Defence spending squeeze

If David Cameron does not want to be made a hypocrite for criticising those NATO countries spending less than 2% of GDP on defence, the Treasury must find more money for the MoD. He may lose the general election in May, of course, which might afford an excuse, but he will need to act if he wins.

Thanks to Malcolm Chalmers, RUSI Research Director, we have a little more data to be going on with. In his briefing paper, ‘Mind the Gap: The MoD’s Emerging Budgetary Challenge’, he projects, having studied the known spending plans of all three major political parties, that defence spending will fall to 1.85% of GDP in 2016/17, equating to £36 billion.

Notwithstanding any reservations we might have with arbitrary targets, this represents as clear an indication as we are likely to get that the Armed Forces are going to come under severe strain in the years ahead unless the government changes its priorities.

If we thought for a moment that the falling percentage might only be a consequence of increasing GDP – not of falling spending – we are mistaken. He predicts real-terms reductions of 10% over four years. This, he admits, is the pessimistic projection, but it is where we are heading if things don’t change.

Whatever your view on the importance of defence spending, this represents a real diminution in defence capability. And this at a time when the world looks as dangerous as ever. We do not need to list the threats: they are self-evident.

Part of the problem is a reluctance to add defence to the list of protected areas of government spending: International Development; Health; Schools, for example. It is a truism, but it is worth saying: the more we protect some areas of spending, the more we have to look at cuts in other areas.

The report says we must add something in the region of £5.9 billion to the defence budget if we are to maintain defence spending at 2% of GDP. It also says this is ‘not plausible’.

That seems like a generous word: ‘Plausible’. If it is taken to mean an increase in the budget is unlikely, an increase would indeed seem ‘not plausible’.

But if ‘plausible’ is used to mean what is reasonable, it is reasonable to expect the government to shift spending to defence from elsewhere. After all, the government already spends more than £700 billion a year. It’s always and everywhere a matter of priorities. If a government wants to find the money, it can: it’s simply a matter of not spending money on something else.

Politics may yet intervene. Pressure from the Commons, the Lords, the Defence Select Committee and, of course, the Opposition sniffing an opportunity, might force the government (of whatever colour) to find the money, even if, as the briefing paper suggests, it would have ‘to be found from increased taxation and/or borrowing’.

But perhaps the government has no intention of spending more on defence. There are, as the strategists give every impression of believing, no votes in defence. Though if the Conservative Party wants to retain its core vote, it might think twice about undermining yet another area of national life it’s core supporters think important. If the Conservative Party is not for strong defence, what is if for?

If the MoD is left with no option than to absorb real spending reductions, what are the options?

Personnel? Well, the personnel budget has already taken a hit. We know 20,000 soldiers are in the process of being cut, leaving the strength of the Regular Army at 82,000. The briefing paper goes further: we have reduced the numbers of service and civilian personnel by 17% and 28% respectively.

There are murmurings that the personnel budget will again be targeted, perhaps reducing the Regular Army by another 20,000. Perhaps this is little more than contingency planning, never to be implemented, but we cannot be sure. Politicians have a way of leaking stories to the media to see how they ‘play’ with the public. If the grumblings are manageable, then crack on—no votes in defence.

But it will be harder this time around to cut troop numbers further. You can squeeze only so much water from a sponge.

That leaves the equipment budget. Can savings be made here? Perhaps. The Defence Equipment Plan 2014 refers to a budget of £163 billion (for both procurement of new and maintenance of old) over the next ten years. While it might be difficult to make savings on some big-ticket items, not least a submarine replacement for Trident, there could be scope to cut in other areas.

Whatever happens, the MoD is in for a torrid time. It will either have to argue for more money, or it will have to find things to cut. Not an enviable task, even though there are no votes in defence.

Still no votes in defence, supposedly

It is being reported in The Times and The Mail newspapers that a number of Tory MPs are not happy with the government’s stance on defence spending. About thirty of them, we are told, are preparing for some sort of Commons revolt next week when NATO spending is debated.

Their anger stems from the growing impression that the Tory hierarchy isn’t that bothered about defence. Defence of the realm is supposed to be a Conservative issue—the first responsibility of government—so you can see why some might be upset by these reports.

It seems increasingly likely that defence spending will fall below 2% of GDP, which is the amount all members of NATO are supposed to allocate to defence. This, of course, does not necessarily mean defence spending will fall in real terms, just that it will fall as a percentage of national wealth—provided the economy grows. Having spent so much time berating other members states, it seems a bit rich for us to fall below the level in the next year or two.

