Beyond 2 per cent: A preliminary report on the Modernising Defence Programme Contents

2The Modernising Defence Programme

Background

5.One of the first acts of the Coalition Government in 2010 was to reform the staff and structure of the national security apparatus which existed at the centre of government by establishing a new National Security Council (NSC). The stated aim of the NSC was to:

co-ordinate responses to the dangers we face, integrating at the highest level the work of the foreign, defence, home, energy and international development departments, and all other arms of government contributing to national security.2

6.In line with this more holistic approach, it was decided that rather than defence policy reviews being conducted in isolation by the Ministry of Defence (MoD), a more wide-ranging review of national security policy should be undertaken across government. The end result was the publication of both a new National Security Strategy (NSS)3 and Strategic Defence and Security Review (SDSR)4 in October 2010. These two documents committed the Government to publishing a new NSS and SDSR every five years. Adhering to this five-year review cycle, a single, combined NSS/SDSR was published in November 2015,5 with the expectation that the five-year cycle of reviews would continue and the next review would take place in 2020.

7.Fewer than 18 months after the publication of 2015 SDSR, reports began emerging that the possibility of re-opening or ‘refreshing’ the review was being considered.6 It is clear from the Ministry of Defence’s written evidence to us that, at some point between April and June 2017, Defence Ministers had come to the view that, although the fundamentals of the 2015 SDSR remained sound, “a significant programme of work would be required through the second half of 2017” to address the strategic and financial challenges that Defence was facing.7 A number of other areas of national security policy were engaged in a period of review or annual evaluation at the same time. Following the 2017 General Election, Ministers and officials began openly to discuss the possibility of a ‘refresh’ of the SDSR.8 This was implemented in the form of the National Security Capability Review (NSCR), which was formally announced on 20 July 2017—via a Cabinet Office press release—on the last day that the House of Commons was sitting prior to rising for the summer recess.9

8.Firm details on the form, process and timescale of the NSCR were slow to emerge. The press release of 20 July established that the NSCR would consist of a number of individual ‘strands’ of work taken forward by cross-departmental teams and led from the Cabinet Office by the National Security Adviser. The review would include an:

examination of the policy and plans which support implementation of the national security strategy, and help to ensure that the UK’s investment in national security capabilities is as joined-up, effective and efficient as possible, to address current national security challenges.10

9.The MoD’s written evidence goes into some detail on how the review process proceeded within the Department as part of the NSCR through the latter half of 2017: a process of global strategic analysis followed by the establishment of a planning framework, leading into policy review and the presentation of a range of options on force structure and capability by the Service Commands. The evidence then describes that, as work proceeded on the NSCR, a major tension began to emerge between its headline goals and its ‘fiscally neutral’ character (this is discussed in more detail below at paragraph 37). This coincided with the appointment of Rt Hon Gavin Williamson MP as Defence Secretary in November, who agreed that further work needed to be done to resolve this tension.11 From this, reports began to emerge towards the end of 2017 that the MoD was seeking for the defence strand to be extracted from the NSCR and treated separately.12 Giving evidence to us in February 2018, the Defence Secretary confirmed that discussions on this subject began with the Prime Minister and the Chancellor of the Exchequer before Christmas 2017.13

10.In January 2018, the NSC agreed that the Defence strand of the NSCR should be separated, moved from the supervision of the Cabinet Office to the MoD, and expanded in scope to review a wider range of areas of defence policy over a longer time period. This autonomous defence review process would become the Modernising Defence Programme (MDP). The MDP was first revealed at a 10 Downing Street press briefing on 23 January14 and was mentioned by the Prime Minister at Prime Minister’s Questions the following day.15 It was only on 25 January that the Defence Secretary made a full statement to the House announcing the MDP and setting out its objectives.16 He confirmed that the MDP would have four strands: MoD organisation and operation; efficiency and business modernisation; commercial and industrial approach; and defence capability and outputs. This represents a much more wide-ranging review of Defence than was being undertaken by the NSCR, seeking to explore how the management of defence business can be conducted more effectively, cost efficiently and collaboratively, rather than examining defence capability in isolation. Crucially, and in contrast to the NSCR, the MDP was not a ‘fiscally neutral’ exercise.

11.The NSCR was published on 28 March 2018.17 A central feature of the document was the announcement of a new national security doctrine—the Fusion Doctrine—which aims at strengthening the UK’s collective approach to national security. The document’s defence chapter reaffirms that the fundamentals of defence strategy laid out in the 2015 SDSR remain sound and that the major elements of Joint Force 2025 will enable the UK to meet the criteria laid out in the SDSR.18 It explains the rationale of the MDP and describes its aim to identify “how we can deliver better military capability and better value for money to make a full and enduringly sustainable contribution to national security and prosperity”.19 The remainder of the chapter provides a detailed account of progress that has been made in a range of areas of defence policy since 2015, but provides no new major announcements on defence capability.

