsibilities.

The chief of the defence staff will also for the first time command the service chiefs. It is unbelievable in one sense that this has not happened before, but do not underestimate how controversial this break from tradition will have been in some quarters.

But an announcement does not mean that real change will just happen. The MoD is one of the stickiest, hardest-to-reform parts of government. Entrenched interests and bureaucratic power struggles are endemic, and Healey will need to make good on his promise to return to this subject time after time to push through his reforms. Successfully doing so will be the key to making all the MoD’s other priorities happen.

3. The best candidates for top jobs must be set up for success in challenging roles

In an organisation like the Ministry of Defence, even more than elsewhere in government, credibility is essential. The system responds to authority and new appointees, particularly those in civilian jobs, must master the system and secure the respect of their colleagues. Healey and the rest of the department need to bear that in mind as they make appointments to new posts.

Healey referred to the recruitment of a new armaments director and was asked whether he was looking for someone like Elon Musk, or a career civil servant. He diplomatically sidestepped the Musk point, said he wanted top talent to apply, and noted that the process was now in the hands of the independent civil service commissioners.

That’s all very well, but to attract the best talent Healey and David Williams, the MoD permanent secretary, must manage the process a bit more actively. Our research shows that to attract and recruit the best external people the government will need to publish a compelling job description and vigorously seek out candidates from beyond the usual suspects. Then, whether from inside or outside government, the successful candidate will need authority and empowerment from the defence secretary.

It sometimes seems like the MoD is unmanageable. Given the threats the UK faces, and the need to spend the defence budget wisely, Healey, his ministers and his top “quad” team will need to appoint the best people and set them up for success.

4. The 2.5% defence spending target is a priority without a delivery plan

In the face of calls for the UK to further up its defence spending, Healey re-iterated the government’s intention for defence spending to rise to 2.5% of GDP, from the current level of 2.35%. The big question – on which Healey would not be drawn – is what path government intends to take to get there. The decision is whether to follow the path set out by the previous government – of hitting 2.5% of GDP in 2030/31 – or to speed up and reach the target faster, or slow down.

This matters because the different paths to this single target have different costs, depending on how long is taken to reach it. Continuing on the previous government’s path means defence spending increasing by around £2.6bn per year in real terms by the end of the spending review period (2028/29). Reaching 2.5% by 2028/29 would mean an increase of about £4bn per year in real terms. 

One reason this government has not yet set out this path is the highly dynamic geopolitical context. With Trump calling for NATO allies to spending 5% of GDP on defence and the future of the Russia-Ukraine war far from certain, it is understandably difficult to make a firm multi-year commitment. 

A further reason for Healey’s unwillingness to commit to a timeframe for increasing defence spending is it cannot be considered in isolation. Government is in the throes of a spending review which will allocate multi-year departmental budgets within a tight spending envelope. Continuing on the current path to 2.5% would imply cuts of around £7.9bn a year to the day-to-day budgets of unprotected departments in real terms by 2028/29 – based on the budget and after factoring in commitments on health, education, aid and childcare. Accelerating the path to meet the 2.5% target by 2028/29 would increase this figure to £8.7bn. Upping this target further to 3% would imply cuts of over £17bn to unprotected departments – more than the entire Justice and Business and Trade departments’ budgets combined.

Facing up to the need for increased defence spending, means confronting the costs and figuring out how to pay for them. As work on the spending review marches on, these are the kinds of difficult decisions that the chancellor, and ultimately the prime minister, will need to take.

5. Better accountability in defence procurement has the potential to improve value for money 

Healey was right to highlight accountability for cost-effective procurement as a key issue in his department. But as our work has shown, this problem goes beyond the MoD. Across government, oversight is too often limited by inadequate data and poor contract management. “Added complexity where simplicity is needed”, as Healey neatly put it, frequently muddies the waters of accountability in procurement.

Accountability matters. Not just as an end in itself, but as a means to improving value for money. It can help identify poor performance, and ensure there are consequences for it. The improved oversight it entails can better align procurements with priorities. Healey said his department plans to save £10bn in the next decade from better procurement, equivalent to around 3% efficiencies in MoD procurement spend each year. Achieving this would go a long way towards meeting the Treasury’s 5% efficiency target, and be very welcome in the context of the already tight spending review. But making these savings a reality will be far from easy.

Strong senior leadership in the form of a new National Armaments Director could help drive this agenda forward. But to be successful, this role must be accompanied by clear lines of accountability that run throughout the organisation, including streamlining the various controls and policies to which each procurement is subject. Similarly, attracting top talent for this new role must be accompanied by ensuring there is appropriate capacity and capability amongst those managing contracts – a priority government recently set out in its updated National Procurement Policy Statement.