Budget Month

November is budget month for the UK government.  And before the Chancellor carries his famous red budget briefcase from 11 Downing Street to the House of Commons on November 22nd there is plenty of lobbying and positioning to be done by Ministers.  As is now customary for the season, government departments are already pleading special status in an attempt to secure a budget uplift – or at least to avoid cuts in order to preserve existing programmes and services.

In recent years, the Ministry of Defence has escaped the worst of government’s austerity drive. Indeed, the MOD budget has increased in real terms since 2015 and is slated to do so until 2021.  This should see spending on defence rise from £34.3 billion in 2015-16 to £39.7 billion by 2020-21.  This is in stark contrast to spending cuts in other departments of up to 30 percent over the same time period.  

Despite this relative munificence from the Treasury though, it has been widely reported that the MOD has managed to create a £30 billion black hole in its finances that at some point soon will need to be plugged. A rise in equipment costs; unfavourable movements in exchange rates; and an inability to deliver intended savings in operating costs have all contributed to MOD living beyond its means.  This will no doubt be one of the issues that are near the top of Gavin Williamson’s in-tray as he arrives as the new Secretary of State for Defence.

It is arguable that at least some of these pressures are beyond the control of the Department.  But the real issue is much deeper: a lack of strategy and vision for the role of UK defence. £37 billion in the current financial year ought to be enough, surely?

Since the end of the Cold War, the size, shape and posture of UK defence has changed immeasurably. Successive defence reviews have shifted policy and resources to take account of the changing world.  And much positive reformation has taken place in terms of creating modern, deployable Armed Forces.   However, the fact is that policy change has been largely incremental; capabilities have evolved over time; and savings been realised through a series of cuts: salami slicing to use the jargon.  In many parts of defence, the current incarnation resembles a mini-me of previous versions.

The time has come then for a radical rethink.  A genuinely new strategy is needed for new times.  A forward-looking view of the role of defence in protecting the UK homeland and our vital interests.  An organisation that is innovative, agile, and dynamic.  On Radio Four’s Today programme recently, General Sir Richard Barrons the former head of Joint Forces Command said that the UK needed to have a “profoundly important debate” about its future defence policy: highlighting cyberspace as one key priority where the UK needs to up its game.  

It is often said the necessity is the mother of invention. If that is the case, then there just might be a silver lining to the dark clouds hanging over the MOD Main Building on Whitehall.  With a financial squeeze and a new person at the top, the time is ripe for the MOD to start that important debate, get on with invigorating a new strategy for the future and articulate what it will cost.

Matt Bassford is Director of Strategy Consulting at Vedette

Article by: Resolution Team