Select Committee on Defence Appendices to the Minutes of Evidence


Memorandum submitted by Professor Malcolm Chalmers (October 2002)


  This memorandum focuses on two aspects of the New Chapter: priorities and resources. It argues that the New Chapter continues the trends in defence priorities that have been in place since before the SDR, and will further consolidate the UK's position as one of Europe's two leading military powers. It also suggests that the government will soon have to make difficult decisions to reduce commitments in some other areas of capability if it is to be able to provide the resources necessary to support New Chapter priorities.


  Although work on a New Chapter of the Strategic Defence Review was ordered as a direct response to the events of 11 September 2001, the resulting review has ranged much more widely, looking at the underlying planning assumptions and priorities that underpin the UK's defence posture and plans. It has therefore been an opportunity to learn from the lessons of operations in Afghanistan, and other developments since SDR in 1998, without the upheaval that would be involved in a full scale Defence Review.

  The need to give higher priority to responding to international terrorist threats has been an important part of the work, most clearly in relation to proposed enhancements in homeland defence. But most of the proposed enhancements in capabilities have a wider relevance for expeditionary warfare. As a consequence:

    even if international terrorism turns out not to be an enduring challenge, we will not be taking our forces and capabilities up a strategic "dead end". (New Chapter, paragraph 34)

  Indeed, it is the priority given to improving capabilities for conducting several simultaneous, long range military operations, rather than the particular requirements of counter-terrorism per se, that is at the heart of the New Chapter's conclusions. In essence, it can be seen as an update to the 1998 Strategic Defence Review, taking into account both (a) the lessons of operations over the last four years (including Afghanistan); and (b) the rapid pace of technological development, and the consequent opening up of new possibilities for "network-centric" warfare.

  The full procurement implications of the New Chapter, and the 2002 Spending Review settlement, have not yet been made public. A high priority is to be given to investments that can enhance "network-centric capability", including (for example) battlefield reconnaisance, command and communications, precision attack, and (both unarmed and armed) unmanned air vehicles. Additional investment in special forces is promised. The review has signalled an increased emphasis on rapidly deployable light forces, including the equipment (support helicopters, air-transportable armoured vehicles) they require. It has also reconfirmed the importance being given to strategic lift and sustainability.

  The period since the SDR has seen requirements for the armed forces to be deployed at short notice on more simultaneous, or near-simultaneous, operations than had been envisaged in 1998. These operations have tended to be relatively small-scale (eg Sierra Leone, Macedonia, the two Iraqi no-fly-zones, and Afghanistan), but very demanding in their requirements for deployed logistical support, communications, and mobile command and control. The ability to rapidly deploy small but highly effective forces has been key to the success of these operations. The New Chapter assumes that such smaller scale, rapid response, operations will continue to place considerable demands on the armed forces; and argues that the UK should enhance its capabilities to respond to these demands.

Playing to the UK's strengths

  The proposals in the New Chapter are designed to play to the UK's strengths, focusing military energies in areas where it has capabilities which few others possess. The UK is one of only three powers (along with the US and France) with a capability for rapidly projecting military power over long distances at the early stages of developing crises, and the aim of the New Chapter is to further develop this "comparative advantage". Precisely because this capability is held by so few, it can provide the UK with relatively unique influence in collective discussions of security policy in NATO, the EU, and/or the UN. It may also increase the UK's ability to shape the political outcome of any crisis in pursuance of national values and interests. In Kosovo in 1999, for example, the fact that UK forces were the first NATO forces to reach Pristina played an important role in preventing a more confrontational approach to the Russian forces deployed at the airport.

  The US is able to conduct almost any conceivable operation without military assistance from the UK or anybody else. Consequently, the opportunities for allied influence on the objectives and conduct of US operations should not be overstated, and have declined further under the current administration. Nevertheless, many US leaders continue to value the enhanced political legitimacy which coalition operations bring, both domestically and in the international community. While this remains the case, the UK's military assets give it an opportunity for influence which other states may not have. Increased investment in "network centric" capabilities in particular may enhance the attractiveness of UK support to the US armed forces, although this will remain critically dependent on the extent to which UK-purchased systems are compatible with those of their US counterparts.

