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

Conclusions and recommendations


1.We request that the Department should issue its response to this report after the Modernising Defence Programme has fully concluded, instead of within the usual two-month period, so that the response can directly lay out how the MDP has addressed the observations and suggestions that we have made. (Paragraph 4)

The Modernising Defence Programme

2.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. (Paragraph 25)

3.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. (Paragraph 28)

4.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. (Paragraph 29)

5.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. (Paragraph 30)

6.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. (Paragraph 31)

7.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. (Paragraph 36)

8.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. (Paragraph 38)

9.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 prescribe—and potentially produce—the 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’. (Paragraph 39)

10.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. (Paragraph 46)

11.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. (Paragraph 47)

12.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. (Paragraph 53)

13.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. (Paragraph 54)

Observations and expectations

14.We offer our observations on areas within the scope of the MDP that we see as priorities. (Paragraph 56)

15.The most serious maritime issue which has been recognised by Ministers, and in the evidence we have taken, is the need for greater anti-submarine warfare (ASW) capacity. (Paragraph 57)

16.With the Queen Elizabeth-class aircraft carriers shortly coming into service, generation of a carrier group will become a priority task for the Royal Navy. Operating aircraft carriers without the sovereign ability to protect them is complacent at best and potentially dangerous at worst. The UK should be able to sustain this capacity without recourse to other states. (Paragraph 58)

17.We have recently reported on the continuing relevance and requirement for amphibious capability, concluding that the disposal of amphibious assault ships—reportedly being considered under the NSCR—was “militarily illiterate”. (Paragraph 59)

18.Consideration should be given to extending TLAM capability to the surface fleet, ahead of development of the Future Cruise/Anti-Ship Weapon System, which will not be in service until the 2030s. The Harpoon anti-ship missile has also wisely been kept in service beyond 2018, but a decision about its future into the 2020s is still needed. (Paragraph 60)

19.The growing ambition which the UK has outside of the Euro-Atlantic area will be a largely maritime-led endeavour. This needs to be backed up with sufficient resources to make a strategically significant contribution to our allies in the region. (Paragraph 61)

20.The generation of the warfighting division should continue to be the central aim of the British Army. The target strength of the Regular Army should not be reduced below 82,000 personnel. Further evidence of progress on reconstitution is necessary. (Paragraph 62)

21.The UK needs to take a full role in the NATO and EU initiatives that are underway to address military movement and logistics. Even with the relevant infrastructure and permissions in place, the Army needs to look to its ability to transport personnel and equipment, including armour and heavy weapons. A clear decision on forward basing is needed in the MDP. (Paragraph 63)

22.There are serious deficiencies in the quantities of armour, armoured vehicles and artillery available to the British Army. (Paragraph 64)

23.Written evidence has highlighted some of the deficiencies which limit the Army’s firepower, citing a lack of vehicle-mounted anti-tank weapons, the potential ineffectiveness of anti-tank weapons to defeat modern active protection systems on enemy armoured vehicles, a lack of precision in tube artillery, the need for modernisation of rocket artillery to improve range and precision, and a lack of self-propelled artillery, all of which leave the Army, as currently configured, at serious risk of being outgunned by its Russian counterpart. (Paragraph 65)

24.Air defence is a further requirement against state adversaries, and one which we have noted as a deficiency in previous reports. A layered air defence system is a basic requirement in the face of an adversary like Russia and a solution should be found to protect the warfighting division. This is a major weakness in the Army’s current Order of Battle and should be addressed as a matter of high priority. (Paragraph 66)

25.General Carter has underlined the importance of the need for the Army to bring into service its next generation of tactical communications and information system. (Paragraph 67)

26.We reiterate our view that the MoD’s refusal to disclose cost estimates for the F-35 to Parliament is unacceptable and risks undermining public confidence in the programme. The Department should also use the MDP as an opportunity to make clear whether it remains its policy to buy the intended complement of 138 aircraft and what mix of variants it now envisages purchasing for the remainder. (Paragraph 68)

27.The intended aircraft and crew provision for the MPA force is too low to fulfil the range of tasks under its responsibility. (Paragraph 69)

