Cutting defence budget too far, too fast, will undermine Britain’s security

This week’s Royal United Services Institute report, Capability Costs Trends: Implications for the Defence Review, on the financial crisis’s likely impact on future Ministry of Defence spending is a welcome injection of honesty into both the budgetary and strategic debate on the future of British defence policy.

Noted defence economist Professor Malcolm Chalmers makes a convincing case for hard choices as to the extent and cost of future major MoD spending on operations and procurement alike. Furthermore, he warns that even the long overdue Strategic Defence Review, which all parties have committed to, conducted this year, may somewhat counter intuitively cause more problems then it solves.

The report argues that a combination of “significant real reductions in the available budget” and “continuing growth in the unit costs of defence capabilities” is likely to lead to a reduction of around 20 per cent in numbers of service personnel, and a commensurate reduction in numerical military capabilities (major vessels, aircraft and ground formations).

In total, the defence budget is likely to decrease by 10-15 per cent between 2010 and 2016 at a time when, to meet existing commitments alone, it would require a real terms increase of more then 4 per cent per year for the next decade.

Professor Chalmers says:

“If cutbacks are evenly spread, ground formations (including infantry, armour, artillery and support regiments) would have to fall from 97 to 79, available aircraft (fixed wing and rotary) would be reduced from 760 to 615, and major vessels (submarines, carriers, escorts and major supply ships) would fall from 57 to 46.

“The central question for this year’s defence review will be whether some of these capabilities should be protected at the expense of deeper cuts in others.”

Commenting on the report, RUSI Director Michael Clark notes that the defence budget is now so overstretched that:

“Even small wars can throw long-term defence planning into chaos.”

The coming Strategic Defence Review therefore poses both a challenge and an opportunity.

The challenge of a long term SDR in this situation is that such a review runs the risk of cutting too far, too fast – fundamentally undermining Britian’s ability to pursue it’s international security goals. This points to the possibility of a three-year only SDR to cover the immediate budget shortfall and then a reassessment in light of the economic situation in 2013 – a model used by the Labour Government of 1964-1970.

Chalmers argues that:

“Politically, the choice between these two options may depend on an assessment of whether it is better to incur the political pain of defence cuts all at once, or in successive smaller doses.

“In strategic terms, the choice may hinge on whether longer-term defence priorities can be agreed while the broader consequences of the Afghanistan operation remain so uncertain.”

On the other hand, the opportunity in this crisis lies in a real and radical re-assessment of Britain’s defence posture in terms of both mission and assets. It is clear that efficiency savings in terms of consultancy contracts, pay freezes and staff cuts will prove insufficient to the scale of the likely defence budget gap in the years ahead.

Major procurement projects like the planned new aircraft carriers, a new generation of RAF fighters, and the largest potential saving, the Trident successor, may have to be axed as serious decisions are taken as to whether or not Britain will continue its attempt to possess a fully fledged naval, nuclear, ground and air force designed for each and every eventuality or if Britain will instead choose more selectively what kind of international security role its armed forces should play in the 21st century.