8.The stated purpose of the NSCR was to identify how the Government “could develop, deliver and deploy [the UK’s] considerable national security capabilities to maximum collective effect” in support of the 2015 NSS & SDSR. The Government’s 2018 NSCR report contained some notable announcements in this regard, including the identification of two more “particular challenges” for UK national security in addition to the four identified in the 2015 NSS & SDSR. These were:
The NSCR report also foreshadowed the launch of two cross-government strategies (on serious and organised crime and on counter-terrorism) as well as outlining measures relating to countering hostile state activity, strategic communications, civil contingencies and emergency planning (under the ‘national resilience’ strand), and border security. Baroness Neville-Jones, former Minister of State for Security and Counter Terrorism (2010−11), said that these policy areas had merited attention in the NSCR and that this work should continue.
9.However, the views we heard suggested that the NSCR and MDP reports did not do enough to address the growing challenges to UK national security. These included changes to the wider strategic environment that undermine the cornerstones of UK national security and the “significant, structural hole” in the Ministry of Defence (MoD) budget, both of which we identified in our March 2018 report on the NSCR.
10.Baroness Neville-Jones said that—as with the 2015 NSS & SDSR—the NSCR’s “fundamental shortcoming” was its failure to address explicitly the changing strategic balance of power in the world. In her view, the value of the NSCR report was “limited” because “it doesn’t discuss the context in which the UK is operating”, particularly in relation to:
11.Tom McKane, former Director General for Strategy, MoD, said that the decision to hold the NSCR might have been justified had it addressed the advent of the Trump presidency and Brexit. In relation to the MDP, Lord Robertson of Port Ellen—former Defence Secretary (1997–99) and NATO Secretary General (1999–2003)—thought that the lack of detail in the final report made it unclear whether these major geopolitical changes had been considered.
12.We took extensive evidence in the first part of our inquiry last year on the implications for UK national security of the Trump Administration and the prospect of a significant shift in the UK’s relationship with the EU. Sir John Sawers—former Chief of the Secret Intelligence Service (2009–14)—told us in January 2018 that the factor that had changed the most since 2015 was “the expectations that countries have of the United States”. He said that this had already led to changes of behaviour among US allies in the Middle East and East Asia and should prompt European countries to re-think their relationships with the United States. In March 2019, Dr Kori Schake—Deputy Director-General of the International Institute for Strategic Studies (IISS)—observed that President Trump continued to raise “first-order questions about the ‘shibboleths’ of the United States’ security policy since the Second World War”. Lord Robertson commented that the UK must adapt to the capriciousness of President Trump’s foreign policy, although he noted the Administration’s positive impact on NATO member states’ defence spending. The recent episode concerning the UK’s ambassador to the United States, Sir Kim Darroch, provides a stark example of the potential impact of such ‘capriciousness’. Baroness Neville-Jones believed that
“The UK is so worried about saying anything about the Special Relationship which might undermine its importance or credibility [that it] puts an intellectual obstacle in the way of talking about the implications for the UK of [how] the world is changing.”
13.On the UK’s relationship with the European Union, Lord Ricketts, former National Security Adviser (2010–12), told us in January 2018 that there was a “question mark” over continued defence and foreign policy cooperation with the EU. He noted that even though these policy areas fell outside formal EU competencies, continued cooperation “is still to be pinned down in negotiation.” Baroness Neville-Jones observed in March 2019 that the NSCR report had not dealt with the consequences of Brexit for the UK’s strategic positioning in any real sense. However, it did identify desirable areas of continued cooperation at the policy level throughout.
14.The challenges posed by China’s rise—and by the wider shift in global power to the east—have come more sharply into focus in the year since the Government published its NSCR report. This has raised questions about how to respond in economic, diplomatic and military terms not only for the UK, but for other close allies of the United States such as Australia and Japan. For the UK, the debate over Huawei’s potential involvement in its 5G telecoms infrastructure has demonstrated the difficulties facing the Government in balancing national security and economic prosperity goals, and in balancing long-established alliances (such as its intelligence-sharing relationship with Five Eyes partners) with newer partnerships. Recent protests in Hong Kong have also raised questions for the UK about its moral obligations under the 1984 Sino-British Joint Declaration, with implications for its status as an advocate of the rules-based international system.
15.Our predecessor Committee highlighted what it described as the Government’s “cognitive dissonance” on China in 2016, in its report on the National Security Strategy and Strategic Defence and Security Review 2015. Two years later, the Government’s NSCR and MDP reports exhibited similar tentativeness in their comparative treatment of China. The NSCR report referred positively to the UK’s “global comprehensive strategic partnership with China” in the ‘Global Britain’ section and referred only obliquely to the “risks of miscalculation and conflict” in the South China Sea in its discussion of state-based threats. By contrast, the MDP report contained the Government’s first explicit reference to the scale and significance of China’s military modernisation. This mirrored the more sceptical tone of public statements by other parts of Government, such as the Secret Intelligence Service in relation to Huawei. In December 2018, the National Cyber Security Centre also publicly attributed a worldwide cyber espionage campaign to Chinese state-sponsored actors. It did so in conjunction with the US and other allies.
16.Dr Schake believed that it would be more cost effective for the US, UK and other European countries to sustain a common approach to China, to cajole it into being a responsible stakeholder in the international system. She considered that the UK should share the burden with its allies by maintaining a military presence in the South China Sea. However, Lord Robertson observed that this might not be consistent with the UK’s trade goals: the UK would face a challenge if it sought to complete trade deals with China at the same time as deploying aircraft carriers to the South China Sea.
