Public Administration CommitteeWritten evidence submitted by DefenceSynergia (ST 19)

RATIONALE FOR A UNITED KINGDOM DEFENCE INDUSTRIAL STRATEGY

Introduction

1. It has been cogently argued by the Chair of the Public Administration Select Committee (PASC), The Hon Bernard Jenkin MP, that Her Majesty’s Government (HMG) does not have an articulated Grand Strategy for the UK. Although the Prime Minister has been forward looking and energetic in setting-up the National Security Council (NSC) there is little evidence of a cohesive “overarching” strategic policy to inform principle business plans across the departmental divide and it is difficult to discern in current government structure a single individual or organisation responsible for formulating a cohesive UK Grand Strategy. Indeed, in evidence to the House of Commons Defence Select Committee, the Rt Hon Oliver Letwin MP, Minister of State for Policy in the Cabinet Office, indicated that his role was one of coordination between departments. Which leaves open the question, if not the Minister of State for Policy in the Cabinet Office, who, in government is responsible for formulating and setting UK Grand Strategy? In the important high profile area of government financial policy it would be good to know because several departments of state and the UK commercial sector would benefit from a cohesive approach.

Background

2. The UK is in the process of restoring its finances following the banking crisis which, some argue, along with excessive public spending, precipitated a major recession and burdened the economy with an unsustainable level of structural debt. In these circumstances the Coalition Government has rightly accorded the tackling of this debt crisis top priority. To achieve this, it is the stated policy of the Government to rebalance the economy away from the public and service to private sector using a manufacturing and export led recovery strategy to spearhead industrial growth. This policy makes economic sense, especially as it is essential to keep unemployment as low as possible in order to prevent welfare payments spiralling out of control thereby consuming tax receipts that could be better spent elsewhere stimulating growth. The positive economic multiplier effects of steady growth in GDP being accepted by most mainstream economists—national wealth and overall tax revenues rise and the need to borrow is offset providing the conditions for stable low interest rates to be maintained at levels that do not add excessively to the debt repayment burden.

3. One of the major contributors towards this aspiration for an export led growth strategy is the UK defence industry. For example, BGC Partners reported in September 2011 on the latest survey from the UK’s principle aerospace, defence and security trade organisation, A/D/S, which showed that employment in their area of UK defence generates around £22 billion in annual revenues for the nation directly employing more than 110,000 people. They went on to say: “Defence manufacturing is a hugely important business for the United Kingdom and it is something that despite the surge in growth of service industries over the past twenty years that we are still very good at. In fact we are the second largest exporter of defence equipment in the world and “Oxford Economics” estimates that including all those indirectly employed in the industry the total number defence related jobs total 314,000”. In 201011 defence business added a massive £35 billion of economic value to the UK as “high-tech” manufacturers, supported by supply chain industries, exported 22% of output—in 2006 this represented some £4.7bn out of a total turnover of £21.9bn—making the defence industrial complex 10th in a league table of 27 major UK exporting areas. However, viewed from the perspective of the past decade of limited funding for defence—as opposed to some very kind years for budgets like education and health—the position of UK defence manufacturing could have been much healthier.

4. Indeed, the Chairman of ADS made the following comments at the end of his response to a 2010 speech by the S of S for Defence. He said this: “Although defence should contribute to solving the current financial difficulties, Dr Fox would be justified in looking around the Cabinet table to challenge other departments to match the contribution to budget savings that defence has already made over the last two decades. Defence spending is half the percentage of Government spending and of GDP that it was twenty years ago. Other departments, where budgets have grown substantially over the same period, should be challenged in the same manner before more is asked of defence given that the demands on our Armed Forces exceed what was originally planned within the current budget”.

Main Discussion

5. The first priority of Government is defence of the realm and the instrument through which this policy is primarily guaranteed is the Armed Forces. It is accepted that the size. structure and composition of these forces will always be constrained by the available finance. However, this restriction can, has and must remain flexible in the face of Global uncertainties, most especially when the security and independence of the nation are directly threatened. What is less well articulated is the essential symbiotic role that British manufacturing plays in defending British strategic interests by ensuring domestic prosperity and international security. The production of UK patented Defence inventions, platforms and systems is the foundation of the strength and reputation of UK Defence industry and that reputation, hard won over the years, is in jeopardy through shrinkage of resources.

6. In a speech to the Royal United Services Institute (RUSI) on 9 December 2011, Philip Hammond, the Secretary of State for Defence (S of S) said “... that is why it is my firm belief that when the Government asks our Armed Forces to put themselves in danger in pursuit of our national security, it is our duty to make sure they have the proper support and the best tools we can give them to do the job. In Defence, we now have a clear programme to deliver on this pledge. Our future Defence will be secured by the partnerships we make and the platforms we invest in”. In other contemporary statements the S of S and Chief of the Defence Staff (CDS) have been quoted as saying, quite rightly, that sound government finances are a national strategic priority. The question is, how, in financially straightened times, to pay for the personnel and equipment identified by the S of S and as priorities in the Strategic Security and Defence Review (SDSR) and National Security Strategy (NSS)? The answer, often too hastily expressed by government sources, is “we would like to bolster defence but just can’t in the current financial climate”. So it would be helpful if the Government were to examine all options most especially those that offer strategic benefit to the country as a whole.