28.The UK has no substantial missile defence capability. The Department should make clear in the MDP its proposed way forward on BMD, including on both radars and potential interceptors, whether in a UK or combined NATO context. In addition, the Department should consider how it will address the need for point defence—including against cruise missiles—at key installations in the UK, not least the principal RAF airbases. (Paragraph 70)

29.The Airborne Warning and Control System (AWACS) capability provided by the RAF’s E-3D Sentry fleet has been allowed to decline. The full range of available options including (but not confined to) an upgrade of the E-3D Sentry aircraft, should be considered by the RAF to restore its AWACS capability. (Paragraph 71)

30.The ability of aircraft to penetrate sophisticated enemy air defence systems must be addressed. (Paragraph 72)

31.The Combat Air Strategy is a valuable opportunity to consider how UK design, development and manufacturing expertise in combat air, from programmes such as Tornado and Typhoon, can continue to contribute to future combat air capability. It is also an opportunity to reduce the reliance on off-the-shelf purchases from overseas when domestic or collaborative alternatives are available. (Paragraph 73)

32.The MoD’s Cyber Vulnerability Investigations programme, is too focused on identifying cyber risks and ... there should be more focus on neutralising them. There is a need for more focus on deployable cyber capabilities. (Paragraph 74)

33.There is need for greater investment in electronic warfare (EW) capabilities. (Paragraph 75)

34.The new challenges in space must be reflected in the next generation of capability. Use of low-cost microsatellites, such as the recently launched Carbonite-2 should also continue to be pursued. (Paragraph 76)

35.The challenge for the Armed Forces is to integrate the principles and capabilities associated with information advantage into existing structures. This development should continue, with close co-operation between the Services and other parts of Government involved in information collection and assessment. The necessary infrastructure will have to be in place to securely transfer, process and analyse large quantities of data that these platforms will collect. (Paragraph 78)

36.The Department should give serious consideration as part of the MDP to how it might in future retain surplus equipment platforms as a war reserve (as both Russia and the US often do) rather than disposing of them cheaply to other countries or even destroying them altogether. Having war reserves of this kind, can add to the conventional deterrent effect of our Armed Forces. (Paragraph 79)

37.The above represents our observations on the areas of capability we would expect to be addressed in the MDP. We ask that each section above is individually addressed by the Department in its response at the conclusion of the MDP. (Paragraph 80)

38.Trained manpower is a constituent of military capability. Even at historically low levels of establishment, the Armed Forces are struggling to meet their recruitment targets. The reasons for this are diverse, and are not exclusive to the UK. It is clear, though, that negative perceptions of shrinking mass, capability and role of the Armed Forces do nothing to maintain—let alone improve—recruitment and retention. The MDP gives the Government an opportunity to reverse the perception of decline and present a career in the Armed Forces as a purposeful and dynamic professional choice. (Paragraph 85)

39.The repeated failures of Capita have affected recruitment across all three Services, and have done particularly serious damage to Army recruitment. If the service provided does not significantly improve very soon, the Department should implement its contingency plans and take recruitment back into its own hands. The Department’s attitude on this issue, of hoping year on year, rather like Mr Micawber, that something will turn up, is simply no longer credible or acceptable. (Paragraph 86)

40.However, even if there were no issues involving particular firms, a more fundamental task would still remain. In addition to improving significantly the efficiency of its recruitment process, the Department must provide evidence that the offer to service personnel is sufficient both to recruit and retain. (Paragraph 87)

41.The continuing pursuit of former and serving personnel in the course of investigations relating to historic allegations is an outrageous injustice to the personnel concerned. We will continue to put pressure on the Government to bring an end to this as a matter of urgency. The powerful and ongoing disincentive this provides to anyone considering a military career is one of the compelling reasons why the Government should do so. We unequivocally condemn the Government’s backsliding on its firm commitment, when responding to our report on ‘lawfare’ against Northern Ireland veterans, to include the option of a Statute of Limitations in its current consultation on so-called ‘legacy issues’. (Paragraph 88)

