Army cuts plan brings risks, says National Audit Office
Plans to scale back the Army and increase reservists have "significant risks" to its operational abilities, the National Audit Office has warned.
The spending watchdog's report said the decision was taken without "appropriate testing of feasibility".
It also suggested the move to raise the numbers of reservists from the current 19,400 to 30,000 by 2018 could be delayed until 2025.
The Ministry of Defence said it was confident the target would be met.
The restructuring programme, known as Army 2020, was set out in the coalition's 2010 Strategic Defence and Security Review. The regular Army will be reduced from 102,000 in 2010 to 82,000 in 2018, while the reserves will go up from 15,000.
It is hoped savings of £10.6bn will be made between 2021-22 as a result.
The NAO said the MoD measures could "significantly affect the Army's ability to achieve its objectives and value for money".
Amyas Morse, head of the National Audit Office, said military judgement played an important role in the overall strategic plan.
But he said the MoD and Army "must get a better understanding of significant risks to Army 2020 - notably, the extent to which it is dependent on other major programmes and the risk that the shortfall in recruitment of new reserves will up the pressure on regular units."
The NAO said a total of 3,020 soldiers entered the reserve last year putting the trained strength at 19,400 in April 2014.
Recruitment will need to "increase substantially" over the next five years if the plans are to be met, the NAO said.
By Caroline Wyatt
The idea of cutting the regular Army while pinning its future hopes on more reserves who have not yet signed up in the hoped-for numbers has proved a poisoned chalice, not least for Defence Secretary Philip Hammond.
The idea was to save money, yet additional bonuses for reserves have had to be raised, while the end target of a trained strength of 30,000 looks optimistic if the recruitment rate remains the same.
However, the plans were agreed and in part conceived by both the current Chief of the Defence Staff, General Sir Nicholas Houghton, and the incoming Chief of the General Staff, General Sir Nick Carter.
That means their reputations are also on the line in making this work.
The main worry, though, is that another defence review due next year may come back for further cuts - perhaps once again to military manpower, something the Army could not bear without fearing real damage both to its capability and its credibility.
Other risks cited in the report include the challenge of implementing Army 2020 alongside "other substantial change programmes", including the return of UK troops from Germany.
It also notes that Army 2020 seeks to integrate regulars and reserves fully within a single force structure for the first time and said contingency plans should be developed.
The NAO said management company Capita's role in the recruitment plans depended on the MoD providing the right IT system but it failed to deliver them in March last year. The Army is incurring increased operational costs of about £1m a month ahead of its expected launch in summer 2015.
The MoD has to sign off the report before it is released and its publication was delayed amid reported wrangling with the NAO over its conclusions.
General Sir Peter Wall, Chief of the General Staff, said the report "fails to capture the nature of the austerity we faced" at the time the decisions were taken.
He added: "Most of the structural change for our new model... is now behind us. We are recruiting regular and reserve soldiers for this new Army avidly."
Defence Secretary Philip Hammond said the armed forces were being restructured to ensure they could respond to new and emerging threats.
"In future, they will be smaller, but better equipped, able to deploy rapidly to protect our interests anywhere in the world and supported by an integrated reserve force."
He added: "The MoD has always been clear that the numbers in the reserves would fall before they increased, but we have now seen the trained strength of the reserves climb for the first time in nearly 20 years. While there is much still to do, we are confident of achieving the target."
Shadow defence secretary Vernon Coaker said UK armed forces could face a "dangerous capability gap".
He said: "Defence ministers were warned that these plans would not work unless they were properly tested and monitored. They were told that front-loading cuts to the Army and back-ending recruitment to the reserves would leave the armed forces under strength.
"There should be a pause in any further redundancies until we see a significant increase in reserve recruitment."
Former head of the Army Lord Dannatt said the plans were a "policy based on hope".
He told BBC Radio 4's World At One: "If it stays relatively quiet and we are not committed anywhere then the risk will not materialise, but if something happens, the strategic shocks happen, and we are terribly bad about spotting them, then we could be embarrassed and we could be in some difficulty."