17.In January 2019, we asked Sir Mark Sedwill, the Cabinet Secretary and National Security Adviser, about the Government’s approach to China. He told us:
“Essentially, the 21st century’s world economy and global security will be determined more than anything else by the rise of China, how the US and China manage their relationship and how the rest of the international system adapts.
Any change of that scale has both pluses and minuses. We try to take a calibrated approach to this. Of course we want to benefit from China’s global economic potential; the last Prime Minister [David Cameron] set out the policy of a ‘golden era’, which was refreshed by this Prime Minister [Theresa May] when she went to China last year. But that does not mean that we shy away from dealing with some of our security concerns, including cyber espionage and so on.
We want a mature and strong enough relationship with China that we can deal with the difficult issues as well as talking about issues of mutual benefit. We are still developing that, but it is the objective.”
18.We appreciate that, for diplomatic reasons, it is not possible to address such sensitive policy issues in fine detail in a public document. Indeed, the Government also produced a classified version of the NSCR report—something our predecessor Committee called for in its 2016 report on the 2015 NSS & SDSR.
19.Nevertheless, we remain unconvinced that the Government is having the honest conversations it needs to have, even behind closed doors. Managing the UK’s relationship with China in the long term will involve a combination of cooperation, competition and hedging between the two; the balance between these elements will need continual adjustment to ensure coherence across a range of policy areas. The UK’s relationship with China therefore offers a salient test case for the Government’s new ‘Fusion Doctrine’ (see paragraphs 56–63). However, the Foreign Affairs Committee concluded in April 2019 that the Government does not yet have a strategy for China. It also criticised the Government’s “unwillingness to face the reality of China’s strategic direction”. Baroness Neville-Jones noted that any such discussions are also not reflected in the Government’s security documents. She said these documents need to “talk about the real world”.
If the Government is to convince others—at home and abroad—that it is positioning the UK for a more positive and self-assured role in the world after its departure from the European Union, then it needs to be more honest about how it proposes to address these challenges.
Box 1: 2015 defence spending commitments
Source: HM Government, National Security Strategy and Strategic Defence and Security Review 2015: A Secure and Prosperous United Kingdom, , November 2015, paras 4.33–4.34, 7.6; HM Treasury, Spending Review and Autumn Statement 2015, , November 2015, para 1.72; National Audit Office, (September 2017), p. 10
21.In 2016, our predecessor Committee questioned the affordability of the future defence capabilities set out by the 2015 NSS & SDSR and especially of its plans for the intended structure of the armed forces in 2025, known as Joint Force 2025 (JF2025). The Committee was concerned despite the Government’s commitment to increased spending on defence (see Box 1). In our March 2018 report, we concluded that
“the 2015 NSS & SDSR [had] perpetuated a longstanding failure to match ambition with capabilities and funding, relying instead on unrealistic promises of efficiencies and reduced contingency funding.”
The result was what we described as a “significant, structural hole” in the defence budget.
22.This conclusion was supported by successive National Audit Office (NAO) reports on the defence Equipment Plan (the 10-year programme that underpins the delivery of equipment and equipment support). Its reports for 2017 and 2018 identified a potential “affordability gap” of several billion pounds—within budgets of £179 billion and £186 billion, respectively—over the following decade should all financial risks materialise and should the MoD fail to mitigate them. NAO audits have also highlighted the MoD’s frequent inability to demonstrate progress towards the efficiency targets that are essential to the affordability of JF2025.
23.In 2018, the Government announced an extra £1.8 billion in defence funding for 2018/19 and 2019/20. We asked General (Rtd.) Lord Houghton of Richmond—who was the Chief of the Defence Staff (CDS) in 2015, when the last full review of national security was held—whether the Government had anticipated such a gap in defence funding when it published the 2015 NSS & SDSR. He told us that
“by the end of the [review] process … we were gusting towards a collective self-delusion that the defence programme was affordable.
… it is quite difficult to recall the remarkable optimism and hubris of 2015. You had a David Cameron Government who were returned with a surprising majority. Brexit was not ahead of us. We had gone a long way towards balancing the nation’s finances. There was a sense of huge optimism about government and the country, and dare I say that some of that optimism spilled into the thought that the economy would be on the up and that 2% of that economy would be more money, so you could take a certain amount of risk in the affordability of the forward programme.”
“Even so, many of us were saying that we could not guarantee that some of this would be affordable. From my own perspective, there was a mismatch between what went on the list and what the available money was, so the alchemy of efficiency was conjured up …
It was known at the time that efficiencies were being put into the affordability of the programme that were based on absolutely no underpinning facts about how they were to be realised.”
Commenting on the additional funding allocated to defence in 2018, Lord Houghton said:
“In many respects, the £1.8 billion of new money was not money for new things; it was the element of the risk materialising … we should not have been that surprised that that amount of money was needed in that timeframe.”
24.The long-term plan for defence set by the Government in 2015 was never affordable. It relied instead on the “alchemy” of unidentified efficiencies and on a misplaced optimism about the financial risks involved. Some of those risks are now materialising, at a cost to the Government of £1.8 billion so far. This is unlikely to be the final price of what we were advised was the “collective self-delusion” that prevailed in 2015.
25.The MDP was established in January 2018 as a separate process to the NSCR, with the stated purpose of:
“modernis[ing] defence to deliver better military capability and value for money in a sustainable and affordable way.”
The MDP was conducted on a different timeline and on a different basis from the NSCR, in that it was never intended to be “fiscally neutral”.