42.Accordingly, we have just announced a further and wider inquiry into the pursuit of UK veterans many years after the conflicts in which they were engaged have come to an end. We intend to hold Ministers firmly to account for the fate of our veterans facing legal persecution, long after the event and in the absence of new evidence. Ministers must honour their obligation to our Service veterans. (Paragraph 89)

43.It is important for the Department to demonstrate through the MDP that it will be a responsible owner of any new financial settlement that emerges, and it should be commended for incorporating a review of its own practices and relationships with industry into the MDP. We have received a number of detailed submissions from defence industry representatives highlighting some specific recommendations which the Department should consider, to improve its approach in these areas, and we expect them to be considered. (Paragraph 95)

44.The challenge for the Department, which has re-examined its commercial and procurement approach to these matters on several occasions over the past 20 years, is to demonstrate how what emerges from the MDP is distinct from the succession of new policies, strategies, reports and ‘refreshes’ which have previously been produced. There have been many successes and innovative reforms during this period, but there are clearly a number of pervasive issues which continue to exist. The Department needs to demonstrate that it understands what has gone wrong and how the lessons learned will form the basis of its future policy. (Paragraph 96)

45.NATO remains the cornerstone of the UK’s defence policy and the conclusions which emerge from the MDP will send a strong message to our allies on how the UK is reacting to developing threats. At the forthcoming NATO Summit, the Government should seek to maximise the scope of the new command structures, as the focus of the two proposed Joint Force Commands relates directly to the UK’s principal strategic interests. The Government should take a robust approach to burden-sharing across the Alliance and should be seeking to hold other member states to the commitments entered into in 2014. We also observe that burden-sharing is not just about providing cash, but providing capability. Expenditure should not be the sole measure of commitment. (Paragraph 99)

46.The range of international defence relationships that the UK enjoys reflects a continuing global role and allows the Services to train alongside the armed forces of allies and partners. Nonetheless, these obligations will be increasingly difficult to uphold with an under-resourced Joint Force, and the cancellations in joint training we have seen recently will undermine these relationships. The MDP must focus on sustaining a force structure that lives up to the wide range of international defence and security relationships. (Paragraph 100)

47.We and our predecessors repeatedly emphasised the inadequacy of the United Kingdom’s level of defence expenditure—placing our views firmly on the record, both in this and in the previous Parliament. We do so again here. Defence spending is far too low. On the Government’s calculation (which includes certain items, like war pensions, which we used not to count), the UK is narrowly exceeding the 2% target; but it is still facing a range of financial challenges. The Government now needs to apply the resources that are necessary to keep this country safe, and must begin moving the level of defence expenditure back towards 3% of GDP, as it was in the mid-1990s. (Paragraph 103)


48.The Armed Forces have inevitably been shaped by the nature of operations which the UK has entered into over the past 20 years—largely land-based expeditionary operations, in pursuit of counter-insurgency and stabilisation, with minimal challenge in the maritime and air domains and minimal direct risk to the homeland. (Paragraph 104)

49.The strategic environment has changed for the worse, and this defence review must reflect this. The UK needs to be in a position to deter and challenge peer adversaries equipped with a full range of modern military technologies who seek to use them in ways that confuse our traditional conceptions of warfare. The likelihood of operating in contested environments across all five domains—maritime, land, air, cyber and space—should be reflected in this force structure. (Paragraph 105)

50.Whilst old threats have reappeared and new ones have arisen, recent ones have not disappeared. The uncertainty of the future mandates a properly balanced force structure, capable of continuing the fight against terror and extremism, containing and deterring state-based adversaries, and sustaining the range of international commitments that support our strategic interests. (Paragraph 106)

51.The Secretary of State should be congratulated on securing control of the Modernising Defence Programme. We wish him and his Ministers success, not only in their work across the four strands of the MDP, but also in securing a much better financial settlement for Defence that recognises the higher level of spending for which this Committee has consistently been calling. We look forward to scrutinising the outcome of this process in detail once it is complete. (Paragraph 107)

Published: 18 June 2018