Editorial

The Frying Pan or the Fire?
10 April 2005

One item that sadly is unlikely to be a significant factor in the UK General Election scheduled for 5 May is the state of the armed forces, and that of the Royal Navy in particular.

Last year saw the RN suffer what were in relative terms some of the deepest cuts since the immediate aftermath of WW2.   The loss of 6 frigates and destroyers represented a 20% cut in an already much diminished escort force, by comparison the 7 frigates lost in the 1974 Mason Defence Review were a mere 10% cut, and even the 10 frigates and destroyers cut in the infamous 1981 Knott Defence Review represented only 17%.  One warship can only be in one place at a time, but worryingly most of the cuts have already been implemented in order to save money quickly, apparently before any  decision on what tasks to accordingly drop.

For over 50 years successive governments (Labour and Conservative) have regularly cut the defence budget, and the British armed forces have continued to successfully do all that’s been asked of them.  It seems that a dangerous perception has developed with politicians (very few of whom have served in uniform nowadays) and the public that defence cuts can be made with immunity, they have become an easy option when money has to be saved or is wanted elsewhere.  However the point has now been reached where our armed forces are no longer 'just' over-stretched, instead large ‘tears in the fabric’ have appeared where sufficient forces or capabilities simply no longer exist to undertake operations, or can only do so with excessive risk of unacceptable losses and/or of failure.

The current Labour government has frequently claimed to have the largest naval construction programme since Word War 2, but actual orders in the last four years have amounted to just one OPV, HMS Clyde, and she will be leased rather than owned by the Royal Navy.  Instead of the expected orders, the last 18 months have seen the unexpected appearance of an extra-ordinary plethora of committees: the Maritime Coherence Study, the Surface Ship Support Study, the UK Naval Shipbuilding Industrial Strategy, the Submarine Acquisition Modernisation Project, and the Future Defence Supply Chain Initiative.  Their objectives sound well in government statements - for example the Maritime Coherence Study is "intended to produce a balanced, coherent and more affordable programme [my emphasis] to address our capability priorities and provide an industrial programme with stable and balanced loading" - but our empty shipyards need orders now rather than a strategy that' will prevent them from supposedly being "overloaded" in five years times, or an industrial policy that forces them in to an unwanted merger.   While the committees slowly do their work and quickly submit their expenses claims, in-service dates slip right and hundreds if not thousands of workers receive their P45s.  There is an unavoidable suspicion that the main purpose of these committees is to provide an excuse to delay expenditure (e.g. CVF, MARS, JCTS and OMAR), or avoid it all together (e.g. the last four Type 45's and FSC).

The Conservative Party Leader Michael Howard talks the talk, but in practice his Party seems to offer a Defence policy that is little different from the current Labour Party policy, as defined in its spending plans and last July's Defence White Paper. 

The Tories have pledged to save the three Type 23 frigates axed last year and have said “we will increase defence spending by £2.7 billion more on frontline services than Labour's planned expenditure over the next three years”, these are much needed measures, but don't represent a major differentiator from Labour's plans.  The £2.7 billion mentioned is less than one point five percent of the defence budget over the stated period, and the small print is that much of the money will be found by “making major savings in the vast and inefficient bureaucracy of the Ministry of Defence”.  For more than a decade the MOD has had to make annual 3% efficiency savings (and this continues to be factored in to its future spending plans), but the easy options were used up long ago and it’s difficult to believe that additional economies can be quickly and easily realised in the manner that the Conservatives hope.  Indeed, the annual departmental hunt for tangible and bookable efficiency gains has now degenerated in to dubious WorldCom type accounting, savage short-term cost saving exercises that actually increase inefficiency and reduce frontline readiness, and out-sourcing agreements that may well result in increased future costs. 

The one area where genuine savings (estimated back in 1998 at £2 billion over 10 years) can really be hoped for is in procurement given the much hyped introduction of “Smart Procurement”, this should now be fully delivering after 6 years of use, but the annual Major Projects Report’s of the National Audit Office make very disappointing reading, indeed the continuing huge cost-overruns in equipment acquisition is a major factor in the MOD’s desperate budgetary problems.

Geoff Hoon, the current Labour Party Defence Secretary, picked up on the weaknesses of the Tory line when he responded to Mr Howard's speech by saying "... the Tories claim 'savings' of £900 million in procurement and logistics but provide no detail on where these savings would be made. And the Tories have ignored the fact that Labour is already delivering efficiencies in this area, including £1 billion in logistics by 2007-08.  It is inconceivable that the Tories could make £900 million on top of this without severely damaging the UK's defence capability."

The next government (Labour or Conservative) will almost certainly find that the Ministry's long-term plans are unrealistic – despite last years cuts the sums still don’t seem to add up as the various budgetary time bombs accepted years ago begin to explode.  An increase in the “near cash” Defence budget seems very improbable - Labour's plans are already published as official government documents, while the Conservatives won't be able fund any increase if their hoped for efficiency savings don't appear and they are serious about their promises to reduce pubic spending.  We can thus expect that more defence cuts will have to be made during the second half of this year and early next year, announced either en-masse (e.g. as part of a Defence Review by a new Conservative government) or in low-profile salami slices (the probable Labour approach).

The Royal Navy, which is anxiously waiting for several delayed equipment projects (e.g. the Future Aircraft Carrier and MARS) to finally pass their approval milestones, is particularly likely to suffer yet more financially driven amputations – the Army is politically almost untouchable at the moment while the RAF has already received Main Gate approvals for its biggest projects (e.g. Typhoon Tranche 2 and Future Strategic Tanker Aircraft) over the last few months.  Key decisions concerning the strike carrier programme will be the focus of acrimonious debate after the election, and the outcome is uncertain.

Whether you vote Labour, Conservative, Liberal Democrat, SNP, or for any other party is your choice.  But if you are reading this editorial, let’s hope that the next Minister of Defence - regardless of his party affiliation - will surprise everyone by announcing some good news for the Royal Navy, perhaps ideally on the 200th anniversary of the Battle of Trafalgar in October.

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