But there are also whispers that defence spending will fall in real terms, too. What they are talking about is a freeze, holding spending to about £36 billion for the next few years. When inflation is taken into account, this amounts to a real terms reduction in defence spending. This would have a real impact on our defence capabilities.

And on top of this, the dreaded phrase “There are no votes in defence” is raising its head again. Allegedly from Philip Hammond the Foreign Secretary no less. I have no idea whether he said this (his people say not), but if he did it would not have been a radical observation. Perhaps it’s because the benefits of defence spending are too intangible—much better to vote for benefits, subsidies and spending on things people will draw on every day, such as health or education.

It would also seem that these Tories have a right to be suspicious. The Coalition government has already slashed the size of the Army by 20,000 soldiers. This is 20% of total strength. By anyone’s measure, even when offset by the proposed uplift of 10,000 reserves (which is still a concept that needs to be proven), this is a significant reduction in our military strength.

Coming at a time when the threat from Russia to its neighbours, particularly the Ukraine and potentially the Baltic states, seems to be on the rise; and at a time when the threat from Islamism shows no sign of abating and every sign of increasing: it seems entirely logical that MPs with an interest in national defence should make their point.

It’s just that I’m sure the government would prefer them to make their point in private, and then shut up about it.

Does it matter if defence spending falls below two percent of GDP?

Much is being made at the moment of NATO’s “2-20” goal: that members ought to spend at least 2% of their GDP on defence, with about 20% of that figure going on equipment – the argument being that if NATO underspends on defence then a) the deterrent effect is undermined, and b) NATO countries will find themselves outgunned if it does actually come to war.

I say ‘at the moment’ but the issue was raised last year at the NATO summit in Newport, Wales. Barack Obama and David Cameron, in a joint article in The Times, criticised members who were not meeting the 2% target and thus not carrying their weight – their weight defined not in absolute terms but in terms relative to their national wealth, which seems a fair way of going about things.

Michael Fallon, Secretary of State for Defence, made a similar point: ‘US taxpayers won’t go on picking up the cheque if we choose to prioritise social welfare spending when the threats are on our doorstep.’

But this has been the case for decades, has it not? It’s not something EU members like to admit; they prefer the conceit that the cause of post-WW2 peace is largely down to the existence of the EU and its former institutions rather than other factors: War weariness; German pacifism; nuclear deterrence; NATO-Warsaw Pact balance; and above all US military and diplomatic power.

Only the USA (4.4%), UK (2.4%), Greece (2.3%) and Estonia (2%) met the target that year – the USA understandably well ahead of the others. We know why Britain is one of the four, but the inclusion of the last two is interesting for different reasons: Greece is skint and so one might excuse them for not hitting the target unlike, say, Germany (1.3%), which is loaded; and Estonia shares a border with Russia and has living within its borders a 25% Russian population and so perhaps might feel a vested interest in spending more on defence.

All other member states fell someway short, Iceland managing a seemingly unfeasible figure of 0% of GDP. But maybe this is a rounding error; it’s difficult to believe they don’t have at least one coastal patrol vessel. Though whatever the particulars of this example, it seems that the majority of NATO countries are not pulling their weight.

So it would be embarrassing, would it not, if the UK fell below the spending target of 2% of GDP. It certainly would, especially after all that finger pointing. Yet this is what is being reported: that George Osborne has told the Prime Minister that on current projections spending will dip below the threshold sometime by 2017.

Personally, I’m not a fan of arbitrary spending targets: if a department is instructed to spend a certain amount of money simply in order to hit a target, the chances are that a good proportion of that money will end up being spent on things we neither need nor want.

‘Don’t worry, Minister, we’ve hit the target,’ is not a comment I want to hear coming out of any senior civil servant’s mouth. Unless, that is, he’s reporting on some sort of recent military engagement. In that case, hitting the target is entirely appropriate.

But if ministers make a big thing about a target, then they really ought to meet it – otherwise they’d be better off not having it; hostage to fortune etc. We can see how the arbitrary 0.7% target for overseas aid has become a political football. If you question it, you are guilty of wilfully killing babies; and if you are for it, you are guilty of high-handedly redistributing money from the poor in Britain to the rich and corrupt in various foreign countries.

The arbitrary target, therefore, can skew the business of government – despite best efforts, I’m sure. For the example of overseas aid, political action becomes less about the rightness and practicality of a particular scheme to help less fortunate countries, and more about the political imperative to meet the target come what may. Success should be defined by its outcomes on the ground, not by reaching the arbitrary target.

