We need a review about the review into the last review...

The Times has broken details of the planned cuts put forward by the MOD to meet the likely scale of budget cuts needed under the ongoing national Security Review being conducted in the Cabinet Office. The planned cuts as leaked to the Times highlight the sheer scale of the challenge facing the MOD at the moment, and seem to resort to many of the ‘greatest hits’ intended to arouse strong opposition, such as ‘merging the Parachute Regiment and Royal Marines’ option.

It is indicated that the Prime Minister has opposed the measures put forward, and that this in turn will lead to a full blown Strategic Defence and Security Review, which will look again at force structures and outputs, and hopefully deliver a more balanced force in due course. The challenge is doing this against a budget which reportedly is £20bn in debt, with no meaningful way to find savings without serious pain.

This difficult situation has emerged because of a chain reaction of events set off by the decision to leave the EU. This caused a decline in the pound, upsetting carefully made expenditure plans as the Euro and Dollar exchange rate dropped significantly. At the same time the planned increase in funding towards the end of the five-year funding round hadn’t kicked in, meaning the MOD had a lot of in year financial savings to make and deliver planned financial efficiency savings as part of this. This led to an internal spending review called ‘ABC17’ which reportedly considered a range of options to balance the MOD’s books.

ABC17 seems to have not been signed off, and instead rolled into the mini Defence Review, presumably because the likely outcomes would have been significant, painful and impacted on the national security goals agreed in the 2015 SDSR. In simple terms, Defence was unable to make savings internally, without stopping support to a wide range of cross Government activities it had agreed to do in 2015. The only way to do this would be through a proper cross Government review.

Image by Ministry of Defence; © Crown copyright

It now seems to be the case that the current Review will not include Defence, because the MOD has again been unable to provide options to meet the funding goals that don’t cause significant long-term impact on a range of issues. Fundamentally the Department seems to be in the middle of a major financial crisis, but is unable to do anything about it until the demands on it change.

What is clear is that the options the MOD presented to Ministers, formally or otherwise represent an enormous challenge to sustaining the Armed Forces at their present level. The widely reported £20bn deficit presents an impossible challenge to overcome without major structural and force level reductions – while there may be scope for some low-level cuts, to meet this kind of challenge means major reductions.

For the current Government this dilemma places politicians in a real bind. The Conservative Party manifesto was built on commitments not to reduce service manpower, to build all four Trident submarines and to grow the equipment budget in real terms, while sustaining 2% of GDP on defence expenditure. To make the books balance for Defence means breaking some of these pledges, a move that will not sit well with the backbenches.

What can we learn from the proposals?

If the planned reductions are as proposed, then it highlights the real financial challenge that the MOD faces. Withdrawal of aircraft fleets is a means of saving a lot of money – not just in airframes, but in closure of bases, reduction in supply chain and logistics issues, and on the training and manpower pipeline – it is possible to quickly rack up enormous savings as a result that would go a long way to meeting MOD goals – but at an enormous cost.

Fleet withdrawal effectively means the cessation of an entire swathe of capability, which in turn has long term repercussions not just on the military, but its ability to support NATO and other commitments. The fact that MOD is seriously considering wholesale removal of multiple aircraft types highlights just how serious the funding problem has become. The loss of Lynx Wildcat (arguably the best maritime helicopter ever purchased by the British Army) is an example of where an entirely brand new fleet of aircraft, bought at significant cost could be deleted with long term implications in order to solve a short term financial crisis, but without removing the requirement for the capability.

Not all the news is inherently foolish though – the suggestion that the RN was considering an option to withdraw 2 frigates is arguably an extremely sensible realism measure. The Type 23 frigate fleet is aging (the youngest will be 16 this year), and some hulls are in very poor material condition. The RN already does not have enough manpower to keep its full force of 19 escorts active, with two permanently alongside at reduced readiness.

A move to delete two of the oldest or most fragile hulls would free up crew and reduce a significant long-term maintenance cost on ships that will become ever harder to keep fully operational. There is little sense in keeping a ship on that is in poor state simply to keep the semblance of numbers, when the people onboard could be used to fill gaps more widely across the fleet.

Similarly merging the Parachute Regiment and Royal Marines into a more combined role makes a great deal of sense. Both organisations have a good level of capability, but both require significant logistical support to deploy and sustain in the field, and it is questionable that the UK possesses the ability to effectively do this simultaneously. It is often forgotten that deploying a formation generates a major logistical tail for shipping and airlift and other enablers.

It makes a lot of realistic sense to instead of maintaining two separate formations seek where possible to create a joint tail, that can support the one that is deployed. It is very hard to see circumstances where both formations would deploy simultaneously on operations, or, frankly, any credible need for a large-scale parachute force anymore – particularly given the real reduction in tactical airlift in recent years. There is a good argument that can be made that merging the two forces as a single entity for deployment purposes, while maintaining individual ethos, would over time be a sensible measure to do.