Rationale

12.The departure from the newly established cycle of five-yearly SDSRs raises the question of whether it was justified. In oral evidence to us in October 2017, while Defence was still part of the NSCR process, the then Defence Secretary, Rt Hon Sir Michael Fallon MP, identified Defence’s two principal headline goals in the NSCR, which have continued to inform its approach into the MDP:20

Intensification of threat

13.The NSCR repeated the four main challenges that were identified in the 2015 SDSR as those likely to drive the UK’s security priorities over the coming decade:

To these the NSCR added two additional challenges:

14.Intensification of threat in each of these areas has an impact on Defence. The Armed Forces have led the UK’s efforts in tackling international terrorism and extremism overseas. The fight against DAESH continues in Iraq and Syria through Operation SHADER. Contingents of British military and civilian personnel are deployed throughout the Middle East, Africa and elsewhere to support security and stabilisation operations.23 The NSCR also recalls that with five terrorist attacks in London and Manchester in 2017, resulting in 36 deaths and many more injuries, the threat from terrorism remains high. Armed Forces personnel were deployed through Operation TEMPERER in response to the Manchester and Parsons Green attacks and up to 10,000 Armed Forces personnel remain at staggered readiness to support the police and other security services in counter terrorism operations.24 Specialists from the Armed Forces also played a central role in the decontamination operation following the nerve agent attack in Salisbury earlier this year. The impact of technology is of fundamental importance. Developments in cyber and other disruptive technologies have opened up entirely new domains of warfare and have the potential to transform the future character of conflict. Implications of these technological changes for Defence will be touched on in the next chapter.

15.The resurgence of state-based threats however is the most direct and immediate concern Defence faces, and this has been reflected in the Government’s view of the priority of threats. In a speech made in January, General Sir Nicholas Carter, the then Chief of the General Staff, now Chief of the Defence Staff said, after addressing threats from international terrorism and from large-scale population movement:

But, I think it is the rising threat from states and the consequences that stem from this for the military that is of most immediate concern. And particularly to me as the head of the Army.25

16.In oral evidence in February, the Defence Secretary Rt Hon Gavin Williamson MP reflected on how the Government’s view of the significance of state-based threats had begun to change:

If we go back to 2010 and the review that was conducted then—you will probably remember this—I think it was stated that there were seen to be no state-based threats. The world has changed so rapidly since then and we have to adapt to that change.26

[ … ]

I think the world got caught napping, in terms of the rise of those state-based threats. We emerged from the Cold War with the belief that things were going to get better and better. You had one superpower that strode across the world, and you didn’t really have any challenge to that. We are seeing that change quite dramatically.27

The Secretary of State then indicated that this had brought about a shift in strategic priorities:

We would highlight state-based threats and the speed at which they were escalating as the top priority, but, within a hair, that is followed by the terrorism threat, which comes straight after that. The thing you are seeing is a convergence of how state-based threats are using terrorist threats to bring instability to other countries. The days of where things were more black and white are sadly gone.28

The Secretary of State also confirmed that this shift would have knock-on effects in terms of force structure and readiness for the Armed Forces.29 In a later oral evidence session, the National Security Adviser, Sir Mark Sedwill, did not characterise this change of emphasis as a fundamental shift, as state-based threats had always been part of strategic planning in earlier reviews. However, he agreed with the Defence Secretary’s analysis about how the threat had developed and how it was of particular significance to Defence:

The Defence Secretary is right, and I think that is particularly right for defence. Of the national security capabilities, defence has an important role to play, as it has, in dealing with non-state threats, but the fundamentals of defence are about a state-based threat—the deterrent, the big strategic conventional capabilities, the carriers, the air group and so on.30

17.Russia is central to the discussion of resurgent state-based threats. The 2015 SDSR described Russia as having become more “aggressive, authoritarian and nationalist”.31 The NSCR, which was published shortly after the Salisbury nerve agent attack, is more direct in describing “a well-established pattern of Russian State aggression”, citing Russia’s illegal annexation of Crimea alongside its fomentation of conflict in other regions around its borders, its involvement in supporting the Assad regime in Syria, its repeated violations of the airspace of its neighbours and a sustained campaign of cyber espionage and disruption, which has included attempts at subverting democratic elections in other states.32 This reflects the Government’s increasingly uncompromising stance in challenging Russian behaviour, which has been articulated by several senior Ministers, including the Prime Minister in her Mansion House speech of 201733 and appearances in the House of Commons following the Salisbury attack.34