How useful are these goals anyway? Why spend 2% of GDP on defence? Why not 1% – or indeed 4% like the USA?

Perhaps the numbers themselves are irrelevant. Military people talk about defence capabilities – naval fleets, air force squadrons, army battalions and formations. What will be – and should be – exercising the minds of defence strategists is not so much the target, but the outcome of the spending each NATO member allocates to defence and how each component part might be brought together as a whole.

NATO itself has recognised that fiscal constraints perhaps necessitate a new approach – or at least a modified one. Smart Defence, for example, encourages member states to cooperate: not just in the development and acquisition of capability, but also in its operation – in cyber defence, missile defence and joint intelligence for example.

But whatever this capability looks like and however it is distributed between member states – it costs money. In these cash-strapped times (last year’s UK budget deficit was £100 billion) it is understandable that governments will be tempted to let defence spending slide: especially because politicos tend to see few votes in defence.

Even so – resurgent tensions with Russia and surging instability in various Islamic countries suggest that defence, though perhaps an unpopular way to spend money, remains essential. Or not, as our politicians will decide?

Is this a new Anglo-French Entente Cordiale?

Every so often we pass a signpost in the road, but fail to see its message clearly. And only when other indicators come into view, much further down the road, do we recognise the approach of our destination or the unwelcome realisation that we are lost. I mean this in the non-literal sense, of course. Britain is on the road to creating a new military structure and capability, and little signposts are already in evidence.

For example, British and French airborne engineers, of 23 Engineer Regiment (Air Assault) and 17e Regiment du Genie Parachutiste, have recently taken part in Exercise Eagle Sapper in the North of England. Imagining a humanitarian relief operation, the engineers dealt with the consequences of a tsunami: infrastructure damage, impending famine, government breakdown and insurgency.

First, they moved from Suffolk to Northumberland where they bridged Kielder Water, the largest man-made lake in northern Europe, some two miles wide, with Air Portable Ferry Bridge equipment, which can be used as a conventional bridge or transformed into a ferry system. Second, they moved to Otterburn and built water supply points, bridged rivers, demolished things and defended positions from raggedy insurgents.

These are not unusual exercise scenarios. British troops, this time from 16 Air Assault Brigade, need to be able to deploy at short notice to carry out just such operations in the future. Planners clearly rolled up a number of threats and challenges in the one exercise, but scenario overload is excellent preparation for the complexity and confusion of military operations. The requirement to fight insurgents in Afghanistan and Iraq, while building national infrastructure, ranging from indigenous security forces to schools and hospitals, amply demonstrates the need for such training.

But the signpost is found in the jointness of it. Britain and France. Two moderate military powers coming together. Jointness is, however, nothing new. NATO demands increasing interoperability and harmonisation of standard operating procedures; numerous standardisation agreements (STANAGs), concerning diverse matters from ammunition calibers to environmental protection, are in place. But this exercise falls outside NATO auspices, and it reveals something new, or perhaps enhanced, in the way Britain will engage in future military operations.

We saw closer British and French co-operation during the Libyan operation of early 2011, when joint forces bombed ground targets, ostensibly to protect civilians under UN authority, but clearly aimed at assisting the uprising. Yet it was the earlier agreement, in 2010, to set up a Combined Joint Expeditionary Force (CJEF) that began this new and enhanced coming together of UK and French armed forces.

This new force is to be ‘capable of facing multiple threats up to the highest intensity, available for bilateral, NATO, European Union, United Nations or other operations.’ Full operating capability is anticipated by 2016, and Exercise Eagle Sapper is one step along the way.

Co-operation and partnership are the watchwords. Partnership also incorporates, or is due to incorporate, unmanned air systems (sometimes, and unappealingly, called drones), and combat air power, and transport aircraft, and submarine technologies, and more… This is not insignificant. In fact, this is huge, as they say.

We are currently travelling down a road which doesn’t exactly have an identified end point, but most certainly has a direction. The imperative is money – or the lack of it – and government is looking for ways to eke out greater capability for less outlay. We should applaud this, of course. But do we (the public) know we are on this particular road? Do we know why we have chosen the French, or they us? Have we considered something similar with our ANZAC cousins, or perhaps with the US?

Perhaps. Perhaps not. And perhaps it doesn’t really matter. Defence is an expensive business, and we have less and less money at our disposal for it. We need to find ways of maintaining capability at cheaper rates, and forging closer links with the French is obviously something we are exploring quite seriously. Just keep an eye on the signposts.