7. One such strategic partnership suggested by “Oxford Economics” postulates that an industrial/defence strategy that strengthens defence and commerce whilst at the same time providing impetus to assist the economy to recover should be considered by HMG. Albeit anathema to HM Treasury to increase spending in support of defence budget projects thereby stimulating other commercial areas in the UK. In fact when “Oxford Economics” collated the available data in respect of all UK’s major commercial and industrial areas they concluded that defence ranked third out of 27 in the UK behind publishing and machine tool manufacture. This is what “Oxford Economics” said: “The outcome...is that the strongest economic case (excluding capacity considerations) for increasing Government investment in order to stimulate the economy can be made for the publishing, machine tools and defence sectors, as these sectors have the three lowest average rankings. However, once capacity is taken into account, the case for supporting the defence sector is strengthened, as it has greater spare capacity than the other sectors.

8. These references to “Economic Stimulus” and “Capacity” are surely the crux of the issue as an industrial led economic recovery must, in part, provide short term returns for Government investment. In the case of the UK, Confederation of British Industry and EUROSTAT surveys on industrial trends confirm that the defence industries are running below capacity, the irregular nature of demand in the defence sector accustoming it to increasing production rapidly in order to meet client procurement targets. This assessment was confirmed in the “Oxford Economics” study which indicates that of the eleven sectors for which capacity data were available, the defence sector ranked third in the UK for spare capacity to allow for rapid expansion. Therefore, for UK, extra investment driven by the potential for rapid expansion would be the key to producing short term but sustainable growth in the economy, not least by increasing “skilled and semi-skilled” employment opportunities for directly and indirectly employed labour. “Oxford Economics” calculate that for every job directly created in the defence sector 1.6 jobs are created elsewhere and that for every £1 spent £2.7 accrue throughout the economy. All of which can fuel a virtuous economic circle as multipliers kick-in through reduced welfare payments and increased tax revenues from incomes, corporate taxation and boosted exports.

9. However, it is recognised that HMG must target and prioritise its limited financial resources in such a way that the burden of borrowing is kept within strictly defined fiscal limits. Therefore, spending to create growth in the economy—harvesting the proceeds of increased GDP—must be targeted at those industries identified by “Oxford Economics” with the best potential to realise short and medium term returns on investment. And, to be realistic, if borrowing is to be avoided, this entails the Treasury revisiting its collective spending priorities with a view to rebalancing spending between the less productive “cash consuming” areas of state in favour of those areas of state spending that support the “cash generating” sectors of the economy. The top 10 of these industries, according to an “Oxford Economics” report from 2009 are, in order of size by total turnover: Motor Vehicles employing 272,000 workers—Construction employing 2,356,000 workers—Pharmaceuticals employing 129,000 workers—Telecommunication employing 270,000 workers—Banking and Finance employing 559,000 workers—Manufacture of steel employing 106,000 workers—Manufacture of electrical components employing 50,000 workers—Manufacture of machine tools employing 30,000 workers—Manufacture of apparel employing 53,000 workers—and Defence directly employing 160,000 workers (another 145,000 in related defence supply chain activity). In 2006 only Pharmaceuticals on the list above invested more in R&D than the defence industries (£7.42 billion versus £2.39 billion) and only Motor Vehicles, Banking, Pharmaceuticals and Steel exports exceeded those of the defence industries (£22.10 billion, £18.38 billion, £14.59 billion, £12.64 billion and £4.70 respectively).

10. The “Oxford Economics” study does not specify what the negative effects on the economy and defence industries might be if the decision of the Treasury were to reduce MOD’s ability to invest in and sustain its current level of contract activity. However, we do not need to speculate too much. Evidence is already emerging that a loss of confidence is leading to redundancies, a reduction in R&D expenditure, erosion of reputation and the inexorable decline of areas of manufacturing and innovation as demonstrated by the case of BAE Systems Brough. The decision to scrap Harrier and move Hawk production overseas has caused a recessionary chain reaction in an area already acknowledged to be socially depressed. [No doubt similar issues will affect BAES Woodford with the cancellation of the Nimrod MRA4 project] At Brough over 800 skilled workers will be laid off as BAES restructure to account for the loss of revenue; national and local tax revenues will be lost to the economy and, because of contractual terms, the Treasury may be forced to pay circa £100m towards redundancy settlements.

11. The long term affect of underinvestment being to emasculate one of the UK’s most successful wealth and employment generating areas of expertise. As the economy recovers more slowly than need be—and recover it will—the British Armed Forces may have to look evermore to overseas companies for the hardware it requires with the knock-on consequences to balance of payments and employment prospects at home. Once the capacity, infrastructure and world leading expertise to build ships, aircraft and sophisticated weapons platforms is lost it will be difficult to regain in a meaningful time frame and—probably financially impossible.