26.The MoD told the Defence Committee in January 2019 that the MDP had “served its purpose” and would “help to keep us on track to deliver the right UK Defence for the coming decades.” Framed under three headline objectives—to “mobilise”, “modernise” and “transform” UK defence—the MDP report outlined initiatives to improve both the MoD’s business practices, including on equipment procurement, and its ability to harness rapid technological change and innovation to maintain the UK’s “competitive edge over adversaries”. The report also set out additional investments in key capabilities where there was deemed to be an immediate need, such as protecting the nuclear deterrent against “growing threats” and building cyber capabilities, which the then Defence Secretary elaborated on in a speech two months later. The MDP report stated that this investment in capabilities and policy approaches, supported by the additional £1.8 billion in funding secured from the Treasury in March and October 2018, had “made Defence stronger”. It also acknowledged that there was “more work to be done as we move towards next year’s  Spending Review.”
27.The experts we heard from were largely negative about the MDP’s outcomes, with many citing the report’s lack of detail about how the MoD would deliver them. Dr Kori Schake was perhaps the least negative, noting that the MDP had laid down “markers for what the UK ought to be able to do”, although the failure to set a budgetary cap for the process had limited its utility. Tom McKane found that the lack of detail in the MDP report made it “difficult … to be confident” that its outcomes were deliverable or sufficient to meet the future needs of UK defence. Lord Houghton described the MDP as “underwhelming”, saying that it “just reproduced stuff which good departments should be doing anyway”. Baroness Neville-Jones said that the MDP report had not done justice to its separation from the NSCR.
28.The NSCR concluded that the defence strategy set out in 2015 and JF2025 remained the right “baseline” for UK military capabilities in 2025, and it was on this basis that the MDP was conducted. However, some witnesses questioned this conclusion, especially in view of the more advanced weaponry and technologies being adopted by countries such as Russia and China, as well as the growing prevalence of conflict below the threshold of ‘war’.
29.For example, Lord Robertson criticised the MDP report’s limited discussion of information warfare and asymmetric warfare—which he attributed in part to a general preoccupation with “platforms rather than … thinking and ideas”. Lord Houghton referred to the tendency to invest in “shiny countable things” at the expense of other important elements of military capability, such as the “brain and nervous system” of military capability (command and control, communications, computers, intelligence, surveillance and reconnaissance—C4ISR). He suggested that the Government should invest more in the “clever bit” of military capability (“the sensors, the technology and weapons effects”) instead of “exotic platforms”.
30.General (Rtd.) Sir Richard Barrons—former Commander, Joint Forces Command (2013–16)—went further, calling for a “wholesale conceptual refresh” of UK defence that drew on the various technologies under rapid development in “the civil sector”. Sir Richard identified improved C4ISR, the development of a mix of manned, unmanned and autonomous forces, and the creation of a ‘Single Synthetic Environment’ (a virtual environment in which all three branches of the armed forces can train together) as important in achieving “significant comparative operational advantage” over competitors. Lord Houghton similarly favoured “a step change” in defence but cautioned that it was important to maintain a balance between investment in manpower, hard-power capability and those capabilities needed for the wider “defence of the nation” in areas such as cyber security.
31.We asked Sir Mark Sedwill why the MDP report had not contained more significant announcements on capabilities, given the terms on which the MDP had been separated from the NSCR. He said:
“The MDP probably did include capability decisions; they were about modernisation and mobilisation in the immediate future, and they set out a perspective for the future. But the big decisions have to be accompanied by resource choices, and that needs a spending review.”
When we pressed Sir Mark on whether this meant that discussions on defence were “in suspension” until the Spending Review had established the MoD’s future budget, he said:
“sufficient additional resources were found for the MoD for the short term, for 2018–19 and 2019–20, but those are not strategic decisions for the future.”
32.Sir Richard Barrons suggested that this short-term increase in funding would not even be enough to close the gap between the cost of the defence programme and the budget, which he estimated was now £2.5 billion each year. Ben Barry, Senior Fellow for Land Warfare at IISS, also wrote that “a significant increase in funding” would be required to respond to the “perfect storm” now facing UK defence, which combined “unaffordable equipment and estate plans, new equipment projects at risk and increasing under-manning”. He concluded that “The MDP as announced does not make solving these very difficult challenges any easier.”
33.The MDP report stated that
“investing more effort in identifying and pursuing opportunities for innovation and the rapid and effective exploitation of novel ideas and technologies … is crucial to maintaining our military edge, ensuring future relevance and the ability to operate alongside allies and partners.”
It announced a number of initiatives to improve the ability of UK defence to harness new technology and wider innovation. These included:
34.Lord Houghton welcomed these initiatives, saying that insufficient money is spent on innovation, especially on the “true outliers of tech”. Tom McKane expressed concern, however, that the £500 million budget for the Transformation Fund would not be enough to pay for the Littoral Strike Ships and “swarms of drones” envisaged by the then Defence Secretary in a February 2019 speech. According to the MoD, the Transformation Fund is expected to fund more capabilities besides these. Furthermore, the MoD has so far allocated only £160 million to the Fund’s budget; it intends to bid for the remaining £340 million during the next Spending Review.
35.Today’s hi-tech and hybrid threats in areas such as cyberspace and information warfare do not obviate the need for soldiers, sailors, airmen and conventional equipment. These remain essential for deterring more traditional threats. The UK’s armed forces must have the capacity and balance of capability to respond to both types of threat, and to protect conventional equipment from newer threats such as cyber-attack.
36.The Modernising Defence Programme was undertaken in the context of significant challenges to UK defence. Having set high expectations at its launch, the MDP provided only a short-term fix for the capability and funding gaps that had emerged since 2015, and ultimately raised more questions than it answered. This has left the Ministry of Defence in a ‘holding pattern’ until the next Spending Review.