18.Our predecessor Committee published a detailed report on the defence and security implications of a resurgent Russia in July 2016.35 As part of the MDP inquiry, we have taken evidence from the Ambassadors of Estonia, Latvia and Lithuania on the security challenges posed by Russia from the perspective of the Baltic States. The Ambassadors discussed a range of challenges including the growing military presence on their borders,36 cyber-attacks,37 attempts to influence Russian-speaking minorities,38 disinformation campaigns,39 and energy security concerns.40 The NATO initiatives active in the region, including Enhanced Forward Presence, were seen to be vital in providing strong deterrence.41 We took further evidence from a panel of experts which discussed a number of shortfalls in UK and NATO capability which might be exploited by Russia, such as ground-based artillery, electronic warfare, missile technology and military space technology.42

19.The state-based threat does not emanate from Russia alone. Alongside Russia, the NSCR singles out Iran and North Korea.43 When asked about the threat from Iran the Defence Secretary replied:

As a state, it certainly is [a threat]. In its ability to use terrorism and other means of causing instability, danger and threats to people’s national security, it is very much engaged in those different avenues.44

We have recently published a report on North Korea which lays out a range of nuclear, conventional and other threats posed by the DPRK.45

20.An omission of note in the NSCR is the lack of discussion about future challenges which might be posed by China. The United States has said in its recent National Security and National Defence Strategies that China is a revisionist power on a par with Russia and is seeking to build up its military, diplomatic and economic influence to achieve regional hegemony and, in the longer term, global pre-eminence.46 By contrast, the only specific mention of China in the NSCR is to confirm the establishment of “a global comprehensive strategic partnership” with China—an ambition laid down in the 2015 SDSR. A more realistic note was struck by the First Sea Lord in a recent speech, who mentioned the potential for state-on-state rivalry in the South China Sea. He also highlighted the capability of China’s rapidly growing Navy, which in a few years will be in a position to challenge the US Navy and may result in new threats to freedom of navigation.47

21.In recognising this changing threat and acting upon it, the Government also has an opportunity to change a trend in defence reviews that has been observed in written evidence by Vice Admiral (Retd) Sir Jeremy Blackham, a former Deputy Chief of Defence Staff (Defence Capability):

The most striking feature of recent (if not most in the modern era) defence reviews, has been the constant reiteration by government that the world is an increasingly dangerous place and getting more so. This is palpably and demonstrably true, yet these protestations have been continually accompanied by reductions in our defence capability on a more or less arbitrary basis with little convincing evidence that this is either safe or wise.48

Budgetary pressures in Defence

22.The goal for all NATO members to spend a minimum of 2% of their GDP on Defence by 2024 was re-affirmed at the 2014 Wales Summit.49 The Government committed the UK to continuing to meet this minimum in the July 2015 Budget, alongside the current funding formula which guarantees a real terms increase of 0.5% a year in defence expenditure until 2020/21.50 In giving evidence to the Joint Committee on the National Security Strategy (JCNSS) in December 2017, the National Security Adviser, recalling his previous role as Permanent Secretary at the Home Office, seemed to regard this as a comparatively generous settlement:

… having run a big department and having dealt with an awful lot of budgetary pressures in that department … the Government can do a great deal to achieve a greater impact with the inputs we have available to us, particularly if we pull them together and use them in a coherent way.51

23.Even within this modestly rising budget, it is clear that the MoD’s finances are on an unsustainable footing. There is a widespread view that the 2015 SDSR was insufficiently funded. As General Sir Richard Barrons, a former Commander, Joint Forces Command, told us in November 2017:

And the context of the current review (the NSCR): we are having this because everybody knows that the defence programme in its current form was not funded.52

Professor Andrew Dorman of King’s College London also described in oral evidence how a “financial hole was built in to the 2015 review”.53

24.The largest area of long-term uncertainty comes from the MoD’s Equipment Plan, which has a total budget of £179.6 billion over ten years.54 In 2016/17 the Department spent 43% of its budget on equipment procurement and support.55 The MoD’s 2017 financial statement on the Equipment Plan recognised that, as it then stood, the Plan “contains a high level of financial risk and an imbalance between cost and budget”.56 The National Audit Office’s 2017 report on the Plan was more direct, concluding that it was simply “not affordable”. The NAO found an affordability gap of at least £4.9 billion over the next decade, and estimated that in the worst-case scenario this gap could be as large as £20.8 billion. The report also found a number of significant financial risks within the Plan. The extent of purchases that are denominated in foreign currency makes Defence particularly vulnerable to foreign exchange fluctuations: assumptions made by the Department on foreign exchange may have understated these eventual costs. Systematic problems within the Department on how costs for equipment were estimated were noted, with projections often being based on either immature or overly optimistic cost models and forecasts. Lastly, as we have pointed out in our first report in this Parliamentary session,57 the affordability of the Equipment Plan has from the start been dependent on a series of ambitious savings targets which experience shows are unlikely to be realised in full, or will cause considerable damage elsewhere in the defence programme.58