Conclusion

12. The UK is experiencing a financial debt crisis and is emerging from recession more slowly than originally planned for. The Coalition Government has rightly set its first priority to reduce the debt burden but at the same time has indicated that it wishes private industry and commerce to lead the way to recovery through increased domestic and export growth. Nevertheless, the Treasury has taken the view that major cuts in public expenditure are still necessary as current rates of growth are insufficient in themselves to alleviate the debt burden within a reasonable time-frame.

13. To this end all departments of state (excepting overseas aid and the NHS) are being tasked to save up to 40% of their departmental budgets. This is a huge domestic challenge and one that has the potential to reduce growth in the economy unless counterbalanced by increased commercial investment. Within this stricture the MOD has been tasked to find 8% savings from financial year 201112 which, if the department had not been starved of funds for over a decade or more, might be portrayed by some as the MOD getting off lightly. However, the results of the SDSR, and NSS which were arguably not strategy led, have compounded the pressures on both the British armed forces and industry—to a great extent “situating the appreciation” and chancing the UK’s prosperity and security for incoherent and largely unnecessary short term fiscal reasoning.

14. That the MOD must put its own house in order and operate in the most cost effective way possible is not disputed, nor is the possibility that the UK Armed Forces must be restructured to meet the requirements of Future Force 2020 as identified in the SDSR. Only the lack of a strategic rationale for financing our armed forces and the essential industries that serve them is in doubt. The absence of a coherent UK Grand strategy and unclear lines of Government responsibility for formulating such a strategy needing urgent attention.

15. However, in one area of UK Strategy there is a way forward being proposed by those most closely associated with the economics of the defence industrial complex. They cogently argue that an articulated Industrial/Defence Strategy—part of a wider UK Grand Strategy—should form part of the mix that ensures the future security of the United Kingdom by promoting prosperity through a vibrant defence industrial complex that is able to directly support the wider UK economic recovery. This thesis postulates that if the British economy is to recover more rapidly than currently forecast and the Armed Forces are to be structured and equipped to meet the requirements of Future force 2020 then Government investment in the various indigenous defence support industries is not only vital to help kick-start economic recovery but to ensure British strategic security.

16. For HM Government, who have responsibility to ensure sound public finances, there is a clear imperative—“the first duty of any Government is defence of the realm and its people”. In this latter respect it is their duty to provide the country, not just with sound finances, as the S of S for Defence and more recently CDS have alluded, but also to strategically target and prioritise those public finances. Indeed, only today the Rt Hon Justine Greening, the Transport Secretary, despite continuing opposition, announced her decision to move ahead with the HS2 rail project, quoting the “Strategic importance” of the decision and economic multipliers that would accrue as part of her business case. As we have detailed above there is a strong evidentially based case for HMG to invest in the UK’s commercial (defence) sector too, thereby, not only ensuring that our armed forces are appropriately equipped and capable of deterring aggressors but providing a solid economic base from which national prosperity (another strategic interest) can grow.

17. Few would argue with the maxim that deterrence always costs far less in lives and treasure than war. Therefore, when HMG articulates UK Grand Strategy and then funds the ways and means to meet it, in part through a cohesive national Industrial/Defence Strategy, the government is acting wisely by aiding economic recovery to ensure peace and future prosperity across the realm. We would argue that no such Strategy exists and that, therefore, the PASC must use its good offices to press HMG to recognise the fact and change course.

January 2012

DEFENCESYNERGIA (DS) UK STRATEGIC CAPABILITIES PAPER

Summary

1. This paper draws largely upon written evidence to the House of Commons Defence Committee, “The Tipping Point” a paper by Bernard Jenkin MP and George Grant, a DS Future UK Strategy paper sent to the Chair of the Public Administration Select Committee in July 2011 and the National Security Strategy (NSS).

2. Based on the evidence DS has concluded that UK Grand Strategy has not been articulated in any meaningful sense by Her Majesty’s Government (HMG) and that, as a consequence, what we describe as UK’s “Capability Interests”, are being neglected in current UK security and defence planning. We contend that these interests arise out of a series of values that we believe to be non-negotiable but that must be articulated to inform the process of formulating Grand Strategy. Not least among these values is a fundamental belief in democracy and government accountability that allow freedom of speech for individuals under the rule of just laws. Conversely, opposing through diplomacy, aid and armed force dictatorial rule that threatens freedom of speech; the right to self determination or the implementation of policies that persecute and exploit the weak or lead to lawless activities in the air, on land and at sea.

3. These values in turn drive the need for a vibrant diplomatic service capable of promoting them within international institutions using soft, flexible and hard power. The latter aiming to provide a stable global market place that can guarantee continuity of imports, exports and information defended by balanced conventional and nuclear deterrent forces capable of independent action. All the above being maintained in a stable world order as defined under international law which guarantees that sovereignty will be respected and if necessary protected militarily under the principle of self defence or by aid to weaker societies or nations.