37.While we welcome the recognition in the MDP report that UK defence must be able to harness new technology and innovation more effectively, the initiatives it sets out are only the first steps towards a wider change in culture that is urgently needed. This includes the ability to identify disruptive technological change and its implications for the application of military force, as well as the willingness to adapt defence programmes accordingly and often at speed.
38.The Chief of the Defence Staff, General Sir Nicholas Carter, has described the additional funding allocated to defence in 2018 as a “welcome platform, which means that we do not have to do anything destructive to ourselves” before longer-term decisions on capabilities can be made during the next Spending Review. However, the NSCR and MDP processes have highlighted three fundamental problems with the UK’s approach to defence funding that require longer-term solutions.
39.The first is that the Government persistently fails to provide enough money to fund its ambitions for defence capabilities. We concluded in our first report on the NSCR that the result was a “significant, structural hole” in the defence budget; we also noted the strong arguments for spending more than 2% of national income (GDP) on defence. According to a July 2019 report by the Defence Committee, MoD expenditure had fallen from 2.4% of GDP in 2010/11 to 1.8% in 2017/18, while overall (cross-government) defence expenditure under the NATO definition had fallen from 2.5% of GDP in 2010/11 to 2.1% in 2017/18 (a proportionate decrease of 16.0%). Those arguing for a minimum of 3% of GDP to be spent on defence have included the Defence Committee and most recently the Parliamentary Under Secretary of State at the MoD, Tobias Ellwood MP. The Defence Committee’s report on the MDP, published in June 2018, also noted that
“Throughout the Cold War years of the 1980s, we spent between 4.3% and 5.1% of GDP on Defence; and even in 1995–96 we were still spending fully 3% on keeping our country safe.”
40.Secondly, the MoD is not efficient enough in how it spends the money it has. The MDP report concluded that the Department must “improve markedly” the way it operates. This is the case even accounting for the cost overruns and inflation that Lord Houghton pointed out were inevitable features of complex projects involving “exquisite technology”. The Public Accounts Committee reported in February 2019 that the MoD persistently “delays the difficult decisions needed to make the Equipment Plan … affordable”, leading the Committee Chair to describe the Department as a “repeat offender” in terms of “poor financial planning”.
41.A third problem is that the defence budget is heavily over-committed—primarily to so-called ‘legacy’ capabilities—which leaves little opportunity for an agile response to changing threats and technology. Dr Schake cautioned that it was too simplistic to assume that the UK could trade off spending on conventional capabilities for spending on countering hybrid warfare, as adversaries would simply shift the focus of their efforts accordingly. However, Lord Houghton told us that the combination of the nuclear deterrent, two aircraft carriers and F35 fighter jets “massively unbalances” the defence budget. He called for a nimbler defence budget that enables the MoD “to flex money quickly to buy new resources”, observing that the MoD could roll over funding to the next financial year in the event of underspend “only in very extreme circumstances”. This, he said, had led to a ‘use it or lose it’ culture within the MoD: “You have to spend what you have or the Treasury will take it off you”.
42.As we said in our March 2018 report, strong arguments have been advanced that it is not enough to spend 2% of GDP on defence, in light of both the scale and range of threats to the UK and the costs involved in keeping pace with rapid technological change. Yet a recent Defence Committee report found that Ministry of Defence expenditure fell from 2.4% of GDP in 2010/11 to 1.8% in 2017/18, while overall (cross-government) defence spending under the NATO definition fell from 2.5% of GDP in 2010/11 to 2.1% in 2017/18.
43.But spending more on defence is only part of the answer. The NSCR and MDP processes have shown that the funding model for UK defence is broken: the Treasury persists in not funding the Government’s ambitions for defence properly, while the Ministry of Defence has repeatedly struggled to manage its budget efficiently and effectively. The current programme budget is heavily over-committed and dominated by so-called ‘legacy’ capabilities, leaving little opportunity for an effective response by the MoD to changing threats and technology.
44.We recommend that, as well as increasing the overall defence budget, the Treasury help the MoD move away from its ‘use it or lose it’ mentality towards a more agile approach to planning and procurement. This would enable the MoD to take better advantage of rapid technological change. At the least, some of the MoD’s budget should be ring-fenced for the identification and adoption of cutting-edge technologies with potential military application. It should also be possible to roll over this ‘transformation’ funding from one financial year to the next in the event of underspend. The National Security Council should oversee a joint process between the MoD and the Treasury to determine the size of this ring-fenced budget. £500 million should be the minimum for such a Transformation Fund.
45.The evidence we have taken throughout our two-part inquiry on the NSCR and MDP suggests that there are difficult and pressing questions for the Government to answer in relation to UK national security. The “optimism” of 2015—as described to us by Lord Houghton (paragraph 23)—has given way to a sense that “Without clear political leadership being brought to bear now … The UK will be riding its strategic luck in a much more challenging and uncertain world.”
46.The first set of questions relates to the UK’s strategic positioning. Sir John Sawers said in February 2018 that it would not be acceptable for the UK to be left “adrift … without a strategic anchor in the western world.” Lord Robertson told us in March 2019 that while it was a “natural ambition” for the UK to have a global role, there was confusion about what that role might be. A wider debate was therefore needed, in his view, especially in the face of today’s complex security challenges and uncertainty relating to Brexit. Dr Kori Schake thought it essential that the UK maintained a “global perspective” for the sake of its continued security and prosperity but said:
“It seems odd that the Government has gone this long without filling in what they mean by ‘global Britain’.”