  By giving a high priority to the improvement of "enabling assets", the New Chapter enhances the UK's ability to conduct operationally and logistically self-supporting operations, reducing the extent to which its forces are obliged to depend on others (including the US) for logistical and other support. It may thus become more able to conduct small scale UK-only operations, such as the Sierra Leone deployment, even when no other Western power has the will and capability to intervene. It also helps to improve the UK's ability to play a leading role in the command and support of small and medium scale European-led operations. Whether conducted under an EU or NATO flag, such operations are likely to become increasingly common in the Balkans, and perhaps also elsewhere, as the US's priorities shift outside Europe.

  Yet all priorities comes at a price. In order to provide the resources necessary to support the New Chapter's plans, lower priority capabilities and operations will have to be curtailed. The armed forces have neither the personnel, nor the financial resources, to meet all the demands that could now be placed upon them. The UK already deploys a much higher proportion of its armed forces overseas than other countries, and the resulting strains on personnel morale and retention are widely acknowledged. At the same time, service personnel numbers have continued to fall since the Strategic Defence Review, from 214,300 in 1998 to 210,800 in 2002. The number of civilian support personnel has fallen more rapidly, from 104,200 in 1998 to 97,300 in 2002.[60]

  One way in which the MoD has been able to cope with these pressures has been to reduce the level of forces deployed in semi-permanent commitments. Although it remains the MoD's largest peacetime commitment, the number of service personnel permanently committed to Northern Ireland has fallen from 17,500 in 1998 to 14,600 in 2002.[61] There has also been an increased commitment to hand over peace support responsibilities to allies after the first crucial months of interventions. In both Bosnia and Kosovo, the size of the UK garrison peaked immediately after the initial intervention. Reflecting its comparative advantages compared with its European allies, the UK provided the largest single European contribution to both the first IFOR (Bosnia) and KFOR (Kosovo) contingents. Since these initial interventions, however, the British contribution to subsequent phases of Balkan peace support operations has declined, and that of other European forces has increased. Similarly, the UK provided the leadership for the ISAF force in Kabul in the first months of 2002, but then handed over leadership to Turkey and began to reduce the size of its military presence. In both cases, the pattern has been for the UK to reduce its own contributions as soon as others are ready to take over, releasing scarce rapid-reaction capabilities for use elsewhere. In all three of these cases, the UK has continued to provide some forces, but at a lower level than before.

  This is a delicate balancing act. It relies on the willingness of other states to take over commitment that have initially been assumed by the UK. Yet, unless there are enough allies that are both prepared and able to take on the roles that are necessary to ensure post-conflict stabilisation, it risks leaving key peace support operations undersupported at a time when they need to be strengthened (and as UK forces move on to the next mission). Perhaps the most obvious example of this dilemma is in Afghanistan, where the failure of the international community to expand the remit of ISAF beyond Kabul has been widely criticised, both within Afghanistan and by international agencies. It makes it more difficult to rejuvenate the national economy, and increases the risk of a collapse of the Karzai regime, with all the devastating effects that this could have, both for the welfare of the Afghan people and for the success of efforts to curb al-Qaeda activities in the region.

  Such an expansion could not be undertaken without substantial commitments from those countries (including the UK) which have the capability to do so; and the UK is not the only European country that is concerned at the prospect of an open-ended commitment of forces to Afghan security. Yet the UK is seeking to reduce the size of its commitment more rapidly than it did in either Bosnia or Kosovo, despite having had less success in improving the security situation, and with less prospect of persuading allies to take over the UK's share of the peace support burden. The commitment of Germany and the Netherlands to lead ISAF after Turkey is welcome. Given the severity of the security problems still facing Afghanistan, however, one hopes that the withdrawal of most UK forces may not soon be seen as a tragic example of the limits of a "rapidly in, rapidly out" approach to intervention.

  The viability of the policy direction mapped out in the new Chapter could also soon be vulnerable to a more fundamental challenge, in the shape of a new requirement to occupy a post-war Iraq. As in the Balkans and Afghanistan, the UK is almost certain to play the most prominent European role in supporting any US military campaign to topple Saddam Hussein's regime. In contrast to those previous conflicts, however, it is much less clear that European allies will have either the resources or the desire to share the burdens of post-conflict occupation with the UK and the US. If British troops enter Iraq, they could be there for a long time.


