Editorial

UK Defence Cuts Announced
20 August 2004

On 21 July 2004 the Secretary of State for Defence, Geoff Hoon, announced the UK’s biggest defence cuts since 1991 under the title "Delivering Security in a Changing World; Future Capabilities".  For the Royal Navy the reductions amount to about 20% of current force levels, in stark terms:

• The Type 42 Batch 1 destroyers HMS Cardiff, Newcastle and Glasgow will pay-off by 2006.
• The Type 23 frigates HMS Norfolk, Marlborough and Grafton will pay-off by 2006.
• The Sandown Class SRMH’s HMS Sandown, Inverness and Bridport will pay-off by April 2005.
• The Northern Ireland patrol vessels HMS Brecon, Cottesmore and Dulverton will pay-off by April 2007.
• The SSN force will be reduced to 8 rather than 10 units by December 2008 when HMS Superb and HMS Trafalgar pay-off. 
• The planned Type 45 destroyer buy is cut from 12 to 8 units.
• The “Vote A” strength of the RN as authorised by parliament is reduced from 41,300 men and women to 36,000.  The RN is already under strength so this represents an actual decrease of 1,500.

Other maritime related cuts include:

• The Nimrod MR.2 force will be reduced from the current level of 21 aircraft to just 16, and eventually be replaced by 12 rather than 18 MRA.4 aircraft.
• Expenditure on new helicopter projects is cut to £3 billion (from a rumoured £4.2 billion).

These cuts (and the First and Second Sea Lord's knew better than to try to present them to the service as anything else) are a bitter blow to an overstretched which RN, which admits that it is having to accept risks that it would prefer not to, and is no longer able to meet all its current comments.  An incidental result is that for the first time in three centuries the Royal Navy will no longer be the leading navy in Europe, most observers  conceding that title to French Marine Nationale by 2005.

It is interesting to compare RN force levels for major units from just before the Strategic Defence Review (SDR) in 1998, with today, and that now planned for late 2008:

Despite the governments much vaunted naval construction programme:

• There has been no mass replacement of old units by new, larger and much capable units.  About 88% of the major warships that the RN now has in service were in service in 1998: the exceptions being: HMS Vengeance (1999) Ocean (1999), Kent (2000), Portland (2001), St Albans (2002), Bulwark (2003) – none of which this government (in power over 7 year now) ordered.
• The RN is becoming a fleet of middle aged or old warships, only the decommissioning of old warships is keeping the mean age from growing too rapidly.  Just 3 Type 23 class frigates and 5 Sandown class minehunters have entered service since SDR period, and none since 2002.  The last SSN was commissioned in 1991, and the last aircraft carrier in 1985.
• The two promised aircraft carriers are still not even on order and steel work won't start until 2007 or 2008.
• The first Type 45 destroyer probably won’t enter service until early 2009 – 7 years after the last T23.
• The Future Surface Combatant (FSC) project has already been delayed three years, ISD slipping from 2012 to 2015, and is set to slip again to the "middle of the next decade" (2016? 2017?). 
• The first Astute submarine won’t enter service until early 2009, 18(!) years after the last Trafalgar class.
• Its widely rumoured that the UK’s JSF buy for JCA will be reduced from the planned 150 aircraft to just 85-100 – or the JCA Project even cancelled altogether.
• The long promised order for a Joint Casualty Treatment Ship (JCTS) has been continuously deferred, and the requirement may now be “merged” with other requirements.
• Numerous RN procurement projects have been delayed or deferred, or cut or cancelled outright: (FASM, FSC, T45, Astute Second Buy, Echo Class, SCMR, FASH/SABR, MASC, Merlin, FASGW … )

The extraordinary thing is that these big cuts (plus others such as the demise of the RN’s Sea Harrier force) are being announced despite them contradicting clear operational needs and government claims that it is is increasing defence spending.  For example on 12 July 2004 Gordon Brown announced that defence spending would increase by 1.4% a year in real terms over the next four years, meaning an impressive sounding £3.7 billion of “new” money.  However there is no doubt that the large reductions being made in the UK's armed forces are a purely financially driven action despite the slightly increased nominal funding, the reasons include:

• The high cost of implementing high-tech “Network enabled capabilities”.  This is proving difficult to meet, particularly while the UK is still locked in to buying expensive legacy systems such as the Eurofighter Typhoon in much higher numbers than it now wants or needs.
• The Treasury’s move to resource based accounting means that the MOD gets penalised for owning assets that it has already has paid for, e.g. buildings and warships.  The MOD and Treasury refuse to admit the net actual effect of the change, but the MOD seems to be at least £1 billion a year worst off under this new system, i.e. its spendable “near cash” budget is much less than it had expected and planned for (£26,479 million in 2004-5).
• The cost of on-going military operations.  Again the actual numbers are not public, but the MOD is believed to be having to meet about £500m a year of additional costs from its budget for operations in Iraq, Afghanistan etc.  The Treasury is paying the rest from contingency funds – but often long in arrears causing the MOD serious cash-flow problems (“robbing Peter to pay Paul”).
• Cost over-runs on major procurement projects.  These were a crippling £3.5 billion in 2002/3 alone.  Cutting equipment quantities in order to stay with in budget is often the only option.
• Inflation.  Defence related inflation is historically much higher than consumer retail inflation – perhaps 10% vs 2% on new equipment at the moment.
• The MOD has run out of high value assets to sell off or privatise – a major supplement to the defence budget for the last decade.
• The Ministry of Defence has committed to find over £2.8 billion of “efficiency savings” by 2007-08, in areas such as more efficient procurement and logistics, and reduced back office and support functions.  Failure to really find these savings translates in to more budget cuts.

But perhaps the most worrying aspect is that despite all the cuts the maths may still not add up.  It was notable during Hoon's statement that the usual compensatory crumbs of comfort or good news during a round of defence cuts were not thrown the RN's way (or the RAF's way - the Army gaining almost all of the small bun).  Hoped for progress ("Initial Gate") in relation to FSC and MARS was not announced, and nothing was done to allay rumours that the SCMR Lynx replacement project is under threat of cancellation, rather the reverse.  As regards the RN's most important project of all, allegedly the First Sear Lord Admiral, Sir Allan West, and CINCFleet, Admiral Sir Jonathon Band, only stomached the current cuts in return for assurances that the Royal Navy would get its promised two new aircraft carriers (CVF), but in fact CVF is still far from safe.  But by brutal co-incidence it was announced by Geoffrey Hoon on 19 July 2004 that the critical “investment” decision (Main Gate) on whether to actually order these ships, which had been expected in April, had been deferred to some time in 2005.  Until the new carriers are order, many senior officials in the Army and RAF will continue to question their need and see cancellation as the best palliative to the MOD’s continuous budget crisis.  There is an influential body of opinion that believes instead of the costly CVF’s the RN should settle for one or two large new helicopter capable amphibious ships (LPH/LHD’s) as a de facto replacement for the Invincible class units (and eventually HMS Ocean). 

Over the last six years Royal Navy has reluctantly accepted two major sets of cuts and many smaller sacrifices as the price of preserving the £3-4 billion CVF project, but it may still have to offer up yet more or make a painful reassessment of the importance of the project.  Some people inside and outside of the RN are wondering out loud whether the cut backs will ever end - projecting the trend of the last 30 years in to the future means that the RN will be down to its last sailor and last rowing boat in less than 20 years.  No wonder that the RN is struggling to fill even even its much shrunken ranks. 
  

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