25.Further reports by the NAO have revealed specific risks within some of the larger equipment programmes. For example, while the Queen Elizabeth-class aircraft carriers are moving towards initial operating capacity, there is still capacity for cost growth in the elements which need to be developed to deliver the full capacity to conduct carrier strike operations, and costs may need to be re-prioritised from the already overstretched budgets of the Service Commands.59 The Defence Nuclear Enterprise, centred on the construction and maintenance of the UK’s nuclear-powered submarines and nuclear weapons is highly complex, geographically widely distributed and open to the prospect of cost growth which could distort the rest of the Equipment Plan.60 The cost growth and delay which have already affected parts of the Enterprise, together with the six-year delay by the Coalition in the Trident Successor Parliamentary vote, have resulted in the current Vanguard class submarines needing to be kept in service substantially longer than their original design life.61 Elsewhere in the Royal Navy, there has been a dramatic increase in the cannibalisation of parts from ships and helicopters, and even from nuclear submarines, due in part to the reduction in support budgets.62 There is a lack of available quantitative information that the investment in support, both maintenance and weapons stocks, across all three Services is sufficient to sustain units to meet policy demands, although there is categoric and circumstantial evidence of cannibalisation in all three services. We expect to be reassured that investment in support and ammunition stocks is sufficient to recover from existing shortages and enable the Department to fulfill the requirements of policy.

26.Pressures are present elsewhere in the budget. Reduction in allocations for Service Commands has required the application of stringent controls on non-contractual expenditure. This has resulted in Royal Navy ships being kept in port when they would normally be on patrol, aircraft flying hours being reduced, and cuts being imposed on training and exercises across all three Services.63 Additionally, following the Government’s announcement of the end of the blanket policy of applying a 1% pay increase cap across the public sector,64 reports have suggested that the Armed Forces Pay Review Body may recommend an increase of some 3% this year,65 which, although welcome and thoroughly deserved, would put further strain on the personnel budget. When asked how the Department would fund pay increases above 1%, the Defence Secretary replied:

We have a budget to have a 1% increase in terms of salaries across the armed forces, but we do not have a budget beyond that … If it comes above 1% we are going to be faced with a difficult decision in terms of the finances that we have to deal with.66

27.As part of its wider efficiency programme and to ease pressure on its personnel budget, the Department is seeking to reduce its number of civilian staff to 41,000 by 2020. While substantial reductions have been made, the rate of reduction has slowed over the past three years and the most recent personnel statistics show a small increase in civilian headcount during the past twelve months.67 Finally, the NAO has estimated that the Department faces a shortfall of £8.5 billion in its future funding for the Defence Estate over the next 30 years, despite the measures that are being taken to reduce the Estate footprint and create a new accommodation model.68 Stephen Lovegrove, the Permanent Secretary of the MoD, has admitted that the Department’s many different efficiency programmes have become too confused.69 This is a point we have highlighted in previous reports, along with the more general criticism that greater clarity is required between genuine efficiencies—maintenance or improvement of capability at lower cost—and reductions in capability, including trained manpower and collective training, which in reality are cuts.70 The Department has indicated that it will consider our suggestion of introducing an ‘efficiency tracker’ to bring greater clarity to efficiency programmes.71

28.The Government was right to initiate the National Security Capability Review in response to the intensifying threats that the country faces. The developing threats from state actors in a new age of strategic inter-state competition—typified by, but not limited to, the threat from a resurgent Russia—reinforce the need for a wide-ranging review. The Modernising Defence Programme must now seek to create a force structure which meets this challenge.

29.Several factors lie behind the financial pressures on the defence budget, such as the heightened level of risk relating to foreign exchange, to which Defence is particularly exposed. Yet, the fundamental problem is that the personnel and equipment requirements of Joint Force 2025 that were laid down the 2015 SDSR were insufficiently funded and consequently are unaffordable under the current settlement. The fact that defence spending is technically growing is no answer, as it is not growing at a rate which will correct the structural deficit in the defence budget over the long term.

30.Previous defence reviews have demonstrated that failure to fund commitments properly eventually leads to the re-opening of supposedly settled policy in order to balance the books. This frustrates long-term strategic implementation and reinforces the perception of inherent and intractable financial chaos in Defence.

31.The force structure that emerges from the MDP must be supported by a robust and sustainable financial settlement, which is not reliant on loose projections and unrealistic so-called efficiency targets to make the numbers add up. While ‘efficiency’ should always be the aim of any programme of reform, and a constant objective of all Government departments, the practice of using unachievable programmes of ‘efficiency’ savings to make ends meet in defence reviews must come to an end. Experience has shown that relying on such targets sows the seed of instability in a long-term programme. The readiness to label a cut as an ‘efficiency’, without any proper analysis of its effect, has devalued the word as a useful term.