This echoes the conclusions of the Foreign Affairs Committee in its March 2018 report on Global Britain:
“The time is right to take stock of the UK’s role in the world. ‘Global Britain’ arose in response to the 2016 vote to leave the EU, but wider and longer-term changes in the international system and global balance of power pose more fundamental questions about the UK’s strategic position and orientation. … For Global Britain to be more than a worthy aspiration, the slogan must be backed by substance.”
47.Our witnesses stressed the importance of being realistic about the role that the UK can afford to play, and in which parts of the world. On defence, Dr Schake warned that the “yawning chasm” between the former Defence Secretary’s ambition for the UK’s armed forces in the South China Sea and current defence resources would “invite attempts to test the UK’s willingness to achieve [that ambition]”. Lord Houghton perceived an “incoherence” in the Government’s willingness to invest heavily in those top military assets that would enable the UK to support US operations in the South China Sea—such as aircraft carriers—only to then be “parochial about their employment”.
48.We asked Lord Houghton whether the focus of the three branches of the armed forces on different theatres risks strategic incoherence within UK defence, with the Royal Navy seemingly developing a global role centred on the Asia-Pacific, and the Army and Royal Air Force primarily deployed in support of NATO missions in Europe. He told us that
“The fact may be that the best tool in the box to project that sort of capability to the Far East is the Navy, while the Army is better exercising in Oman. You dynamically task your assets to cover off your strategy.”
49.On foreign policy, Lord Robertson questioned whether the UK would still have the capacity to play a global role without access to those levers available to it as a member of the EU. He said that it would not make sense to “drop regions” at a time when the UK may have to carve out new trading relationships. Nevertheless, he observed:
“We will need a major diplomatic effort at a time when the FCO has had its budget dramatically cut over a number of years.”
50.The NSCR report made a commitment to “strengthen our overseas network”. In October 2018, the Foreign Secretary, Jeremy Hunt MP, announced an increase in the FCO’s network by 1,000 staff over the following two years. The FCO has also now begun the process of opening 12 new Posts in Africa, the Caribbean and the Pacific. However, a recent report by the British Foreign Policy Group (BFPG) demonstrated the extent to which the FCO’s capacity has been hollowed out over the past four decades. It pointed out that 450 of the 1,000 new positions had already been announced by Mr Hunt’s predecessor as Foreign Secretary and that the FCO’s core (discretionary) budget for diplomacy was set to drop below 0.1% of GDP for the first time in 2018/19. The BFPG accused the Government of “favouring a foreign policy built around resources instead of fitting resources around foreign policy priorities.” It is difficult to disagree with this assessment.
51.It is time for the Government to go back to first principles on the national security strategy. The UK will have to chart a more nuanced course in the coming years as the direction and influence of key countries such as the US and China change unpredictably, and following its departure from the European Union. It will also have to respond to fast-changing and increasingly complex security threats, as described in our March 2018 report on the NSCR.
52.Yet the Government has become accustomed to talking a better game than it plays on national security, despite efforts to improve how it makes and delivers strategy since the National Security Council was established. The ‘Global Britain’ concept is meaningless against the current background of reduced diplomatic spending and under-powered defence. If the Government wants to turn ‘Global Britain’ into a meaningful strategy, it must re-build the UK’s hard power while reinvesting in and unifying the various instruments of soft power, including aid and diplomacy. This will require a combination of increased funding and rebalancing funding between defence, diplomacy and aid. National security strategy-making is about making choices, and the Government must now steel itself to make the difficult choices that it has sidestepped for too long.
53.We recommend that the Government, under the new Prime Minister, immediately set about addressing policy and budgetary decisions that have been left hanging by the National Security Capability Review and especially by the Modernising Defence Programme—with its implicit requirement for greater defence expenditure. The next Spending Review would provide the best opportunity to do so. The Government should describe in its response to this report what action it is taking to ensure that the Spending Review is based on thorough consideration of the issues raised.
54.At the same time, the Government should begin an honest conversation at the national level about the extent of its ambition for the UK as a significant global player, the risks it is willing to take in relation to national security, and the resources it is willing to commit to these ends. In 2009–10, the then Government produced a Green Paper that facilitated such a discussion. A similar Cabinet Office-led exercise in advance of the next National Security Strategy and Strategic Defence and Security Review would leave the UK better prepared than it was in 2015 to deliver on its national interests in the face of unpredictable strategic change and evolving threats. This next full review should take place alongside a Spending Review.