The UK compared

  The latest MoD-published figures show the UK as spending slightly less on defence than France and slightly more than Germany: making it the world's fifth largest military spender.[62] Yet these data conceal the considerable gap that has now opened up between the UK and its main European allies, both in the volume of resources devoted to defence and in the useable capability that is being generated from these national efforts.

  One reason for this discrepancy is that official comparisons rely on NATO defence spending figures that include large amounts spent on two items—pensions and paramilitary forces - that figure much more prominently in the budgets of other European countries, but which do not contribute to current military capability. Table 1 recalculates the defence budgets of the four largest European countries excluding these items. It shows that, at current exchange rates, the UK now spends around 50% more on defence in absolute terms than either France or Germany, and more than twice as much as Italy. It would take a sterling devaluation of a third for the UK's euro-denominated defence budget to be equivalent to France's.

  Moreover, raw spending totals probably understate the capability gap between the UK and its major European allies. During the Cold War, both history and geographical position led the UK to maintain a defence posture better suited to expeditionary warfare than its continental allies: a large ocean-going Navy with worldwide bases, and an Army and Air Force designed for forward defence outside national territory. Defence reforms begun in 1990 further reinforced the UK's comparative advantage, reducing redundant capabilities for large-scale warfighting while continuing high levels of investment in new equipment and other assets. By contrast, a large part of allies' budgets continued to be devoted to maintaining large armies configured primarily for territorial defence, despite the disappearance of any credible threat of invasion. The commitment to maintain conscription has also, at least until very recently, constrained the pace of reform.

  This structural difference between the UK and its European allies can perhaps be most clearly illustrated by comparing levels of spending per serviceperson. The UK has fewer personnel in its armed forces than any of the three other major European powers (it only has a few thousand more than Poland). But it makes up for this deficit by spending

176,000 on defence for every person in its forces, compared with

79,000 in Germany and

74,000 in Italy. Even France, which no longer has conscripts in its armed forces, spends only

98,000 per serviceperson. (The US, by comparison, spends around $250,000 per head). In contrast to the undercapitalisation and lower productivity that still characterise many parts of the UK civil economy, therefore, UK servicemen and women are more fully supported by support and equipment spending than their continental counterparts. Moreover, because these figures are on a non-RAB cash basis, they do not take into account the additional advantages that the UK armed forces would receive if account were also taken of the cumulative effect of past defence investments.

  Nor do spending trends in European allies suggest that the gap in capabilities will narrow dramatically in the near future. Although France has committed itself to real term increases in defence spending, further cuts in German spending seem probable. In most of Europe, a combination of slow economic growth and widening budget deficits severely constrains the ability of any spending ministry to obtain new resources.

  The UK has a substantial stake in ensuring that, despite these tight budgetary limits, the pace of military reform in allied countries is accelerated. As discussed above, the long-term value of UK military operations often depends on the ability of allied forces to provide a high proportion of follow-on forces for peace support and related missions. This ability has been demonstrated in the Balkans; but is less in evidence in the operationally more challenging environment of Afghanistppan. The more that the UK becomes involved in operations without substantial contributions from other Europeans, however, the more dependent it will become (operationally and politically) on US priorities rather than those developed collectively by a broader coalition of states.

The 2002 Spending Review

  The additional investments outlined in the New Chapter are to be financed from the budgets set out in the Spending Review published in July 2002. Between 2002-03 and 2005-06, real defence spending (in resource accounting terms) is due to grow by an average 1.2% per annum. Calculated in near-cash terms (equivalent to old pre-RAB budgets), the increase is rather greater: 1.7% per annum in real terms.

  Yet this apparent change in trend does have to be severely qualified before wider conclusions can be drawn:

    —  First, the increase from 2002-2003 onwards comes after a 4.6% fall in defence spending between 2001-2002 and 2002-2003. As a consequence, planned 2005-2006 spending will still be lower in real terms than in 2001-2002 (see Table 2).