Fundamentally though these proposals demonstrate the dire state that Defence finds itself in. Hemmed in by policy commitments requiring it to deliver mandated force outputs against certain outputs, while trapped by public, political and media opinion that makes difficult change almost impossible, the only answer would seem to be another full blown Strategic Defence Review.

For Defence such a review would allow the chance to take stock of planned outputs, commitments and force levels and work out what can no longer be done, what can be done differently and what now needs to be done in such a manner as to help shape long term force structures.  The problem though is that a genuinely strategic Defence Review only makes sense if there is money available to fund it properly and on a sustainable basis for many years to come.

Defence does not win many votes – for all the talk of it being important and dear to people’s hearts, the average voter doesn’t really seem to place Defence above all other issues as a rationale to vote one party over another. The £20bn that Defence requires over the next few years will not generate much political reward, particularly when health and social care is screaming out for more money.

At the same time the Government needs to take stock on its level of ambition in a post Brexit world, and whether the UK wishes to use its global influence and power projection capability as means of helping play a role in shaping global events. An increase in Defence funding to alleviate the pressures faced would help the UK maintain a role as a global player, helping buy influence with the EU and others, which in turn could translate to beneficial relationships.

But in a world where economic difficulties are likely as the UK adapts to leaving the EU, the headroom to find extra money is limited, and there are plenty of other departments who will also want funding too. There is seemingly little public appetite for large scale military engagement overseas, but plenty of people want more money for the NHS. The average voter probably neither knows, nor cares, much about whether the UK has a military presence in South Asia, but they do know and care if Aunt Agnes has her hip operation cancelled due to ‘cuts’.

A Review into a Review?

For the MOD, meeting the four commitments set out by the Conservatives will be difficult, unless radical decisions are made to either abandon them or amend the manpower figure to include Reservists. Trident is unlikely to be funded from anywhere other than the MOD budget, and extra funding is unlikely to be found for it. Similarly, equipment budget growth will continue, but given the collapse in the exchange rate by over 10%, any real growth is quickly cancelled out by the need to attribute more money to dollars than previously estimated.

The difficulty then for Defence is conducting an SDSR in a world where politicians seem unsure as to what their ambition is for the UK in the next 5-10 years, and whether they want to find the money to do this or not. There is probably strong political support for the idea of maritime and air power, both of which can easily be deployed (and recovered) discretely and with no long-term entanglements. It is reasonable to assume that the RN and RAF have a compelling case that they should receive the lions share of investment in the review.

By contrast the Army will find itself facing a difficult time – it is telling that all three options presented in the Times focused on a major loss of Army manpower, and capability reduction. What is also likely is the wider impact of further delays in procurement and reduction of exercises, training and other tools essential to keeping the Army credible. As its vehicle fleet ages, and with almost all of its primary weapon systems verging on becoming near obsolete, politicians face a difficult choice – do they continue to direct funding into high end high capability ground equipment, or do they take the’ UOR it on the day’ option of reducing the size of the Army and hope that come the next long-term ground operation, there is enough time to sort a round of UOR purchases out to equip people to the right standard.

At its heart though is the difficulty that the UK seems pathologically incapable of taking and sticking to credible long-term plans on defence and seeing them through to fruition. Strategic now seems to mean ‘two-year horizon’ at best, and there is a real sense that for all the glossy PowerPoint slides and publications, it is a department in a perpetual state of crisis as it struggles to afford the equipment needed to do the tasks asked of it.

This cycle of unaffordability is not new, in fact it seems never ending. There is an occasional period of a few years when things seem a bit better, but then another thing goes wrong and the Department is back to square one. Part of this problem lies in an eternally optimistic set of planning assumptions, coupled with such regular turn over of staff that no one ever has to see through the impact of their work.

The other problem is that rather than bite the bullet, take some incredibly tough decisions and wholesale withdrawal from commitments and capability, the Department lurches on, occasionally being bailed out by some deal that finds a few extra quid to just about see it through. What isn’t happening is systematic and thorough reforms to really grip and address the problems that the Department has got to stop them cropping up time and time again.

At some point the UK must have a serious policy discussion about what it really wants from its defence and national security capability. Does it want to seriously fund it, at a time of economic challenge and government austerity, or does it want to scale back ambition in order to find funding for other national projects? This conversation will not happen though in any meaningful sense, and instead the debate will be shallow, superficial and focus on numbers not outputs and leaked papers warning of an inability to defend the UK if something is cut.

It is all very well having an SDSR again (the third in 8 years), but unless there is a real change in behaviours, there will simply be another one in a couple of years’ time when the new plan proves unaffordable and unworkable. We cannot go on like this indefinitely.