Ambition and process

32.We have discussed above both how the NSCR was originally characterised as a ‘refresh’ of the 2015 SDSR and that it would consist of twelve different strands of work. The National Security Adviser told us in May 2018 that the Government had three options at the outset of the NSCR, in terms of the ambition of the exercise:

The first was not to have any kind of cross-cutting review, and just to look at the individual pieces of work separately and see how they came together. There was the option of a full SDSR without a spending review … Obviously, those big resource decisions have to be taken in the context of the Government’s overall fiscal position and spending priorities. This option was essentially between the two. We thought it was right to look at capabilities and do a cross-cutting review, but not a full SDSR.72

33.The original intention therefore seemed to be a process which was less comprehensive than a ‘full SDSR’, mainly because it would not be held at the same time as a comprehensive departmental spending review. However, as far as the Defence strand was concerned, reports began emerging in late 2017 that drastic changes to force structure and capability of the Armed Forces were being considered as options were drawn up by the MoD to meet the parameters of the NSCR. These options reportedly included:

An account of three options obtained by The Times in early January 2018 pointed to total reductions of 14,000 personnel and large-scale cuts in capability across the three Services.80 We questioned the National Security Adviser at some length on the accuracy of these apparent leaks and, while he refused to discuss any specifics about the options that were reported, he accepted that options looking at cancellation of previous plans and early removals of capability from service would always be canvassed as part of a process of this kind.81

34.The JCNSS, in its report published prior to the release of the NSCR, also remarked on how the review process would be stretching over a longer period of time than either the 2010 or 2015 SDSRs, if one took into account the extra time needed for the MDP. The Joint Committee concluded that the NSCR “has inadvertently become an uncomfortable halfway house between a refresh and an SDSR”.82

35.Details of the process and methodology of the NSCR were slow in emerging, For example, it was through a Westminster Hall debate in October 2017—months after the NSCR had been initiated—that it was revealed that there were 12 strands of the NSCR, of which Defence was merely one. Comprehensive information on the scope and process of the NSCR, including the full list of the 12 strands, was provided to the JCNSS only towards the very end of the review process in February 2018.83

36.The NSCR was originally characterised as a ‘refresh’ of the 2015 SDSR. However, once the NSCR was established, it soon became apparent that as far as the Defence strand was concerned, major reconfigurations of force structure and reductions in military capability were being considered, across the entirety of the Joint Force, on a scale that went far beyond a mere ‘refresh’. The lack of clarity from the Government on the level of ambition in the NSCR was one of many factors which added to the perception that it was a closed and opaque exercise.

37.A second major aspect of the NSCR which emerged only late in the process was that it was a ‘fiscally neutral’ review. This was confirmed by the National Security Adviser when appearing before the JCNSS in December 2017. Sir Mark said that the review had been commissioned by the National Security Council as a fiscally neutral exercise and that “the purpose in doing it is to see if the money that is already allocated is allocated in the right way”.84 This effectively meant that no new resources were being allocated and that more resources for one area of national security policy would have to be found by inflicting cuts on another. This became the defining feature of the review, and the restrictions thus imposed were instrumental in the decision being made to break out the defence strand and initiate the MDP. On the announcement of the MDP, the Defence Secretary confirmed in response to questions in the House that the MDP would not have the same constraint applied:

The [MDP] does not aim to be fiscally neutral—that is why we brought it out of the national security and capability review.85

Giving evidence to us a few weeks later, Gavin Williamson elaborated:

… we needed to separate defence out of the national security capability review, because it had been put into a straitjacket that would have meant that there was a danger of some of the wrong decisions being made. No one wants to make the wrong decisions. It goes without saying that where you have a world that presents much greater and greater threats, you need to step up to the challenge in making sure that you meet them. That is making sure that you have the right capabilities and the right support, and that they are properly financed.86

38.Despite the scope of the NSCR in terms of reviewing the Joint Force, the ambition to provide more resources to national security was practically imperceptible. It did not become clear until December 2017, almost 6 months after the review had been initiated, that the NSCR would be ‘fiscally neutral’. This was the defining aspect of, and fundamental flaw in the review. It is inexcusable that vital aspects, like this, had to be extracted through parliamentary debates initiated by backbenchers and select committee hearings, rather than from information volunteered by the Government. The information which was revealed was given piecemeal, making it very difficult to gain an understanding of the scope and limitations of the review and its method of analysis.

39.The work under the Defence strand of the NSCR had to be done within the wider constraint of so-called fiscal neutrality. Thus, there could be no way of applying more resources to address individual threats without reducing provision elsewhere in Defence, whether this ran counter to the conclusions of the strategic analysis or not. This created the perverse situation that reductions in capability were being considered in a review that was initiated because threats were intensifying. The NSCR was, in this sense, wholly resource-led from the outset. The MDP, freed from this constraint, has the potential to be a genuinely strategically-led exercise that can prescribeand potentially producethe force structure necessary to meet strategic objectives rather than one that merely fits within straitened financial parameters. Accordingly, we recommend that the MDP should set out a clear ‘menu’ of military requirements, together with an estimate of the cost of each main component listed. The Government, and the country, will then be able to see the scale of what it is necessary to invest in Defence, in order to discharge ‘the first duty of Government’.