4. Therefore, DS contends that these “Capability Interests” are enabled by a combination of political, commercial, diplomatic and military means all of which are interlinked domestically and internationally. A stable global diplomatic environment is enhanced by British core values which are much admired internationally. In turn these shared values create the conditions essential for manufacturing and world trade to flourish and for UK to prosper. Hence DS contends that it is no giant leap to deduce that protection of these vital interests must form the core of UK strategic thinking. As history has consistently demonstrated, the UK’s primary “Capability Interest” has been maritime not continental: the principle vulnerability of the British Isles, whether threatened by Napoleon, The Kaiser, Hitler or a modern day equivalent, being resource starvation. Whilst direct invasion of the UK mainland may now seem a distant threat it is still an issue for overseas territories and in the recent past it was relative maritime strength that provided the essential enabler for UK to act in accordance with her innate values and re-establish democracy and the rule of international law in the Falklands, Sierra Leone et al.

Introduction

5. In “The Tipping Point” a paper written by Bernard Jenkin MP and George Grant—released through the Henry Jackson Society in July 2011—a central question was posed: “What is UK Grand Strategy?”. In engaging the issue a series of questions and possible answers were postulated as to how grand strategy, or the lack of it, impacted the UK’s long and short term security interests.

6. It is DS’s view that Jenkin/Grant rightly postulated, despite the government’s explicit statement in the NSS that UK would continue its traditional full world wide role, that the necessary support infrastructure prerequisites—financial, diplomatic and force—were not in-place. Indeed, Jenkin/Grant went further in assessing that the NSS was not of itself a “Grand Strategy” at all but one of a number of government inspired documents that misrepresented themselves, however innocently, as strategy: a level to which they aspire but fall short.

7. The Jenkin/Grant paper goes on to discuss the need for balanced and well financed diplomatic and armed services to ensure the security of future world wide UK interests. DS agrees with this premise but would go further than the scope of the paper may have allowed by defining these interests and detailing the capabilities that form UK’s strategic “Capability Interests”. Hence DS recognises that the aims and interests that inform UK Grand Strategy have not thus far been articulated coherently and cogently by Her Majesty’s Government (HMG) and we, therefore, offer our own assessment as a template.

8. To this end the strategic requirements used in this paper are based on the “DefenceSynergia Future UK Strategy” paper sent to the Chair of the Public Administration Select Committee (PASC) in early July 2011 and the NSS. However, these interests do not arise in isolation but out of a series of values that we believe to be non-negotiable.

The Values Which Underpin UK Grand Strategy

9. History and Culture No two nations are completely alike. How a nation appears to the rest of the world today results from generations of its history and cultural development, as influenced by such varied aspects as natural resources, industry, trade, wealth, politics and involvement in world affairs. Alliances are built around common interests (but not necessarily common cultures) and a desire to promote and defend these interests for the common good. But interests—national or personal—cannot be articulated unless there is an underpinning set of adjectival building blocks that describe their inherent characteristics. For this we need to dig into the nation’s character, into the warp and weft of society as built and passed down the generations and see what makes us all “tick”. What it all boils down to is simple: our values.

10. Whether these values are accepted by other people and other nations is of course open to question, but that is not the point. Values will (must) inherently be evident and widely understood without their needing to be explained in a detailed taxonomy. In the West we did not need to accept communism to understand that it was overwhelmingly not a framework of values in which we would choose to live; its very existence offended our values of democracy, freedom of speech, fairness and accountability for all under just law. Democratic and communist nations and alliances inherently understood the other’s position whilst mutually, inherently, disagreeing with the other’s values. Strategies emerged on both sides to manage, defend and promote these different value-sets in such forms as NATO and the Warsaw Pact alliance.

11. Our Values Is it, therefore, not obvious that in UK the overwhelming majority of the population ascribe to and support a fundamental belief in democracy and elected government accountability that allow freedom of speech for individuals and the media under the rule of just laws? Would many disagree that, by definition, this includes equality for all under the rule of law—allowing international free movement of people and trade and support for the wishes of others who strive to achieve or who already uphold these values? Not only are these values understood within UK, they are understood by people on the Cairo, Mumbai, Moscow and Beijing omnibuses; and those on the Cairo omnibus might very likely be interested to learn how they can achieve in a nascent democracy the values that we take for granted in ours.

12. Defending These Values It therefore follows that these values are defended by using diplomacy, aid and armed force to deter dictatorial rule that threatens freedom of speech; the right to self determination or free trade through the implementation of policy or laws that persecute and exploit the weak or lead to threats or lawless activities in the air, on land and at sea.