    —  Second, the increase for defence after 2002-2003 takes place in the context of a very generous overall spending settlement. Total departmental (DEL) spending is due to rise by 5.2% per annum in real terms over these three years, with particularly generous rates of increase for transport (12.1%), international development (8.1%), health (7.3%), education (5.7%) and the Home Office (5.6%). As a consequence, the relative priority given to defence, compared with other areas of government spending, will continue to decline: from 7.7% of total managed expenditure (TME) in 2001/02 to 7.0% in 2002-03 and 6.4% in 2005-06. This compares with a reduction (on a pre-RAB basis) from 6.5% of TME in 1997-98 to 6.1% in 2001-02.[63]


  While UK plans for defence spending appear relatively generous compared with those of its European partners, they still represent a marked reduction in the priority given to defence within overall government spending. Unless the government is willing to countenance further substantial increases in taxation and/or borrowing, the rate of growth in total state spending will probably slow sharply after 2005-06. As a consequence, the government may have to make much harder choices on defence priorities in the aftermath of the 2004 Spending Review than it has to make in 2002.

  Over the last five years, the government has been able to shift defence resources into higher-priority areas while making only incremental reductions in other aspects of defence capability. This approach has been politically attractive, helping to avoid the controversy that would attend larger cutbacks in front-line forces or major procurement programmes. If the defence budget were to come under greater scrutiny as part of a less generous future spending review, however, this delicate balancing act may not be sustainable.

  Such a review of defence priorities may in any case be inevitable as the costs of providing "network-centric' capabilities increase. The New Chapter hints at the likelihood of further reductions in the size of the front line in some areas. As resources shift from firepower towards mobility, communications and other force multipliers, it suggests that it is increasingly "less useful to measure combat power in crude terms of numbers of platforms and people."[64]

  The tighter the budgetary settlement for defence is, the more rapid and difficult the decisions on where to economise will have to be. At the centre of such a review is likely to be the need to think through the implications of the further reduction in the risk of large scale conflict in Europe that, the New Chapter concedes, has taken place since 1998.[65] How far are current force structures and plans still a legacy of past Cold War requirements? And how far can the size and expense of these structures and plans be reduced without harming the capabilities necessary to meet new threats?

  The Army seems more secure from cutbacks in this respect than the other services. The SDR requirement to undertake a single major offensive ground operation (comparable in size and duration to the UK's 1990-91 Gulf War contribution) seems likely to remain a priority, since recent events (including the possibility of a European-led ground campaign against Serbia in 1999 and the current reported plans for an invasion of Iraq) have demonstrated the continuing relevance of such a capability. But the forces that can most effectively generate this military effect will change over time as new technologies and capabilities enter service. In addition, the New Chapter has made clear that further reorientation of the Army's warfighting capability towards more mobile and lighter forces is planned. The MoD will want to ensure that, as far as possible, Army major war capabilities can also be effective in the smaller scale operations that the New Chapter argues are becoming increasingly common. This might signal, for example, a further shift of emphasis towards the use of helicopters in anti-armour warfare once the Apache is fully operational.

  In the Royal Navy, the increased requirement to be able to conduct operations outside Europe, often with limited access to local infrastructure, will strengthen the case for continuing with the planned purchase of two large aircraft carriers, for entry into service around 2012. Capabilities for projecting power into land will also be improved by the entry into service of two new LPD (Landing Platform Dock) ships and four new Bay class amphibious landing ships. But the RN could come under pressure to release resources (money and personnel) for these priority programmes by further reductions in the size of its 32-strong frigate and destroyer fleet and its 12-strong attack submarine fleet (much of the latter is currently in refit). Some reduction in both these areas was already ordered as part of the SDR. But the further decline in the priority accorded to anti-submarine warfare, together with the lessened threat of conflict in the Falklands, may allow further reductions to be made. With both the Type 45 destroyer and the Astute class SSN due to provide a step-change in capability compared to the systems they will soon be replacing, overall capability might (depending on the measure used) be improved even if numerical strength is reduced.

  Perhaps the greatest scrutiny will be accorded to plans for aircraft procurement, the cumulative costs of which dominate the future equipment budget. In the past, massive sums have been expended on aircraft that have become obsolescent before, or soon after, they have entered service (as in the case of the Tornado F3). The government will be keen to ensure that this experience is not repeated over the next decade, when three major programmes are currently at various phases of production, development or study:

    —  the planned purchase of 232 Typhoon aircraft at an estimated cost of £19 billion, with Tornado F3 and Jaguar aircraft due to be progressively replaced in operational squadrons from 2004 onwards;

    —  the plan to buy up to 150 F-35's to replace RAF Harriers and RN Sea Harriers from 2012, at an estimated total cost of £10 billion;

    —  the continuing requirement to replace the Tornado GR4 strike aircraft with a Future Offensive Air System (FOAS) from 2015.

