Editorial

New Management = New Ideas?
13 May 2005

As expected the Labour Party was re-elected for a third successive term in the UK general election on 5 May 2005, and as also widely predicted, a new ministerial team has been appointed by Prime Minister Tony Blair to the Ministry of Defence. 

The new Secretary of State, Dr John Reid, may have once been a card carrying Communist Party member, but he created a favourable impression during a brief previous stint at the MOD as Armed Forces Minister. It is also believed that he actively sought the appointment and his close links with the Prime Minister maybe helpful, although arguably his far from close relationship with the Chancellor, Gordon Brown, may prove to be of far more importance in the long term.

Dr Reid is now faced with many difficult decisions that his predecessor, Geoff Hoon, had deferred as long as possible.  This includes the fate of several major RN equipment projects that are currently marking time (not least the new aircraft carriers), the size and schedule of the UK’s warship construction programme, and the future structure and capabilities of the naval industrial base.

But top of the Ministers headache list will be the sheer lack of money, at best (there's lies, damn lies and statistics) UK defence spending may have been essentially static (allowing for inflation) since Labour came to power in 1997, but  for various reasons described in previous editorials, its so-called "near cash" buying power has steadily reduced.  The UK defence budget is now simply inadequate for the great demands that are being made on the armed forces by the government – and the Navy has suffered more cuts than the other services as in recent years the utility of airpower and boots on the ground has been far more obvious to MPs and ministers than grey warships over the horizon.

The RN has a powerful role to play in half a dozen areas that fully support government foreign policy, national security, and our UN Permanent members status.  These need to be re-articulated and appropriate force levels identified and funded.  [Note to First Sea Lord:- Clearly and concisely explain to the new boss the importance, role and relevance of the Royal Navy in the current world environment, in just one page.]   SDR made a good attempt some 7 years, and for a few years the RN knew where it was heading.  But lack of funding and the war on terrorism has blown us badly off course.  If funding is inadequate - then the risks being taken must be identified and articulated - i.e. the governments risk appetite and risk acceptance has to be defined.  If there's a gap between resources and desired capabilities, the possible consequences must be clear to everyone.

We have to be realistic though, there is little room for sacred horses.  If the RN's role is now the unglamorous job of transporting and delivering the Army, providing floating airfields for the RAF when no Host Nation Support available, sweeping mines for the USN, and supporting coalition land based operations, then so be it.  The possession of large powerful anti-submarine forces and surface (warfare) action groups can only be justified with an identifiable threat navy, and France, Germany and even Russia are now our friends!  Also, if tasks such as hydrographic survey or fishery protection can better be done by agencies other than the RN, then again, so be it.

Another major problem remains equipment procurement, the huge cost over runs on old projects are devouring the funding that had been painfully freed up (often by the RN agreeing to cuts now for ‘cake’ later) and allocated to important new projects, while delays and slippages are leaving the armed forces woefully badly quipped on occasions.  Smart Procurement is now clearly not delivering as once hoped, that's not acceptable and the problems must be identified and resolved.

But even while he ruthlessly prioritizes and puts his own house in order, Dr Reid will still have to argue for more money at a time when every other Minister is suggesting that the MOD’s budget is one of the few that can be cut without breaking already made promises to increase spending on health, education, the environment, ….   for example the government has made a very public long-term commitment to substantially increase health spending, one Treasury document notes that current spending plans provide for NHS funding to increase by  £40 billion over the period 2002-03 to 2007-08, representing an annual average growth of 7.3 per cent above inflation.  By comparison, the entire defence budget is £30.9 billion in 2005/06.  Spending on the NHS (£90.5 billion in 2005/06) is about three times that on defence, and is increasing in real term by the equivalent of over  20% of the defence budget every year - clearly a lot of money that has to be found from somewhere.

In the naval context, Dr Reid’s “reign” has started with the news emerging that the Joint Casualty Treatment Ship (JCTS) project has effectively been cancelled, at least in its anticipated form "dedicated new build form.  While no disaster in itself (the need for a costly JCTS has been far from proven in operations since SDR), it is nevertheless symptomatic of the current situation, and the latest casualty in the long lists of important projects that the RN thought it had in the pipeline after the 1998 Strategic Defence Review (SDR) – FASM, FASH, SCMR, FCBA, FOAEW, FSC, ….. but which have since fallen by the wayside.  In almost all cases the government will argue in an increasingly tired manner that they haven’t actually been cancelled – rather they have been renamed, re-scoped, or that planning assumptions have changed.  But 7 years after SDR, the lack of any actual “Demonstration and Manufacture” orders for all these once key projects (several of which were originally expected to be entering service by 2005), or even their successors, is damning.   Yet another dark cloud is that despite numerous sacrifices by the RN in recent years in order to release funding for the carrier strike programme (CVF, MASC, and a large element of the JCA project) and ensure its progress, a close linkage now seems to be developing between these getting investment approval and the MOD's ability to find a way of cancelling the now unwanted c.£8 billion Tranche 3 buy of EF-2000 Typhoon fighters that it is committed to - embarrassingly the UK itself insisted upon the prohibitive cancellation penalties that are now causing so many problems.

Navy Matters congratulates Dr Reid and his team on their new appointments, and very much hopes to be able to report on their successes in the coming months.

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