Balancing the books has not been easy but our work has produced impressive results. In the new strategic environment we will be able to provide the modern and militarily effective Armed Forces that Britain needs more cost-effectively.”
Just the kind of statement you would have expected to hear from British Secretary of State for Defense Philip Hammond last month when he claimed he had closed the gaping maw of defense finances. Except that the assertion was made in 1998 and belongs to a supporting essay in the then-Labour government's Strategic Defense Review (SDR).
Such were the “impressive results” that by 2009 there was a £38 billion ($60.5 billion) chasm between ambition and available cash in the Defense Ministry's 10-year equipment and support program. By some calculations, this figure was £63 billion by 2012.
There has been the usual Punch and Judy-show politicking. The Conservative-led coalition government repeatedly reminded anyone within earshot of the defense-budgetary “chaos we inherited” from Labour. They are correct, up to a point. But there should be a salutary lesson in Labour's brave prognostications of the 1998 SDR having ended up a decade later as little more than a promissory note and an admission there was no more money. Defense procurement machinations have a habit of crushing the most capable and best-intentioned plans.
The effort by Hammond, and his predecessor Liam Fox, may have resulted in defense expenditure being corralled but it has now to be kept there.
“Reaching a balanced budget for the's [Ministry of Defense] 'Planning Round 12' . . . represents a hugely important milestone in the transformation of defense. It is a symbolic break with the failed practices of the past and a solid foundation on which to build,” Hammond told Parliament May 14. Around £160 billion is now allocated for the 10-year equipment and support program, a plan “endorsed” by the finance department. This is of course a significant cut from the £198 billion or £223 billion (depending on the figure used) that would have been required to meet the previous aspiration for the 10-year period.
Not all of the savings are driven by cuts to the equipment program. Two years of frozen pay, followed by two years of a 1% increase cap, and reductions in cost overheads and non-front line expenditure also contribute. Some of the equipment cuts were spelled out in the 2010 SDR. These included canceling the Nimrod MRA4 anti-submarine warfare (ASW) and maritime patrol aircraft, early withdrawal from service of the Harrier GR9, cuts in the number of Tornado GR4s, withdrawal of the Sentinel R1 intelligence, surveillance and reconnaissance aircraft when no longer required for Afghanistan, and pulling thefrom service by 2022, nearly a decade earlier than originally slated.
Some of these actions resulted in capability gaps—most notably for carrier strike and maritime patrol efforts. The present planning date to reconstitute carrier strike capability is 2020, assuming no more vacillation on the variant ofbeing bought, while ASW/maritime patrol is likely a candidate for the ministry's priority list. This is a kind of equipment program reserve bench whereby if enough financial headroom is found then unfunded aspirational projects can be brought into play. The Sentinel R1, for instance, could be granted a reprieve.
The extent and implications of the cuts has not gone unnoticed. The Atlantic Council, a U.S. think tank with many U.S. political and military luminaries in its ranks, cautioned in May in a report into the future of the Alliance that “deep defense reductions risk undermining [the U.K.'s] special status as one of NATO's most capable members.”
The British Defense Secretary does recognize that balancing is a continuous act. Planning Round 12 “starts to put the destabilizing uncertainty behind us as we move forward with defense transformation.”
Key to keeping the Defense Ministry's books in order will be Bernard Gray, the person in charge of reforming defense equipment acquisition management in the ministry. He is trying to craft a stable defense procurement model after issuing a stinging rebuke of current practices in 2009. The government has already instituted some of Gray's new recommendations, but still has to decide on further structural changes at the Defense Equipment & Support management agency.
It will be the extent to which these are embraced, enacted and embedded that determines whether Hammond's balancing act can be sustained.