Future of the SDSR process

40.We have received differing views on the implications of the separation of defence from the wider consideration of national security policy, and the longer-term future of the SDSR cycle. Professor Andrew Dorman of King’s College London considered that separating Defence was a retrograde step:

The separation of defence from security is a step backwards, in the sense that we have moved towards looking at a cross-Government view of security, of which defence is a part, for the past 10 to 15 years, and now this is a reverse of that. What is unclear is whether this is just a temporary measure to try to square the MoD’s budget or is part of a longer-term trend giving authority back to the Ministry of Defence. That is unclear. This Committee asked questions of the Defence Secretary about the next SDSR and what would happen with it, when it would be and how it would be managed. From my perspective, I think it would make more sense to delay the national security capability review and produce the whole thing as one single document in the round, and not take defence out of that.87

41.Other witnesses took a different view. Tom McKane, former Director General for Security Policy at the MoD, said:

In principle, it makes more sense to consider defence in the round with the rest of the national security capabilities, but I can see that if, in the current circumstances, it is taking longer to resolve the issues that defence faces, and there is a desire to publish the rest of the national security capability review, then it is perfectly sensible to take a bit more time to do it. The other thing I would say is that, although I do think it is better to look at all these things in the round, there is some benefit from having a close political oversight of the defence element of the review. One of the disadvantages of the wider national security reviews was that inevitably the Prime Minister cannot give the same level of attention to the day-to-day workings of the review as, say, a departmental Cabinet Secretary of State can. There are pluses and minuses.88

42.James de Waal, Senior Consulting Fellow at the International Security Department at Chatham House gave a different reason why defence might be set apart:

I am not that opposed to the idea of separating out defence, partly because, in the recent national security exercises—the defence and security reviews—there has always been a sense that defence has dominated the discussion, just because of its size and the political sensitivity of a lot of the issues. That has meant that some of the other national security issues have been rather neglected.89

43.Written evidence submissions also varied on this issue, some supporting the view that a holistic and co-ordinated approach should be preferred,90 while others considered that there are particular circumstances where a separation is justified.91

44.On the issue of the future of the five year SDSR cycle, the Government has not yet indicated how it will proceed. The next SDSR following 2015 would normally be due in 2020. When asked about future SDSRs, the Defence Secretary said:

We had committed to doing them on a cycle of every five years, and I very much imagine that that cycle will continue to stand. We are doing a Modernising Defence Programme because we think that that is the right thing to do in order to make sure that we get the right deal for our armed forces and make sure that they are in the best possible position to keep this nation safe, but I would still imagine that future Secretaries of State for Defence will want to have their own SDSRs. I would imagine that they would keep it within the existing cycle that had been established.92

45.The Secretary of State was then asked, with the 2020 date in mind, whether keeping to the existing cycle would mean that work would have to begin within 12 months of the MDP:

As I say, I think that when we have completed the Modernising Defence programme I would probably not be looking at going into a full SDSR straightaway within a year, but I do think that having a regular pattern of SDSRs is quite important in having a full threat assessment and looking in real detail at what the challenges are. I do not think it would be the right thing for our armed forces to launch into a full SDSR a year after the conclusion of the Modernising Defence programme.93

The MoD’s written evidence confirms that there has been no announcement on when the next NSS and SDSR will take place but that there may be consideration of adjusting the regularity of major reviews in a manner similar to the UK’s international allies.94

46.We support the separation of the Defence strand from the NSCR and the initiation of the MDP. While we recognise the benefit of a holistic approach to national security policy reviews, Defence represents by far the largest proportion of expenditure on national security and is facing particular challenges which warrant greater consideration than would be possible within the confines of the NSCR. In particular, the ‘fiscal neutrality’ of the NSCR meant that any extra expenditure on any part of national security could lead to corresponding cuts in defence capability. Furthermore, the range and complexity of functions under the supervision of the MoD, and the long-term implications that stem from changes to military capability require a deeper analysis than the NSCR is able to provide.

47.A question remains about the future of the SDSR process of which Defence has previously been an integral part. Although the Defence Secretary has indicated that there are likely to be SDSRs in the future and that a regular pattern of defence and security reviews is important, no firm decisions seem to have been made on the future of the SDSR cycle. The Government should make clear when it expects the next NSS/SDSR will be held and whether Defence will be part of the wider process, or remain separate.

