Monday, May 24, 2010

HM Treasury announces UK government cut-backs - implications for defence ?

HM Treasury announces UK government cut-backs - implications for defence ?
May 24, 2010

More years ago than I care to remember one of my University Professors issued an essay list from which I chose the subject of 'are defence reviews solely driven by financial concerns'. I remember making a spirited defence of the importance of coherence in defence and foreign policy.

As the years have progressed and my work in the defence industry evolved I see a somewhat different picture. Following the May 2010 General Election in the UK the new Chancellor of the Exchequer announced today ('Government announces £6.2bn of savings in 2010-11') immediate Government spending adjustments ahead of the June budget. In the statement available from the HM Treasury website the new Chancellor, George Osborne made the following comments,

"Today the Government has taken the decisive action necessary to start tackling the UK deficit and secure the recovery only 10 days after taking office.

Savings will be taken out of budgets, without affecting the quality of key frontline services, as set out in the coalition agreement. In addition to £6.2bn of savings in non-protected departments, savings in health, defence and international aid will be reinvested in front line services in those departments."

What can we infer from the statement for Defence - a touchy subject for a fresh government with major commitments overseas ?

Firstly, this financially driven imperative cuts across the SDSR started under the Labour government and halted during the election by the MOD. It would appear than a Departmental effort to re-run the 1997 process is being hi-jacked by a political and Treasury driven effort to re-run the mid 1990s 'Front Line First' review under the Conservatives and Malcolm Rifkind aimed at exactly what is being pitched now, transferring resources from the tail to the teeth of Britain's armed forces.

This instead of new resources.

What outcomes can we expect to see ? I think the most worried part of the MOD must be the Royal Navy. Given the directives to MOD officials to evaluate all recent contracts for get-out clauses, plus the lack of enthusiasm for the Conservative in Scotland leads to a lack of desire to award ship building contracts to Scottish, Labour and Union driven yards.

Plus the new Ministerial team is principally Army sympathetic - Junior Ministers representing Aldershot and having served with the Special Forces are unlikely to listen to the Admiralty - especially if there is a way out of naval shipbuilding projects.

This could be highly deleterious to the long term national interest. Having written a Doctoral thesis on the collapse of the CVA-01 aircraft carrier program in the mid 1960s one can see how vulnerable the program is. That said, the RN prevaricated for a few years over specification and industry configuration to deliver the program when resources were relatively plentiful.

In addition the challenge of maintaining a 'drumbeat' in construction of nuclear submarines has also been a constant pressure which the new ministerial team may be less sympathetic towards.

The Royal Air Force one could suspect will downsize their stations further and one could see a strong effort to redirect or else cancel Eurofighter Tranche 3. This would be a good move from the perspective of making back-bench Eurosceptic Conservative MP's happy IF the financial penalties can be in someway mitigated.

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