13. The capability mix required to defend established values To achieve, promote and defend these values the UK must be capable of maintaining global reach using soft, flexible or hard power through a strong and visible diplomatic corps that is supported by cohesive, capable and credible armed forces all working to a clear UK Plc strategy. Correctly structured these instruments would in turn lay the foundation for the UK to undertake diplomatic and military action alone or with allies in pursuit of core values. These activities may include military assistance or aid—internationally or domestically—to ensure the rule of law, relieve suffering, to support diplomacy, trade and international regulation via treaty organisations such as NATO, EU, UN, IMO etc—extolling these values within international institutions and communicating them world wide through a free press and other media outlets.

The UK’s “Capability Interests”

14. This combination of values, interests and capability requirements would coalesce into 5 “Capability Interests” that could form the core drivers for UK Grand Strategy as follows:

(a)A strong vibrant diplomatic service capable of influence and able to promote our values and interests internationally using soft, flexible and hard power.

(b)Coherent supportive government departments striving for agreed British values that are communicated, understood and supported by the majority of the UK electorate.

(c)A stable global market place based on internationally agreed open trade that can guarantee the security of supply of raw materials, food, energy, technology and information.

(d)Secure and defensible borders and trade routes maintained through alliances backed up by well balanced conventional and nuclear deterrent forces capable of independent action.

(e)The maintenance of a stable world order as defined by international treaty and law which guarantees that established sovereign borders will be respected and, if necessary, protected militarily under the principle of self defence.

Supporting Criteria

15. UK’s Traditional Respected Position in World Affairs. The UK is a respected key international player and must continue to engage at every level of international diplomacy—UN, NATO, EU et al through a strengthened diplomatic service. The UK’s influence—which is much admired—has been earned over centuries and must not be allowed to wane. Whilst this may be a source of chagrin to some and there may be a few nations with similar economic clout, it must be remembered that outside the USA, only the UK and France are long established stable industrialised democracies with permanent status on the Security Council of the UN. Like it or not Russia and China still have some way to go before establishing international trust.

16. UK’s Voice in World Affairs. The UK’s close relationship with the USA must continue to provide a balancing voice in major international affairs; to provide an interface with the EU and Commonwealth (27 EU and 54 Commonwealth countries representing one third of the world’s population) and to counterbalance any future transfer of power from West to East. Therefore, to be credible this implies that the UK’s independent nuclear deterrent must be retained alongside strong conventional forces that are supplied by a vibrant and robust R&D intensive industrial base supported over well protected lines of communication. As a long term special partner of the US in the fields of intelligence and defence cooperation the UK must ensure that its own capabilities are able to both integrate and reciprocate on a military and civil level or the relationship may falter.

17. The Diplomatic Services UK Requires. The UK must reinforce its world wide diplomatic presence through its embassies, diplomatic corps, military and commercial attaches. A key role, here, will be to argue for international law to be revised in respect of definitions of combatants, rules of engagement and jurisdiction in respect of terrorists and pirates. We must demonstrate the need for robust international rules covering prosecution and detention of non-state actors in order to deny them safe havens or protection by proxy-nations. With the threat to “cyberspace” security increasing exponentially it will be essential to define the legal nature of such threats or attacks especially in relation to the current law of armed conflict and the status of nations and individuals who sponsor or carry out “cyber-attacks”. As the UK has signed up to the jurisdiction of the International Criminal Court (ICC) and UN Charter, the legal position of the government concerning regime change may be ambiguous. As enforcement of core national values may overlap with the concept of regime change (currently in Libya) the legal position requires qualifying if future humanitarian and stabilisation operations are not to be constrained allowing dictators to hide behind quasi-legal shields.

18. UK’s Vibrant Domestic and International Industrial Status. For the UK to prosper she must nurture and protect a strong and vibrant domestic high-technology industrial base capable of exporting and importing world wide without interference. These industries and the general public at large rely upon imports of food, raw materials, oils, gas and minerals all of which are vulnerable to interruption of supply as the UK is not self sustaining and does not have more than a few weeks storage on average. As populations grow and climate change takes effect the severity of these issues and the problems they engender can only worsen—water and food riots, disputes over exploration rights, border incursions, piracy, human trafficking, gun running and terrorism are already on the increase. State sponsored aggression against resource rich neighbours cannot be ruled out.

19. How are UK’s “Capability Interests” to be Enforced? As the criteria points to a “World Wide” UK “Grand Strategy” that maintains a traditional world leadership role for the UK, clearly a “maritime” not “continental” (military) strategy is required to defend our “Capability Interests”. [This view (albeit it USA focussed) is independently articulated by Robert Kaplan (a member of the US Defense Policy Board & senior fellow at the Center for a New American Security) in his recent paper entitled “The South China Sea Is the Future of Conflict”.] Which must drive the need for the current mix of forces to be strategically rebalanced as future operations will most likely be maritime-centric and, other than for defence of Overseas Territories (OT’s), as part of an alliance that is most likely to be US led.