18 The four “particular challenges” originally identified in the 2015 NSS & SDSR were: terrorism, extremism and instability overseas; the resurgence of state-based threats and wider inter-state competition; the impact of technology, especially cyber threats; and the erosion of the rules-based international order. HM Government, National Security Capability Review, March 2018, p. 5
19 HM Government, CONTEST: The United Kingdom’s Strategy for Countering Terrorism, , June 2018; HM Government, Serious and Organised Crime Strategy, , November 2018
23 Joint Committee on the National Security Strategy, First Report of Session 2017–19, National Security Capability Review: A changing security environment, HL Paper 104, HC 756, paras 32, 34, 40
25 Oral evidence taken on 29 January 2018, HC (2017–19) ; oral evidence taken on 26 February 2018, HC (2017–19) ; Patrick Porter (); Mr James Rogers (); Joint Committee on the National Security Strategy, First Report of Session 2017–19, National Security Capability Review: A changing security environment, HL Paper 104, HC 756, paras 9–12
26 Oral evidence taken on 29 January 2018, HC (2017–19) , Q9 [Sir John Sawers]
29 “Britain’s man in the US says Trump is ‘inept’: Leaked secret cables from ambassador say the President is ‘uniquely dysfunctional and his career could end in disgrace’”, Mail on Sunday, 6 July 2019; “Trump axed Iran deal to spite Obama: How the British ambassador called the President’s actions ‘diplomatic vandalism’ fueled by ‘personality reasons’ - as revealed in more explosive cables that have sparked a free speech row while Iran tensions mount”, Mail on Sunday, 13 July 2019; “Britain humbled after Donald Trump pushes out its ambassador”, The Economist, 10 July 2019; oral evidence taken before the Foreign Affairs Committee on 10 July 2019, 16 July 2019 and 18 July 2019, HC (2017–19),
31 The UK will also have to negotiate continued cooperation on security issues covered by EU treaties, including access to EU tools such as the European Arrest Warrant, the Schengen Information System (SIS) II and the European Criminal Record Information System. Institute for Government, ‘Political declaration on the ‘Framework on the UK-EU future relationship’, November 2018, accessed 1 July 2019
32 Oral evidence taken on 29 January 2018, HC (2017–19) , Q10 [Lord Ricketts]
34 The Government has also set out its goals for future cooperation in these areas in two ‘Future Partnership Papers’—one on security, law enforcement and criminal justice and the other on foreign policy, defence and development—published in September 2018. HM Government, Security, law enforcement and criminal justice, September 2018; HM Government, Foreign policy, defence and development, September 2018
35 General (Rtd.) Sir Richard Barrons—former Commander of Joint Forces Command (2013–16)—observed that “over the past 12 months the recognition that China will become the defining security factor of this century has taken greater root”. General (Rtd) Sir Richard Barrons ()
36 Oral evidence taken on 28 January 2019, HC (2017–19) , Qq56–57. In an interview with the Financial Times last July, Robert Hannigan, former Director of GCHQ (2014–17) and witness to the first part of our inquiry, said that technology poses particularly difficult questions, given that Chinese technology is now often “world-leading”. “Why the UK has national security fears over China’s Huawei”, Financial Times, 26 July 2018
37 “Hong Kong protests: Foreign Secretary’s statement”, Foreign & Commonwealth Office press release, 12 June 2019; “China to Britain: Keep your ‘colonial’ hands off Hong Kong”, Reuters, 3 July 2019; “Hong Kong crisis could not have come at a worse time for the UK, The Guardian, 2 July 2019; “Hong Kong exposes the UK’s lack of China policy and risks of its position”, The Telegraph, 3 July 2019; Foreign Affairs Committee, Sixteenth Report of Session 2017–19, China and the Rules-Based International System, HC 612, paras 78ff.
38 The 1984 Joint Declaration made provision for a Sino-British Joint Liaison Group, which operated until 1 January 2000. However, it also declared that Hong Kong’s current social and economic systems would remain unchanged for 50 years following the handover in 1997 (to 2047), as would its existing rights, freedoms and lifestyle.Responding to an Urgent Question in the House of Commons on 2 July 2019, Sir Alan Duncan, FCO Minister of State, said: “We reject the Chinese Government’s assertion that the joint declaration is an ‘historic document’, by which they mean that it is no longer valid, and that our rights and obligations under that treaty have ended. Our clear view is that the Sino-British joint declaration of 1984 obliges the Chinese Government to uphold Hong Kong’s high degree of autonomy, and its rights and freedoms, and we call on the Chinese Government to do so.” Hong Kong: The Joint Declaration, House of Commons Library Briefing Paper , July 2019
39 Our predecessor Committee’s July 2016 report recommended: “In producing the next NSS & SDSR, the Cabinet Office should ‘game’ hypothetical scenarios where the UK’s relationships with key allies and partners are called into conflict. That process would help to establish which aspects of the UK’s key relationships are the most important.” Joint Committee on the National Security Strategy, First Report of Session 2016–17, National Security Strategy and Strategic Defence and Security Review 2015, HL Paper 18, HC 153, paras 47–48
41 Ministry of Defence, Mobilising, Modernising and Transforming Defence: A report on the Modernising Defence Programme, December 2018, p. 12
42 “Alex Younger: MI6 chief questions China’s role in UK tech sector”, BBC News, 3 December 2018; “UK and allies reveal global scale of Chinese cyber campaign”, National Cyber Security Centre press release, 20 December 2018
43 In February 2019, the then Defence Secretary, Gavin Williamson MP, announced that the first operational deployment of the UK’s aircraft carrier, the HMS Queen Elizabeth, would include the Asia-Pacific. Ministry of Defence, ’, speech at the Royal United Services Institute (RUSI), London, 11 February 2019, accessed 24 June 2019
45 Oral evidence taken on 28 January 2019, HC (2017–19) , Q51
46 Oral evidence taken before the Defence Committee on 1 May 2018, HC (2017–19) , Q152; Joint Committee on the National Security Strategy, First Report of Session 2016–17, National Security Strategy and Strategic Defence and Security Review 2015, HL Paper 18, HC 153, paras 7–8
47 Foreign Affairs Committee, Sixteenth Report of Session 2017–19, China and the Rules-Based International System, HC 612, paras 125ff. Lord Houghton also told us that, as Chief of the Defence Staff between 2013 and 2016, he was “party to individual decisions about doing individual things [in relation to China and the South China Sea] but not putting that on a sustained, strategic basis.”
