Spending Review 2010 - Treasury Contents


Written evidence submitted by Professor Trevor Taylor, Royal United Services Institute

  Given the Government's commitment to reduce significantly the budget deficit, the settlement for defence was as good as could have been expected. Spending is to be cut in real but not cash terms, the real cut is just 7.5% over the whole period and until 2013-14 the MoD can enjoy virtually level real expenditure.

  A key question is whether the combination of the Comprehensive Spending Review with the Strategic Defence and Security Review has generated an affordable defence programme for the foreseeable future. The pre-SDSR widely reported over-commitment in defence plans stemmed in part from reluctance by Labour Governments to abandon struggling projects and a readiness to defer many schemes, including plans for the introduction of the two aircraft carriers. However we should not overlook that the projects kept from before 1997 and those adopted later reflected the demands of an ambitious policy. This was set out in 1998 and increased in scope incrementally thereafter, under which UK forces were required to be ready to undertake a range of roles on the global stage. The Conservative-Liberal Government has to date been unwilling to scale back significantly the scope of this policy. To offer two illustrations, Foreign Secretary Hague said in Brussels on 15 October that the UK would remain a military power "of the first rank" with "flexible, highly deployable forces"[6], while the Prime Minister's Foreword to the SDSR document spoke of the UK's "global responsibilities and global ambition".

  It is hard to conclude that the programme adopted in the SDSR is affordable beyond 2015, indeed the Prime Minister as good as recognised this when he told the House of Commons of his "strong view that this structure will require year-on-year real-terms growth in the defence budget in the years beyond 2015". Even before then, there is risk in the MoD's many savings plans for the sale of assets and reductions in head counts, not least of more than a quarter of all civil servants posts. It may well be that Lord Levene can come up with changes to the MoD's organisation and ways of working that mean that many tasks can be abandoned. However, if the MoD's processes are not changed drastically, staff cuts will mean either that those remaining will be overwhelmed with work or that more tasks will be outsourced to the private sector. The private sector will expect to be paid. On the nuclear front, where it is clear that the MoD is struggling to conceive how the Trident submarine system could be replaced within the confines of even a defence budget that is level in real terms, the SDSR asserts the savings to be made from deferring warhead replacement programme and reducing the envisaged size of the missile compartment in the replacement submarines. However this is an area where there are many fixed costs.

  In making adjustments to the CSR for the next four years, the MoD faces the problem that, as the NAO has underlined[7], 75% of its budget next year is already committed and that share does not fall sharply in the following few years. In an era where the outsourcing of defence (and public sector) needs to the private sector is viewed as sensible, it must also be recognised that there are good reasons why long-term contracts with the private sector have often been concluded. The result today is that the MoD is being pressed into introduced cuts where they can be made rather than they need to be made, and the result will inevitably be a degree of defence incoherence: equipment being present but training money being absent and so on. This is most apparent with regard to maritime air but it must be expected to occur elsewhere. The MoD's press release on the SDSR implicitly accepts this when it notes that a review priority was "to make sure that we emerge with a coherent defence capability in 2020"[8] (this author's emphasis). The policy guidance means that the conduct of the Afghan operation (for which there is separate funding) and the maintenance of one high-readiness brigade will have a high claim on resources.

  The SDSR of 2010 should not be compared with the 1998 exercise SDR because the latter sought to identify and introduce important improvements to the MoD's structures and processes: the creation of the Defence Logistics Organisation, the Equipment Capability Customer and the Permanent Joint Headquarters were examples. The five months allotted to the SDSR process was insufficient for any similar effort, hence the separate treatment of a Defence Industry and Technology Policy and of the Defence Reform effort under Lord Levene.

  Clearly there is always potential for increased efficiency in an organization as large as the MoD, but some changes have significant implications and will take time to introduce. If it is concluded that there are too many officers at Lieutenant Colonel rank and above (and their air force and naval equivalents), cutting their number implies a different offering to officer recruits. They need to be told of reduced chances for promotion and even that they should not think of a career in uniform beyond the age of 48. Currently much internal defence effort goes on checking ("scrutinizing" and "assuring") the work of colleagues but significantly reducing this would require very extensive culture change and would not be risk-free. It would need to be accompanied by a significant training and education effort. The armed forces remain in essence three separate and, in the face of severe resource shortages, rival groups: increasing their integration could well save money but it would again mean cultural change and political resistance. Lord Levene's task is not straightforward.

  But even an impressively efficient MoD cannot be expected to generate broad-spectrum, flexible armed forces comparable in standard with those of the US, with the government having a significant degree of "operational sovereignty" over how and where they will be used, on a budget that accounts for a little over two per cent of GDP. Before too long the UK will need to change either the scope of its policy ambition or the money it makes available for the armed forces.

November 2010






6   "Britain will remain military power of `first rank', says William Hague", Daily Telegraph, 15 October 2010, http://www.telegraph.co.uk/news/newstopics/politics/defence/8066161/Britain-will-remain-military-power-of-first-rank-says-William-Hague.html Back

7   Report of the Comptroller & Auditor General, Strategic Financial Management of the Defence Budget, London, 21 July 2010, p.5, http://www.nao.org.uk/publications/1011/mod_financial_management.aspx. Back

8   Ministry of Defence, "Strategic Defence and Security review published: a Defence Policy and Business News article", 19 October 2010, http://www.mod.uk/DefenceInternet/DefenceNews/DefencePolicyAndBusiness/StrategicDefenceAnd SecurityReviewPublished.htm. Back


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2010
Prepared 26 November 2010