20. The importance of this emphasis on alliances is that the military effort [and influence] provided and accrued by nations is reflected in the capabilities they are able contribute. In this respect—with the notable exception of the USA which has “full-spectrum-capability”—NATO and EU partners have a collective abundance of infantry, armour and combat air but a paucity of intelligence, reconnaissance, air refuelling, strategic air and maritime lift, submarine and carrier air capability. Therefore, in multi-national-allied-operations the UK’s willingness to contribute a disproportionately high level of ground and air forces is a consequence of the available resources linked to a natural desire to show commitment—not necessarily to meet operational need. Hence the forces of the USA (most particularly maritime) are all too often used as the default setting while NATO and coalition allies “fill-in” for political rather than sound military reasons.

21. Whilst this drive to show commitment in international operations may be laudable at the diplomatic and political level it can artificially distort expectations not least in respect of the UK’s national “Capability Interests”. The latter, driven by economic factors, skewing strategic policy thinking, as in the recent SDSR, that left the UK with fewer (in some cases none ) of the scarce capabilities mentioned above—carrier air, long range maritime air, airborne sensor, air refuelling and strategic transport capability.

22. Determining The UK’s Prime Capability Interest Having established that there are five UK “Capability Interests” enabled by political, commercial, diplomatic and military instruments, the UK’s Prime “Capability Interest” must be determined. However, these enablers must also be based on a clear sense of national direction which is centred around the Nations core values. Arguably these values are expressed through the will, aspirations and productivity of the people when exercising their democratic choices which empower the executive to govern and protect through funded social, health, security and defence policies.

23. Clearly these national core values and aspirations are interlinked—domestically and internationally—and, therefore, a “Grand Strategy” must consider the inter-relationships that exist between the people, industry, body politic, diplomacy and national security. Underpinning this is UK’s involvement in international institutions that should provide the peaceful environment essential for prosperity through self determination and free trade. These latter conditions lay the ground for a nation to thrive domestically through manufacturing and trade conducted under the protection of strong security services and armed forces.

24. Therefore, as the UK has chosen to meet these social choices through a domestic social welfare system this must also be funded by borrowing and taxation. In this latter respect two of the largest providers of taxable income in the UK are the private finance and industrial sectors which rely for profitability upon unhindered domestic and global trade and the secure exchange of data. Hence this need for profitability [government income through taxation] dictates that UK’s prime “Capability Interest” is secure lines of communication (trade routes) that ensure prosperity through unimpeded economic growth.

25. A Combined UK Resilience Response Existential threats have the capability to rapidly affect the nations ability to function, therefore, DS believes that UK national security capability interests would be enhanced by integrating intelligence, police, diplomatic, commercial and armed forces input to meet UK’s strategic aims. This multi-departmental approach suggests that a National framework, designed to offer a single point of focus, must take the lead in meeting international and domestic emergencies by pooling intelligence, expertise and resources as required. Whether this is achieved through the NSC or an established head quarters, such as PJHQ, is a matter for discussion—but it must be considered a matter of urgency.

26. The Armed Forces to Meet Capability Interests International relations supporting trade being the primary driver of UK Grand Strategy the British armed forces and the consequent diplomatic thrust must be Maritime and Intelligence focussed—army and RAF capability being rebalanced to support this doctrine. Protection of free world trade, UK trade routes, storage, manufacturing infrastructure, ports, air and cyberspace are the key security priorities that must underpin UK defence strategy. Correctly structured these rebalanced forces would form the core of a UK expeditionary capability able to deter aggressors, respond to overseas threats and provide resources for humanitarian operations that can operate either alone or as part of a coalition. However, the term “Maritime-Focussed” does not infer RN dominance within the MoD but a doctrine that acknowledges the maritime realities of a “Capability Interest” based defence policy. To this end the need for the army and RAF to embrace the doctrine of a strategic maritime policy is paramount but not and end in itself—essential ground and air components that provide non-maritime command and control, intelligence and combat capabilities to meet NSS assumptions must also be maintained.

27. However, the government’s post-SDSR 2010 plans—based around “Force 2020”—are a future aspiration and it is not yet clear whether the funding to achieve this plan will be made available. In any event there is already a serious gap developing in UK maritime, air support and intelligence gathering capability. Whilst it has been reported that the army will reduce in size to 84,000 after the Afghanistan operation ends and the RAF will reduce to 33,000, the RN is being reduced at the same time—to circa 30,000 including 7,000 Royal Marines. [The latter often being employed in lieu of army units.] Counterbalancing through the TA and reserve forces (30,000 army, 3,100 RN and 1,800 RAF) seeming to favour a predictably army-centric view given that these changes to British force structure are being implemented without a clear national “Grand Strategy” from which a cohesive “security doctrine” can be formulated to guide and direct the planners.