External engagement

48.In our recent report on the Royal Marines and UK amphibious capability, we criticised the lack of external engagement in the course of the NSCR.95 We considered the NSCR to be an unnecessarily ‘closed’ process which created an atmosphere in which leaks and rumours flourished and from which Parliament was almost wholly excluded. The JCNSS expressed similar concerns in their report.96

49.We are pleased to observe a more open approach under the MDP, which, despite having been initially trailed in a Downing Street press briefing two days previously,97 was announced in the House in an oral statement by the Secretary of State laying out the purpose, scope, process and expected length of the review. The MoD has submitted detailed written evidence to this inquiry and we have been provided with a private briefing by senior officials. A public consultation ran from early March until the end of April98 and the Defence Secretary has indicated that a wide range of stakeholders will be involved.99

50.We took oral evidence from a panel of defence journalists in March and they told us that they had also detected a change in the level of engagement. Larisa Brown, Defence and Security Editor of the Daily Mail told us that there had been:

a dramatic shift in the MoD engagement policy over the last few months. Clearly, there is a new strategy where the MoD thinks it is better to engage with journalists, to let them know what is going on in the Department and to allow us to speak to the military chiefs to get their sense on where the threat is at and what capabilities are needed.100

Deborah Haynes, the Defence Editor of The Times, agreed that there seems to be a greater desire to acknowledge the difficult challenges under the current Secretary of State, but that “it is going to become more difficult in the summer, when we actually see the product of the work”.101

51.There is also evidence that the Department has stepped up its efforts to consult with allies and international partners. The Defence Secretary told us that he sent a team out to the United States for consultation102 and that there has been close dialogue with NATO officials on how capabilities can complement NATO requirements.103 When we asked the Ambassadors from the Baltic States whether they had been consulted, the Latvian Ambassador said “there has been a lot of exchange and discussion”.104 The Secretary of State has also offered to hold meetings with Scottish Ministers.105

52.At the outset of the MDP the Secretary of State undertook to keep Parliament updated as decisions were made.106 The Department has told us that the MDP is due to deliver high-level findings by the end of June and to conclude in the autumn.107

53.We, along with the Joint Committee on the National Security Strategy, have been critical of the opacity of the NSCR process and the leaks and rumours that such a closed process created. As well as frustrating scrutiny, it generated a great deal of worry and uncertainty among Service personnel and their families. We commend the Department for taking a more open approach in the MDP.

54.That said, we expect the Government to provide opportunities to debate the findings of the MDP when they begin emerging, so that Parliament has an opportunity to influence the process. The Department has indicated that it aims to publish ‘high-level findings’ by the end of June, with a view to the process being fully complete in the autumn. The Government should ensure that Parliament has the opportunity to debate the MDP’s high-level findings before the summer recess, and that there is a continuing dialogue with all key external stakeholders, including international partners, up to the point when the MDP finally concludes.


2 10 Downing Street, ‘Establishment of a National Security Council’, 12 May 2010

3 HM Government, A Strong Britain in an Age of Uncertainty: The National Security Strategy, Cm 7953, 18 October 2010. The UK’s first National Security Strategy had been published in 2008 - Cabinet Office, The National Security Strategy of the United Kingdom: Security in an interdependent world, Cm 7291, March 2008

7 Ministry of Defence (MDP0026)

8 See for example the speech of Mark Sedwill, National Security Adviser, at the RUSI Land Warfare Conference, 29 June 2017 and HC Deb, 13 July 2017, c 452 [Rt Hon Sir Michael Fallon KCB MP]

9 Cabinet Office, ‘Strategic Defence and Security Review Implementation’, 20 July 2017

10 Cabinet Office, ‘Strategic Defence and Security Review Implementation’, 20 July 2017

11 Ministry of Defence (MDP0026)

12Defence chiefs seek new review and £4bn bailout’, The Times, 11 December 2017

15 HC Deb, 24 January 2018, c 260

16 HC Deb, 25 January 2018, c 423

17 HM Government, National Security Capability Review, 28 March 2018

18 Joint Force 2025 is the force structure laid out as an objective by the 2015 SDSR

19 HM Government, National Security Capability Review, 28 March 2018, p 14

20 Ministry of Defence (MDP0026)

22 HM Government, National Security Capability Review, 28 March 2018, p 5

23 Ministry of Defence, Annual Report and Accounts 2016–17, HC 21, July 2017

24 HM Government, National Security Capability Review, 28 March 2018, pp 5, 17

25 Speech by General Sir Nicholas Carter, RUSI, 22 January 2018

32 HM Government, National Security Capability Review, 28 March 2018, p 5

34 HC Deb, 12 March 2018, c 620; HC Deb, 14 March 2018, c 855; HC Deb, 26 March 2018, c 551

35 Defence Committee, Russia: Implications for UK defence and security, First Report of Session 2016–17, HC 107

42 Oral evidence taken on 17 April 2018, HC 818, Qq 110–146

43 HM Government, National Security Capability Review, 28 March 2018, p 6

45 Defence Committee, Rash or Rational: North Korea and the threat it poses, Fourth Report of Session 2017–19, HC 327

48 Sir Jeremy Blackham (MDP0005)

49 The predecessor Defence Committee’s observations on how the Government’s methods of calculating defence expenditure have changed over time and continue to be opaque are made in Shifting the Goalposts? Defence expenditure and the 2% pledge, Second Report of Session 2015–16, HC 494