49 ‘Defence capability’ covers all areas of the MoD’s output, including personnel and training, but the most readily visible aspect of defence capability is the Equipment Programme, which absorbs approximately 45% of the MoD’s total cash budget (on 2017/18 figures). National Audit Office,, October 2018, p. 6 Ministry of Defence: Departmental Overview
50 Joint Committee on the National Security Strategy, First Report of Session 2016–17, National Security Strategy and Strategic Defence and Security Review 2015, HL Paper 18, HC 153, paras 71–72
51 Joint Committee on the National Security Strategy, First Report of Session 2017–19, National Security Capability Review: A changing security environment, HL Paper 104, HC 756, paras 32, 34
52 Figures for the 2017 Equipment Plan suggested a gap of at least £4.9 billion, and possibly up to £20.8 billion, between expected costs and the budget (a total of £179 billion over the following ten years). Figures for the 2018 Equipment Plan suggested a likely gap of £7.0 billion, and possibly up to £14.8 billion, between expected costs and the budget (a total of £186 billion over the following ten years). National Audit Office, Session 2017–19, The Equipment Plan 2017 to 2027, HC 717, 31 January 2018, p. 4; National Audit Office, Session 2017–19, The Equipment Plan 2018 to 2028, HC 1621, 5 November 2018, pp. 6–7
53 For example, the 2015 NSS & SDSR set a target of reducing the number of civilian personnel working for the MoD by 30% by 2020. According to the NAO, meeting this target would have translated into savings of £310 million. However, the MoD achieved only a 2% reduction in civilian personnel between July 2015 and October 2018. The target was ultimately scrapped. National Audit Office, Session 2017−19, Ministry of Defence: Reforming the civilian workforce, HC 1925, March 2019, Summary, para 7; “UK MoD drops target to cut civilian staff”, Jane’s Defence Weekly, 7 March 2019, accessed 11 March 2019. Nevertheless, the MDP report stated the MoD’s belief that it “can achieve over the next decade the very demanding efficiency targets we were set in 2015”. Ministry of Defence, Mobilising, Modernising and Transforming Defence: A report on the Modernising Defence Programme, December 2018, p. 17
54 HM Treasury, Central Government Supply Estimates 2017–18: Supplementary Estimates, February 2018, HC 808; HC Deb, 29 October 2018, [Commons Chamber]
57 HC Deb, 25 January 2018, [Commons Chamber]
58 The MDP process involved four workstreams: examining how the MoD is organised and operates; identifying further efficiencies and ways to be more productive; improving MoD commercial and industrial practices; and reviewing current and planned defence capabilities. HC Deb, 25 January 2018, [Commons Chamber]
59 Ministry of Defence ()
60 Ministry of Defence, Mobilising, Modernising and Transforming Defence: A report on the Modernising Defence Programme, December 2018, p. 15
61 Ministry of Defence, Mobilising, Modernising and Transforming Defence: A report on the Modernising Defence Programme, December 2018, p. 15
62 In a speech at RUSI in February, Gavin Williamson MP set out capability investments including: investments to “counter growing threats to the security of our nuclear deterrent” (£600 million); Typhoon’s next-generation radar (£60 million); improvements to anti-submarine warfare capabilities (£33 million); “a very significant additional investment” in cyber capabilities. Ministry of Defence, ’, speech at RUSI, London, 11 February 2019, accessed 24 June 2019
63 Ministry of Defence, Mobilising, Modernising and Transforming Defence: A report on the Modernising Defence Programme, December 2018, p. 5
65 Dr Schake argued that the MoD should have been tasked with identifying precisely how it would spend both more and less money. Joint Committee on the National Security Strategy, Note of informal discussion, 18 March 2019, accessed 24 June 2019
70 For example, the current Chief of the Defence Staff, General Sir Nick Carter, described Russia’s “eye-watering capabilities” in a January 2018 speech at RUSI. He concluded: “Our challenge now is to leap forward to what we need, given the threats … described”. Since then, Russia has announced new capabilities including a hypersonic nuclear-capable missile and underwater drones. Speech by General Sir Nick Carter, ‘Dynamic Security Threats and the British Army’, RUSI, London, 22 January 2018, transcript available at: , accessed 24 June 2019
73 Sir Richard Barrons listed data processing, improved processing power, connectivity, machine learning, materials science, bio-science, robotics, gaming and autonomy as examples of such technological progress. General (Rtd) Sir Richard Barrons ()
74 Lord Houghton welcomed the references in the MDP report to the armed forces’ role in responding to cyber-based threats but added that “this is something that we should be quietly accelerating towards”.