Concluding Recommendation

28. DefenceSynergia concludes that Bernard Jenkin and George Grant are correct and that a UK Grand Strategy has not thus far been articulated by HMG. DS also supports Robert Kaplan in his thesis that future strategy for the Western powers (we say UK included) must be maritime centric. However, SDSR 2010 and the NSS have not fully articulated the overarching strategy required to meet these challenges. This in turn has placed government planners (not least alone the MOD) in the position of having to decide the scope of spending without a clear sense of direction. An impossible position. Therefore, we strongly recommend that HMG revisits this crucial area, the lack of which prevents all departments of state from formulating cost-effective joined-up-government.

This paper has set out some of the ingredients that should make up the UK Strategy document that will guide and ensure coherence for Financial, Defence & Security plans. This will be particularly useful to the National Security Council. The sooner that this work is concluded the more clarity the rest of Government will have.

September 2011

DS PAPER—THE LESSON OF HISTORY & UK STRATEGY IN 2012

The Lesson of History

1. “History provides many examples of a British Army being asked to operate under appalling handicaps by the politicians responsible for British policy, but I doubted that the British Army had ever found itself in a graver position than that in which the governments of the last twenty years had placed it.” This statement was made on the 15 May 1940 by Major General Noel Mason-Macfarlane shortly before Operation Dynamo, the evacuation of the British Expeditionary Force (BEF) from France, had been authorised. Proving, if proof were necessary, that leaders rarely seem to learn from past mistakes. In 2012 can our Government honestly say that it has learnt the lesson of history?

2. The critically acclaimed writer and historian, Andrew Roberts, has postulated that the defeat of Germany in 1945 was due to strong leadership by Roosevelt, Churchill and Stalin who, despite undoubted difficulties and widely differing political view points, managed to agree and execute a successful joint Grand Strategy. Nazi Germany on the other hand, in the control of Hitler, an authoritarian leader with dubious strategic acumen, failed to maintain its war aims. As a consequence the German armed forces, prematurely committed to combat in the West, failed to subdue Great Britain and following the invasion of Soviet Russia were forced into a two front war that many senior German commanders believed to be strategically unsound. This failure to grasp the strategic necessities was further and fatally compounded when Japan (an axis ally), without consultation or any joint strategic planning, attacked Pearl Harbor in December 1941, not only forcing the USA to end its stance of neutrality but directly leading to an allied “Germany First” strategy when Hitler, in a gesture of strategic madness, declared war on America.

3. At a stroke British (Churchill’s) principal war aim post 1940—to survive long enough to gather strength and to draw a reluctant USA into the war as an ally—had been achieved. Because of flawed strategic logic (arguably a complete lack of a joint Grand Strategy) the Axis Powers found themselves, in December 1941, not facing a weakened isolated British nation but the combined manpower, industrial and military strength of The British Empire, The Soviet Union and the United States of America.

4. However, as unprepared as the BEF was in 1940 to meet the challenge of fighting a mobile ground/air war and despite the heartfelt condemnation of our politicians by Maj Gen Mason-Macfarlane in respect of the neglect of the British army to that time, Britain was not totally unprepared. The Royal Navy (RN) and Royal Air Force (RAF) had, since the ridiculously flawed “10 year rule” strategy was abandoned, begun to modernise and grow in strength. As a consequence the UK mainland was protected from direct invasion and the maritime supply routes (the strategic arteries that provided the life blood of the nation) were defended. Therefore, largely because of a belated strategic reappraisal Great Britain remained open for business, providing a base for training and rearming the British Army and ultimately becoming the launch hub for the Allies to totally defeat the Axis enemy in the West in 1945. But at what cost?

The Cost of a Flawed Strategy

5. When, on 8 May 1945 Winston Churchill told the nation that “this is your victory” he may well have had in mind that alongside the British, Commonwealth and Allied forces stood the combined population, industry and workforce of those nations—not least the British. With some 45% of UK GDP being devoted to defence the scale of the British industrial contribution and the population’s commitment to the war effort becomes clear. However, the most startling figure to emerge from that period is that of net national debt. By 1945 Great Britain owed a staggering 238% of GDP having entered world war two still paying for world war one and owing 110% of GDP in 1940. The nation had achieved its primary strategic objective—to survive and win—but the long term financial cost was enormous and it was not until 1992 that national debt was reduced back to the pre 1914 levels of circa 25%.

6. It may seem churlish to suggest that a winning strategy was flawed when a brave and great nation was prepared to stand alone to defend its freedom, whatever the cost. However, as strategy is a living concept requiring a continuous, honest and flexible evaluation, not a simple standard set in stone, the dynamics of past decisions have the ability to influence present and future events. Hence, for example, the “10 year rule” in UK and the “Washington Treaty” more widely not only allowed unscrupulous enemies to rearm and build treaty busting war ships but provided the flawed rationale for Western cash strapped governments to put off or ignore difficult defence spending decisions. Whether an earlier strategic adjustment to British foreign policy and defence spending plans would have been a sufficient deterrent to Hitler’s and Mussolini’s ambitions is now an historic conundrum, however, arguably, the British Forces would have been better equipped and prepared for the onslaught, with, very probably, a reduction of the nation’s losses in blood and treasure.