50 HM Treasury, Summer Budget 2015, HC 264, July 2015, para 2.22

51 Joint Committee on the National Security Strategy, Oral evidence taken on 18 December 2017, HC 625, Q27

53 Oral evidence taken on 27 February 2018, HC 818, Q18. See also Chalmers, M, Decision Time: The National Security Capability Review 2017–2018 and Defence, RUSI Whitehall Report 1–18, February 2018, pp 8–11

54 Ministry of Defence, The Defence Equipment Plan 2017, 31 January 2018

55 Ministry of Defence, Annual Report and Accounts 2016–17, HC 21, July 2017, p 76

56 Ministry of Defence, The Defence Equipment Plan 2017, 31 January 2018

57 Defence Committee, Gambling on ‘Efficiency’: Defence Acquisition and Procurement¸ First Report of Session 2017–19, HC 431, paras 43–57

58 National Audit Office, Ministry of Defence: The Equipment Plan 2017 - 2027, HC 717 [2017–19], 31 January 2018

59 National Audit Office, Ministry of Defence: Delivering Carrier Strike, HC 1057-I [2016–17], 16 March 2017

60 Oxford Research Group (MDP0019)

61 National Audit Office, Ministry of Defence: The Defence Nuclear Enterprise: a landscape review, HC 1003 [2017–19], 22 May 2018

62 National Audit Office, Ministry of Defence: Investigation into equipment cannibalisation in the Royal Navy, HC 525 [2017–19], 1 November 2017

63 Oral evidence taken on 21 February 2018, HC 814, Qq25 -28. See also Ministry of Defence (DPS0001).

64 HC Deb, 12 September 2017, c 17WS

67 Ministry of Defence, UK Armed Forces quarterly personnel statistics: 1 April 2018, published 17 May 2018. Table 13 shows a civilian headcount of 56, 865 on 1 April 2018, compared to 56, 675 on 1 April 2017, an increase of 190.

68 National Audit Office, Ministry of Defence: Delivering the Defence Estate, HC 782 [2016–17], 15 November 2016. Written evidence from the Scottish Government (MDP0023) highlights the impact of the Better Defence Estate programme in Scotland.

69 Speech by Stephen Lovegrove, Permanent Secretary of the MoD, RUSI, 5 March 2018. See also Sir Jeremy Blackham (MDP0005).

70 Defence Committee, Gambling on ‘Efficiency’: Defence Acquisition and Procurement¸ First Report of Session 2017–19, HC 431, para 43

76 ‘Tory revolt could prompt compromise on defence cuts’ The Guardian, 26 November 2017; ‘Army CutsThe Sun, 4 December 2017

77British Army armoured brigade faces the chop’, The Times, 8 October 2017

78 ‘Tory revolt over defence cuts’, The Times, 25 November 2017

79 ‘General hints at cuts to F-35 warplane order’, The Times, 22 November 2017

82 Joint Committee on the National Security Strategy, National Security Capability Review: A changing security environment, First Report of Session 2017–19, HL Paper 104, HC 756, paras 48–49

83 Joint Committee on the National Security Strategy, Written evidence from Sir Mark Sedwill, National Security Adviser (CSE0018)

84 Joint Committee on the National Security Strategy, Oral evidence taken on 18 December 2017, HC 625, Q4

85 HC Deb, 25 January 2018, c 428

90 Dr Jie Sheng Li (MDP0001); General Atomics Aeronautical Systems (MDP0013); United Nations Association (MDP0014); Oxford Research Group (MDP0019); ADS Group (MDP0024); DefenceSynergia (MDP0029)

91 Commander (Retd) N D MacCartan-Ward (MDP0007); Professor David Kirkpatrick (MDP0010); Defence Police Federation (MDP0012); Plymouth City Council (MDP0021); James Rogers (MDP0028)

94 Ministry of Defence (MDP0026), para 28

95 Defence Committee, Sunset for the Royal Marines? The Royal Marines and UK amphibious capability, Third Report of Session 2017–19, HC 622, para 13

96 Joint Committee on the National Security Strategy, National Security Capability Review: A changing security environment, First Report of Session 2017–19, HL Paper 104, HC 756, paras 65–71

97 Defence minister wins more time to avoid spending cuts’, Financial Times, 23 January 2018

98 Ministry of Defence, Modernising Defence Programme public consultation, 7 March 2018

105 The Scottish Government (MDP0023)

106 HC Deb, 25 January 2018, c 424

107 Ministry of Defence (MDP0026), para 27




Published: 18 June 2018