Defence procurement suits contractors not soldiers

Douglas Carswell is the Conservative Member of Parliament for Clacton

British-tank-in-action An early cheerleader for coalition government last May, I hoped it would allow the Conservative party to change for the better. The search for common ground with Clegg and co would strengthen the hand of those of us advocating a new model Toryism, based on localism and the dispersal of power.

If coalition means compromise, I saw the trade offs as a chance to fuse direct democracy Conservative ideas with pragmatic Lib Dem thinking (such as those set out in the oft-quoted, less often read, Orange Book). One year on, I fear we’ve done something a little different – and nowhere is this more the case than with defence.

Conservatives have traditionally had a strong defence commitment – even if they’ve been a little slow to see that simply spending more is not enough. More ambivalent about large scale defence projects, the Lib Dems seemed to clock that spending more money at the behest of large defence contractors is not the same thing as giving our armed forces the kit they need.

Lib Dem spokesmen, during those endless years of opposition, spoke out against enormously wasteful procurement projects. They pointed out the cosy relationship between defence contractors and the Ministry of Defence, and demanded we shut the revolving door.

A Liberal Conservative defence policy ought, therefore, to marry traditional Tory support for defence, with the Lib Dems’ desire to overhaul the way we spend the defence budget. We seem we have managed to do almost the opposite. The government seems ambivalent about defence spending and at the same time, prepared to carry on spending what money we do have appallingly badly. Despite being the fourth highest spending military power in the world, Britain’s ability to project military might is hamstrung by the way it spends its budget.

Instead of buying the best kit in the world that our armed forces need, we seem to buy kit that it suits the large contractors to sell. Using bogus arguments about jobs and “sovereign supply”, we run a protectionist, mercantile defence industry that is simply not much good at converting financial muscle into military punch.

If you think I overstate my case, ponder this: while China – which spends approximately the same on defence that we do – launches a deep water fleet and stealth bombing capability, we’ve just axed our last few dozen harriers.

The coalition talks as if they are willing to scrap the disastrous Defence Industrial Strategy. Yet we remain light years away from the kind of transparent off-the-shelf procurement, with open competition, that we need to ensure that we spend our defence budget wisely. Rather than see it as their role to justify appalling mismanagement inside the MoD, coalition ministers ought to apply liberal principles of accountability and open competition to make sure it is at last spent wisely.

http://twitter.com/douglascarswell/status/54862780091731968 Douglas Carswell MP

RT @leftfootfwd: Defence procurement suits contractors not soldiers: http://bit.ly/haT1Xq by Conservative MP @DouglasCarswell
http://twitter.com/philcane/status/54865448566652928 Philip Cane

RT @leftfootfwd: Defence procurement suits contractors not soldiers: http://bit.ly/haT1Xq by Conservative MP @DouglasCarswell
http://twitter.com/modditydodds/status/54866632824201216 Knut Cayce

RT @leftfootfwd: Defence procurement suits contractors not soldiers: http://bit.ly/haT1Xq by Conservative MP @DouglasCarswell
http://twitter.com/simonkillane/status/54872592095522816 Simon

Defence procurement suits contractors not soldiers http://bit.ly/gyf0m5
http://twitter.com/akers75/status/54876809153626112 jeremy akers

RT @leftfootfwd: Defence procurement suits contractors not soldiers: http://bit.ly/haT1Xq by Conservative MP @DouglasCarswell
http://twitter.com/annette2947/status/54897290170736641 Annette Carter

Defence procurement suits contractors not soldiers: The government seems ambivalent about defence spending and a… http://bit.ly/ghEsVR
http://twitter.com/bankruptbanks/status/54986378311778304 Bankrupt Banks

RT @leftfootfwd: Defence procurement suits contractors not soldiers http://bit.ly/fZUUgy
http://www.adsgroup.org.uk Matthew Knowles

Just a few point-by-point comments.

“Conservatives have traditionally had a strong defence commitment – even if they’ve been a little slow to see that simply spending more is not enough.”

Defence spending began to fall as a percentage of Government spending and of GDP in the early 1990s under John Major. This trend has continued ever since. It was 4.3% of GDP then (about 10% of Government spending) and it is now around 2.3% (or 5% of Government spending).