UK Strategy in 2012

7. Whilst few would argue that today’s strategic thinking should be predicated entirely upon the past many would agree that the lesson of history provides a useful guide for future policy. Therefore, it is essential to draw upon those principal strategic nodal points that have now established legitimacy and that remain constant for the UK. These are, it may be averred, our national values of widely admired democratic institutions underpinned by the enforcement of international and domestic law providing economic well being and security for the people. Indeed, British values as exercised through membership of international institutions such as the UN, NATO, EU, G8 et al have largely driven British diplomatic and defence operations since the end of WW2. In recent decades, these initiatives have been almost entirely in support of the primacy of international law and the provision of humanitarian aid. In all these activities, there has been a recognition of the “National Interest”, although—it has been claimed—it has been at risk of being overlooked. Recent developments, particularly the deployment of a UK veto in Brussels, have served to underpin a general feeling that the exercise of some European Union powers is unwelcome. Their impact has been declared to be authoritarian in style, compliance has been expensive, and certain measure have been assessed as simply discriminatory against a UK which is the second largest net contributor after Germany.

8. However, as much as shared national values may provide the principle to underpin UK Grand Strategy these values do not in themselves help to quantify or codify policy and resources required for its execution. For this, an articulated and dynamic appraisal must be conducted, both of British interests and the ways and means of maintaining them. In this regard, modern UK Grand Strategy falls short, being based not on a single coherent policy document but on a plethora of uncoordinated departmental business plans, policy objectives and the overarching “Coalition Agreement”. Even the much discussed National Security Strategy (NSS) is deficient, having defence at its core but in isolation from most other government departments and British industry, and with only passing or generalised references to foreign policy and international development. The National Security Council (NSC), a body in which logically the authorship of such Grand Strategy might lie, is currently too small, limited in scope and, arguably, because of its terms of reference, little more than an FCO/MOD COBRA.

9. Therefore, the importance of inter-departmental and commercial cooperation in the formulation of UK Grand Strategy can never be overstated. It is the bedrock, without which a cohesive national policy for security and prosperity cannot properly exist. This is not just a case of deciding what infrastructure or which armed service, industry, or commercial enterprise is technically strategic to UK’s interests (important as this is) but to what extent and in what direction public spending can be used for the strategic good. When, for example, public spending in essential defence or security areas provides strong strategically necessary defences, whilst at the same time preserving manufacturing skills base, this could be said to represent an immediate and long term UK Strategic interest. Whereas, UK tax revenues being spent to provide jobs abroad, thus losing national skills base and industrial capability can rarely, if ever, be in UK’s best interests.

10. Compounding the problem is a lack of clarity or definition as to what a “UK Grand Strategy” actually means, is or should be. To the government’s own minister for policy in the Cabinet Office it seems to mean coordination between departments of state and the NSC. For the Prime Minister, in his reply to the Chair of the House of Commons Public Administration Select Committee on the topic of “who does Grand Strategy”, it is encapsulated in a combination of the NSS, departmental business plans and the “Coalition Agreement”. Whilst there are those in senior military positions and within academia who understand the difference between operational or departmental strategy with a small s and a defined Grand Strategy with a capital S confusion elsewhere is endemic. Indeed, despite the UK having had in the past a single senior civil servant responsible for “Imperial Strategy” the post has long gone and with it the essential cohesion, advice and professional understanding that the incumbent brought to the position.

Recommendation

11. Therefore, DefenceSynergia recommends that for the UK to have an articulate, meaningful, and definitive but dynamic Grand Strategy, coordinated across departmental boundaries, several hitherto unfinished items of business must be concluded:

(a)The need for an articulated UK Grand Strategy must be acknowledged by HMG.

(b)A senior government minister and civil servant to be appointed to lead on the issue and to co-chair a government appointed body (UK Strategy Directorate) within the Cabinet Office. This to act as an executive arm, reporting to the NSC, with active policy control for UK Grand Strategy and supporting documentation.

(c)A joint departmental committee (diplomatic, academic, military, security and industrial support) to be established to initiate the UK Grand Strategy document and to provide updated input and future advice to the NSC through the UK Strategy Directorate.

(d)All Government departments to be represented and the resulting document to be incorporated as the “highest” policy statement within departmental policy documents. [Within MOD, to have primacy in all NSS & SDSR decisions.]

(f)The NSC to be accountable for provision of monthly progress reports to the Prime Minister leading up to the publication of UK Grand Strategy. Thereafter, the NSC, through the UK Strategy Directorate, to be responsible to the PM for maintaining the UK Grand Strategy document and briefing ministers as concepts and policy develop.

12. These recommendations are put before the House of Commons Public Administration Select Committee (PASC) as evidence in support of earlier work by the PASC and for onward communication as the committee Chair disposes.

This is a DefenceSynergia paper written by Dave Tisdale and Christopher Samuel.

January 2012

Prepared 20th April 2012