MoD savings targets mean that while the DE&S has already cut 2,267 staff, it will either need to make 2,000-2,500 people redundant or outsource their jobs, he said.
Outsourcing will not save as much money as cutting staff numbers, he added, because people will still be in their posts – but by taking that route “you have the same amount of output available.”
If the department does cut those jobs, however, “I am not saying I can maintain my output to the armed forces,” he said.
In the case of big job cuts Gray could only offer “fewer services” in future because “I do not have enough people to supply the full range”.
DE&S is currently reducing its head count by 28 per cent, from about 20,000 to 14,500 staff. Gray said he hopes to achieve this through “efficiency gains of about 18 per cent”, with the final 10 per cent achieved “through outsourcing or by reduced output”.
“Depending on what the department chooses to do there are a set of tasks, particularly within logistics, distribution and storage, where it is possible to tender for outsourcing to logistics companies and that would take something like 2,000 people from the DE&S budget and put them into a contractor,” he said.
Philip Dunne, minister for defence equipment, support and technology, told the committee that in two phases of cutbacks this year – in March and September – they reduced head counts by 2,267 civilian and 150 service personnel.
Gray added that he’s conscious of mistakes made in the early 2000s, when costs were reduced and the department “lost sight” of “some safety issues”. He said that when going for the extra 10 per cent cuts, all safety-related posts would be “starred” – meaning “they must not be left vacant”.
Dunne said the MoD is currently planning for a one per cent real terms increase in spending from 2015.