- While the Ministry of Defence (MoD) has improved its oversight of Reserve Forces’ and Cadets’ Associations (RFCAs) since its 2019 review, an NAO investigation has found that financial, legal and governance risks remain which the MoD must mitigate to support the increasingly important role of the reserve forces in national defence
- The MoD must consider how, in doing this, it ensures that the RFCAs provide the reserves and cadets with cost-effective, high-quality infrastructure and support services while retaining the benefits of their local identities and connections
The MoD must address risks in the organisation and operation of the RFCAs, which support and provide training sites and facilities for 31,967 reserves, who comprise nearly a fifth (18%) of the UK’s armed forces, and 139,960 cadets, says a National Audit Office (NAO) report.
The independent public spending watchdog’s latest report investigates the MoD’s current oversight arrangements for the RFCAs, including how it has addressed the 2019 Sullivan review’s recommendations.1
The 13 regional RFCAs support the UK’s reserve forces, which have an increasingly important role in national defence, and cadet forces, which provide young people with valuable life skills. They manage and maintain a network of 2,478 sites for training and other activities, and support and promote the interests of reserves and cadets in their local areas. The RFCAs have established a Council as a co-ordinating headquarters, through which public money flows to them. In 2023-24, the RFCAs received £146.1 million of public money.
The Sullivan review, which concluded that the RFCAs’ functions supported the MoD’s objectives and should be retained, included two strategic recommendations for the MoD – to ‘regularise and streamline’ the Council and the RFCAs into a single executive non-departmental public body (NDPB), and to appoint a senior officer as sponsor for the RFCAs.
The MoD has now appointed an appropriate sponsor, but in April 2023, it paused the RFCA Reform Programme due to a lack of Parliamentary time to legislate for a new NDPB. The MoD told the NAO it planned to revive proposals for the NDPB, but the Council and some RFCAs have expressed concerns that this might damage local engagement, which they see as essential for delivering better value for the taxpayer and effective support for the reserves and cadets.
Five years on from the Sullivan review, the MoD has strengthened its oversight of the RFCAs. It has implemented 36 out of 80 recommendations, progressed 25 as far as possible without establishing an NDPB, and paused, not pursued or, in one instance, transferred the remainder. It has strengthened its financial relationship and service level agreements (SLAs) with the RFCAs; developed a more business-like way to hold them accountable; helped improve the stewardship of the volunteer estate; and supported a new board structure at the Council.
However, some financial, legal and governance risks remain, including the limitations of the MoD’s powers to act if a RFCA was to fail in delivering its duties. The MoD’s oversight operates through the Council, and it does not deal with individual RFCAs. If an individual RFCA underperforms, the Council has limited leverage to address this.
In August 2022, HM Treasury raised concerns about whether the financial framework between the Council and the MoD was compliant with its rules, which are meant to control and oversee spending. The MoD is working on a new financial framework to address these concerns, but it is not yet in place, and until recently the MoD lacked the resources to regularly monitor spending.
The NAO also reports that for four years the MoD has not published the Council’s Annual Report and Accounts on time, which brings together the accounts of all 13 RFCAs. In addition, the reporting does not comply with accounting standards, for example by not including a cash-flow statement. The Council’s finance team have prioritised reforming the structure of the RFCAs and have had limited resources. The Council’s 2023-24 Annual Report and Accounts are still unpublished.
The NAO concludes that the MoD must mitigate the remaining legal and financial risks, whether that is by creating a new NDPB or further strengthening the current model. In doing this the MoD will need to consider how best to retain the benefits of the RFCAs’ local identities and connections, while ensuring that they provide cost-effective, high-quality infrastructure and support services for reserves and cadets.
Read the full report
Investigation into the MoD’s oversight of the Reserve Forces’ and Cadets’ Associations
Notes for editors
- In 2019 the MoD published the latest in its series of periodic reviews of the RFCAs, which became known as the ‘Sullivan review’ after its author. The review examined the need for the RFCAs, the appropriateness of their delivery model and the effectiveness of their governance and management. The review made 80 recommendations for change, including regularising and streamlining the Council and the 13 RFCAs into a non-departmental public body (NDPB), to provide a “more efficient and effective service” to the MoD, with “more accountable and business-like corporate governance” and in order to address financial, legal, safeguarding and estate safety risks.