Hammond happy with Army's role in Games

Defence Secretary says drafting in troops for the Olympics has humanised the face of the armed forces. By Oliver Wright

Philip Hammond: ‘Commercial model is not always best’ (Charlie Forgham-Bailey)

Of all the legacies of London 2012 it was perhaps the most unexpected. Just a few weeks ago when ministers said they were calling in the troops to check bags and frisk spectators coming to the Games it looked like an act of desperation. But now it all looks rather inspired.

The biggest deployment of troops on Britain's streets since the Second World War (12,000 in total) was one of the defining and positive images of London in 2012 and commanders are delighted at the forces' new profile.

For their boss, the Conservative Defence Minister Philip Hammond, what started as a rather sorry affair has paid an unexpected political dividend. Sitting in his office in the Ministry of Defence on Friday – he is the first to admit that he's rather thankful now that G4S spectacularly failed to measure up to expectations.

"It would be disingenuous not to admit that from our point of view – from the military's point of view – it has been a fantastic opportunity," he says with delight.

"In two weeks they've been able to do two years worth of engagement with the public. It has humanised the face of the armed forces."

The episode has curiously had another effect as well: it has changed the Defence Secretary's thinking about the merits of the public sector.

When Mr Hammond was drafted in to replace Liam Fox nearly a year ago, many service chiefs approached his appointment with trepidation.

A self-made millionaire businessman before entering politics, he had the reputation as something of an ideological bean counter: someone who believed the private sector was always more efficient, capable and preferable to the state. Military commanders feared they would not have a champion prepared to stand up to the Treasury. But, Hammond says now, the G4S affair has rather changed his thinking.

"I came into the MOD from a private sector background with a starting prejudice that we have to look at the way the private sector does things to know how we should do things in Government. But the story of G4S and the military rescue is quite informative. The G4S model says, 'Here is a cost envelope within which I have to deliver an outcome' and I have to do it incredibly leanly with very little resilience. G4S were literally hiring people and expecting to deploy them three days later. They were trying to build up a management structure overnight and they placed a lot of dependence on the work force – for example getting them to schedule their own shifts by accessing an internet site.

"The military came at it from the exact opposite extreme. What's the job that needs to be done? OK we'll do it. And that's why everything has operated so smoothly. When you go through these search lanes everything just hums. That's because for every three people doing the work there is one watching them and there are two others watching him.

"I'm learning: that the application of the lean commercial approach model does have relevance in areas of the MOD, but equally you can't look at a warship and say how can I bring a lean management model to this – because it's doing different things with different levels of resilience that are not generally required in the private sector. We don't ask the military to prepare to maybe be able to do something or to have an 80 per cent chance of delivering.

"We ask the military to be in a position that if we ask them to do a task to be absolutely able to do it for us."

There are other things Mr Hammond, 56, has had to learn in his job as Defence Secretary – not least a new language.

"This department has a language all of its own," he says. "Everything has an acronym."

But even if he learns the language, Hammond faces a formidable task putting Britain's military forces onto a more sustainable footing. He is overseeing a massive cost cutting exercise which will see the size of the regular armed forces cut from 102,000 to 82,000, while trying to find another 15,000 reservists to fill the gap.

Somehow he has to manage the MODs vast procurement budget and try ensure that billion pound equipment overspends are a thing of the past.

Then there is the small matter of successfully managing our exit from Afghanistan and trying and ensure that, as one senior politician put it privately, we don't just leave behind a well armed, well trained civil war.

Much of his effort so far has been spent trying to formulate a new strategy for procurement and he recently announced that he had for the first time "balanced the budget" so that the armed forces could live within its means.

Time will tell whether the paper accountancy translates into real savings. But Hammond says he is confident that the financial discipline is now in place to make it work.

"Balance the budget is not so much an exercise in making the numbers add up – which we've done. It is changing the culture to accept that we can't say: 'I think we need another three frigates and we'll worry about how to pay for them later'.

In terms of cutting force numbers Hammond is unequivocal that this has to happen in order to ensure that Britain does not end up with what he has described as a "cardboard army".

"There is a moral and a practical dimension to it. You shouldn't send people out to do a job which you cannot afford to equip them to do," he says.

Hammond is unlikely to be moved in the expected autumn reshuffle – but as a politician he knows that his time to embed these changes will be limited. And as if to remind him in the ministerial waiting room there are pictures of all predecessors going back to 1964 – 20 in all – including six in the last seven years. So can he do it?

"I'm pretty confident that we are creating an irreversible momentum in this direction," he says.

"We are putting in the checks and balances which will make it very difficult for politician or generals to go back to the bad old days."

G4S was literally hiring people and then expecting to deploy them three days later. They were trying to build a management structure overnight

It would be disingenuous not to admit that from our point of view – from the military's point of view – it has been a fantastic opportunity