“More ambivalent about large scale defence projects, the Lib Dems seemed to clock that spending more money at the behest of large defence contractors is not the same thing as giving our armed forces the kit they need.”

If anyone out there believes that a Government of any stripe buys equipment because a defence company tells them to then they are living in cloud cuckoo land. The 300,000+ people in the UK working for the industry take a great pride in supplying the best possible equipment to our armed forces (over three quarters of which when polled say that they have never been better-equipped) and if it were sub-standard or over-priced it would not be such a strength for the UK economy in terms of exports.

“A Liberal Conservative defence policy ought, therefore, to marry traditional Tory support for defence, with the Lib Dems’ desire to overhaul the way we spend the defence budget. We seem we have managed to do almost the opposite. The government seems ambivalent about defence spending and at the same time, prepared to carry on spending what money we do have appallingly badly. Despite being the fourth highest spending military power in the world, Britain’s ability to project military might is hamstrung by the way it spends its budget. Instead of buying the best kit in the world that our armed forces need, we seem to buy kit that it suits the large contractors to sell. Using bogus arguments about jobs and “sovereign supply”, we run a protectionist, mercantile defence industry that is simply not much good at converting financial muscle into military punch.”

The issue that is often missed is that if the Government of the day orders a specific large project and then tinkers with the design or delays the project (or often both) then this adds to the costs. The UK industry responds to the customer and pay its own workers in the meantime to retain their expertise. If UK equipment was uncompetitive or low-quality then the UK’s position as number one in Europe and second only to the US in the defence exports market would have been lost years ago. The US Government Accountability Office found that over half of US defence projects are over budget. In the UK the majority are not only on budget but on time. The horror stories on large projects and budget over-runs or delays in the UK have been due to changes in specification or delays requested by the customer. Procurement reform is supported by the industry and will deliver further improvements. But be in no doubt, in international terms, the way the UK buys defence equipment – while not perfect – is one of the better models.

“If you think I overstate my case, ponder this while China – which spends approximately the same on defence that we do – launches a deep water fleet and stealth bombing capability, we’ve just axed our last few dozen harriers.”

The only comparable part of the two countries is the bottom-line budget and even that is questionable when the Chinese budget funds various parts of the military from other sources. Furthermore, does China pay the same wages as UK companies or abide by the same regulations on things such as health and safety? Has the Chinese Government cut research and technology spending in defence by 20% over the last three years to 2010, the UK Government has? There might be some answers in there to explain this situation.

“The coalition talks as if they are willing to scrap the disastrous Defence Industrial Strategy. Yet we remain light years away from the kind of transparent off-the-shelf procurement, with open competition, that we need to ensure that we spend our defence budget wisely. Rather than see it as their role to justify appalling mismanagement inside the MoD, coalition ministers ought to apply liberal principles of accountability and open competition to make sure it is at last spent wisely.”

Ask the Japanese or Koreans how buying off the shelf or open competion works. The overseas supplier offers cut-price kit and wins open competitions until the domestic competitor goes out of business and then the prices go up. Off the shelf is most often more expensive once development costs are added on (they are included in the unit cost of UK-made kit but not in the case of overseas equipment) and support costs ramp the price up even more. The UK is the closest thing to the only open large defence market in the world (Europe and the US have much more closed markets that favour their own suppliers while in the UK we have many overseas companies supplying the MoD).

We should also consider the stark dilemma that if available funds are used increasingly to import commercial off-the-shelf equipment, and research and technology in the UK is reduced, UK intellectual property will diminish and so, in time, will exports and the UK supply chain. The Government needs to be realistic about the security of supply implications of reliance on other nations for defence and security science and technology. State of the art technology may increasingly be generated in countries which will not want to share it with the UK, or not on acceptable terms. The UK should retain core capabilities in key areas of science and technology, civil and military, and should be prepared to invest to develop new technologies to meet future threats. There are no shortcuts to obtaining a world class technological and industrial base for defence and security. Capabilities once lost are rarely recoverable; risks taken with this base will almost certainly translate into military and security risk before too long.