75 We note that the MDP announced a new Strategic Net Assessment Unit and a Defence Policy Board of external experts, with a view to improving MoD decision-making. We will monitor the Department’s progress in establishing and then integrating the work of these two bodies into its wider activity. Ministry of Defence, Mobilising, Modernising and Transforming Defence: A report on the Modernising Defence Programme, December 2018, p. 17
76 Oral evidence taken on 28 January 2019, HC (2017–19) , Q57
77 During the first part of our inquiry last year, Sir Richard told us that this gap was £1.5 billion each year. In written evidence submitted to the second part of our inquiry, he said this gap appeared to be increasing “as equipment acquisition risk accrues, additional costs appear in the nuclear programme, and forecast efficiencies prove—predictably—elusive.” Oral evidence taken on 28 February 2018, HC (2017–19) , Q25; General (Rtd) Sir Richard Barrons ()
78 ‘Extra money for UK military innovation, but hard choices put off’, IISS, 21 December 2018, accessed 24 June 2019
79 Ministry of Defence, Mobilising, Modernising and Transforming Defence: A report on the Modernising Defence Programme, December 2018, p. 22
80 According to the MDP report, examples of ‘Spearhead’ programmes include: exploring how better to combat sub-surface threats to submarines, using autonomous systems, networked sensors, artificial intelligence and machine learning; improving command and control in the Land Environment; using a new ‘Defence Information Range’ to test how artificial intelligence and machine learning can enhance decision-making, understanding and situational awareness; and combining novel software and hardware to improve the UK’s ability to analyse data, distribute information, and task intelligence, surveillance and reconnaissance assets. Ministry of Defence, Mobilising, Modernising and Transforming Defence: A report on the Modernising Defence Programme, December 2018, p. 22
81 Ministry of Defence, Mobilising, Modernising and Transforming Defence: A report on the Modernising Defence Programme, December 2018, pp. 10, 22; Ministry of Defence, ’, speech at RUSI, London, 11 February 2019, accessed 24 June 2019
83 Joint Committee on the National Security Strategy, Note of informal discussion, 18 March 2019, accessed 24 June 2019; Ministry of Defence, ’, speech at RUSI, London, 11 February 2019, accessed 24 June 2019
84 The Transformation Fund will also be used to fund “pioneering robotic fighting and logistic vehicles” and the rapid development of battlefield software applications (to support decision-making, for example). Ministry of Defence, ’, speech at RUSI, London, 11 February 2019, accessed 24 June 2019; “£30m boost to fast-track battlefield apps”, Ministry of Defence press release, 11 March 2019
85 Ministry of Defence ()
86 Oral evidence taken before the Defence Committee on 4 December 2018, HC (2017–19) , Q11
87 Joint Committee on the National Security Strategy, First Report of Session 2017–19, National Security Capability Review: A changing security environment, HL Paper 104, HC 756, para 34
88 Defence Committee, Twentieth Special Report of 2017–19, Shifting the Goalposts? Defence Expenditure and the 2% Pledge: An Update, HC 2527, para 2
89 Defence Committee, Eighth Report of Session 2017–19, Indispensable allies: US, NATO and UK Defence relations, HC 387, para 85; , The Times, 4 June 2019
90 Defence Committee, Seventh Report of Session 2017–19, Beyond 2 per cent: A preliminary report on the Modernising Defence Programme, HC 818, para 101
91 The MDP report states: “We must become a more agile organisation, capable of continuous and timely adaptation, unencumbered by unwieldy process and structures. We are already implementing important changes to how MOD is organised and operates. We have strengthened MOD’s Head Office so that it exercises a stronger grip over the wider Department, and we are accelerating transformation of the Defence Equipment and Support organisation.” Ministry of Defence, , December 2018, pp. 16–17
93 Public Accounts Committee, Seventy-seventh Report of Session 2017–19, , HC 1519, Summary; , Public Accounts Committee press release, 1 February 2019, accessed 24 June 2019
94 The MDP report acknowledged the need to “create financial headroom for modernisation and to sustain strategic advantage in a fast-changing world by using modern business practices”. Ministry of Defence, , December 2018, pp. 4–5
97 ; General (Rtd) Sir Richard Barrons ()
98 Providing oral evidence in January 2018, Sir John Sawers said that the advent of the Trump presidency and the UK’s decision to leave the EU had created “a combined effect and can add to the complications for us as the UK”. Oral evidence taken on 29 January 2018, HC (2017–19) , Q9 [Sir John Sawers]; “Former MI6 Head John Sawers: Brexit could pose long-term problems for British security”, Prospect, 14 February 2018
104 Naval capabilities featured heavily in the then Defence Secretary’s February 2019 speech at RUSI on the role of defence in ‘Global Britain’. In addition to the headline deployment of HMS Queen Elizabeth to the Asia-Pacific, the Defence Secretary announced the intention to base Littoral Strike Groups east and west of the Suez Canal. The First Sea Lord, Admiral Sir Philip Jones, confirmed the Navy’s “expanding maritime horizons” in a March 2019 speech at IISS, alongside his Indian counterpart. He said: “Our fleet’s increased global presence I believe is set to stay; I know we have to find different ways of enabling the fleet to deliver on that, but I believe it is hugely welcomed by our partners in those regions where we are now beginning to reassert our presence, and establish it more regularly”. Ministry of Defence, ’, speech at RUSI, London, 11 February 2019, accessed 24 June 2019; speech by Admiral Sir Philip Jones, Chief of the Naval Staff, at IISS, 14 March 2019, accessed 1 July 2019
108 Foreign & Commonwealth Office, ‘’, speech at Policy Exchange, London, 31 October 2018, accessed 28 June 2019
109 According to the BFPG report: since the UK joined the European Economic Community in 1973, core diplomatic spending has fallen from 0.5% to 0.1% of public-sector current expenditure; the FCO’s administration and programme budget was cut by 17.2% in 2014/15 alone and has yet to return to its pre 2014/15 level, despite additional funding for preparations for Brexit; and the UK’s overseas network was reduced by 270 staff between 2012 and 2017. The recent announcement by the Foreign Secretary of 1,000 additional FCO staff will only take the number of UK diplomats posted overseas back to its 2012/13 level. “Running Out of Credit: The Decline of the Foreign Office and the Case for Sustained Funding”, British Foreign Policy Group, June 2019, pp. 5, 7, 10, 26
110 “Running Out of Credit: The Decline of the Foreign Office and the Case for Sustained Funding”, British Foreign Policy Group, June 2019, pp. 5–6, 10, 26
111 “Running Out of Credit: The Decline of the Foreign Office and the Case for Sustained Funding”, British Foreign Policy Group, June 2019, p. 28
Published: 21 July 2019