  It is difficult to see how all these programmes can be afforded, especially on timescales that suggest that all three could require substantial funding from the MoD in the latter part of this decade. One possibility might be to reduce the size of the second and third tranche of Typhoon orders, due to be signed in 2003 and 2007. The Typhoon is optimised for air superiority, and this role is now of lower priority, given that few if any potential opponents have capable modern air forces (in contrast to the 1980's when the Typhoon was first conceived). Alternatively, after taking account of both the contractual penalties involved and the technical possibilities, some planned Typhoons might be re-configured to replace Tornado GR4 in the offensive role (as is already planned in the Luftwaffe). The new capabilities demonstrated by unmanned air vehicles, most recently in Afghanistan, also open up new (and perhaps more economic) FOAS possibilities.

  Yet the extent of the potential "funding crisis" should not be overstated. Some analysts still assume that there is a rate of defence-specific inflation, like that for health or other public services, which is inevitably higher than general inflation; and that, as a consequence, more needs to be spent on defence in real terms every year in order to preserve existing capabilities. They point to the tendency of wages to rise faster than inflation, reflecting the need to recruit and retain an increasingly more professional workforce, as well as the historic tendency for the real unit costs of major weapon systems to greatly exceed the systems that they replace.[66]

  There is some evidence to suggest that the rate of equipment cost escalation may have slowed down since the pressure of the Cold War arms race was removed. More fundamentally, this argument understates both: (a) the extent to which new weapon systems and new "force multipliers" allow qualitative improvements in defence capability; and (b) the increased productivity levels that accompany higher real wages, allowing many tasks to be performed with fewer (but better paid) personnel than in the past. It is true that, if defence capability is measured solely in terms of numbers of personnel and front-line weapon systems, then it is almost certain to decline further over the next decade. But, as in most innovative and capital-intensive sectors of the civil economy, new technologies increasingly allow more defence capability to be provided with fewer people and platforms. Improved capabilities for logistic support and network-centric warfare, for example, are making it possible to provide the same front-line "punch" with a far smaller force package, including fewer personnel, than would previously have been required.


  The New Chapter makes a good case for continuing the process of reorienting the armed forces towards new missions and new priorities, building on the UK's comparative advantage as the European power best equipped for expeditionary operations. If the ambitious foreign policy goals which underpin it are to be realised, however, it will increase the UK's reliance on other countries (especially European allies) to provide the complementary capabilities (e.g. in peace support) which the UK will be less able to provide. Given the budgetary restraints under which the MoD must operate, moreover, the fulfilment of New Chapter priorities will soon require difficult decisions to be made to reduce the cost and size of lower-priority capabilities and programmes.

Table 1


Service personnel

  Note: Excludes spending on pensions, gendarmerie and carabinieri. The UK figure is for 2002-2003 on a near-cash DEL basis at an exchange rate of

1.58 = £1, and excludes notional pension contributions.



2001-02 Provisional outturn
£30.7 billion
2002-03 Plan
£29.3 billion
2003-04 Plan
£30.2 billion
2004-05 Plan
£30.2 billion
2005-06 Plan
£30.4 billion

  Source: HM Treasury, 2002 Spending Review, Annex A, Table A.4.

  Note: These figures are on a RAB basis and are therefore not comparable with those in Table 1.

60   The civilian personnel figure for 2002 includes 8,000 transferred to QinetiQ in 2001. Defence Statistics 2002, Table 2.1. Back

61   Defence Statistics 2002, Introduction to Chapter 2. Back

62   Defence Statistics 2002, Table 1.18. 2001 levels, calculated in 1998 prices and exchange rates, as published by the Stockholm International Peace Research Institute. Russia's place as the world's second largest spender is based on the questionable use of a "purchasing power parity" conversion factor for Russia alone. If market exchange rates are used, Russia spent $12.7 billion on defence, ranking it only 12th in the world (behind India). Back

63   Defence Statistics 2002, Table 1.2. Back

64   New Chapter, paragraph 41. Back

65   New Chapter, paragraph 91. Back

66   For an excellent exposition of this argument, see Michael Alexander and Timothy Garden, "The arithmetic of defence policy", International Affairs, 77, 3, July 2001, pp 509-530. Back

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