A Long and Winding Road: The UK’s Defence Review Could Last For Some Time Yet

On 19 July, Defence Secretary Gavin Williamson announced the ‘Headline Conclusions’ of the ‘first phase’ of the Modernising Defence Programme (MDP), which he announced on 25 January of this year, using the well-established device of a written ministerial statement to Parliament.

The MDP was launched because ministers were unable to bring to a conclusion the defence element of the National Security Capability Review (NSCR), begun shortly after the 2017 election, when other elements of that review were ready to be concluded at the start of 2018. When this process is included, the MoD has now been in ‘defence review mode’ for more than a year and its deliberations will soon exceed in length the 1997–98 Strategic Defence Review, which lasted just over fourteen months. With no date announced for the MDP’s completion, it will soon become one of the longest defence reviews since the end of the Second World War.

Despite this longevity, this week’s published report makes clear that more work remains to be done. The most substantive announcements are decisions to establish new processes for assessment and policy-making: the building of a strategic net assessment capability, the publication of a space strategy, and the publication of a defence technology framework. On the key issues of capability development and prioritisation, the progress report does little more than outline a series of important issues on which decisions still need to be taken:

‘we will consider our global defence network, to make sure we have the right military and civilian staff deployed around the world’.

‘we will consider how we can rebalance our training and equipment to mainland Europe, the Far East and the Middle East and review our overseas basing to improve our interoperability …’.

‘we will consider a much more agile approach to the development of new equipment …’.

‘we may need to accelerate elements of the programme to meet the most acute threats sooner’.

‘we will consider how to improve our resilience, so that our networks … are protected against cyber-attack and infiltration …’.

‘we will consider how to enhance our ability to collect, analyse, disseminate and act very quickly on the vast quantities of data …’.

‘we are considering what a more active and dynamic approach to operations in all five domains – land, sea, air, space and cyberspace – should look like’.

‘we will consider how to modernise our approach to technology and innovation’.

‘we will consider how to deliver greater efficiency by adopting ambitious, digitally-enabled business modernisation’.

‘we will consider removing existing areas of overlap and duplication within our force structure and burden-sharing more effectively with allies and partners’.

Each of these statements is of interest, and together they provide significant insights into the main themes that the MDP has been considering so far.

Yet they give no indication of how, or when, the government will answer the strategic questions of resourcing and prioritisation to which they are all related.

One of the central weaknesses of the current defence review has been that its central purpose has not been consistent over time. In its early months, during the summer and autumn of 2017, the review was simply one element of a broader refresh of the 2015 SDSR, designed to make course corrections at the margins, but within the broad framework of capability choices set out in that document. Ministers were aware from an early stage that difficult decisions would need to be made to correct budgetary gaps left from the 2015 review as a result of slow progress in the delivery of efficiency savings, cost overruns (especially in the nuclear programme), and (not least) an over-ambitious shopping list of new procurement commitments. At this stage, however, it still seemed likely that the NSCR’s defence strand would resemble the 2011 ‘Three Month Exercise’, which delivered the final savings needed to close the funding gap left by the 2010 SDSR (mainly through cuts in numbers of Army regular personnel).

By historical standards and helped by the fact that the total defence budget was now rising in real terms, the size of the gap to be closed (although significant) was not particularly large. The National Audit Office’s estimates for the ten-year funding gap for equipment ranged from £5 billion to £21 billion, depending on the assumptions made on cost estimation, exchange rates and efficiency. Further savings would be needed in the non-equipment budget, especially if service pay began to grow more rapidly than it has during the last seven years. Yet, depending on the assumptions made, the total funding gap – between the budget available and the resources needed to fund SDSR 2015 commitments – probably amounted to around £1–2 billion a year by 2020–21, compared to a total annual defence budget of some £40 billion.

Closing that gap would not have been easy but it was manageable. It would have meant difficult decisions, probably involving some combination of efficiency savings and net capability reductions, perhaps made somewhat easier by some extra cash from the Treasury.

But this was not to be. Under new Secretary of State Gavin Williamson, appointed after Michael Fallon’s unexpected resignation in November 2017, the wider purpose of the defence element of the NSCR was redefined. It became a more ambitious undertaking, designed (alongside a vigorous public campaign) to make the case that defence needed a substantial additional cash injection. In the meantime, the Treasury agreed to alleviate the short-term pressures on the MoD budget by agreeing to a one-off cash injection of up to £600 million for 2018–19,  in response to cost increases in the Dreadnought  programme.

As of July 2018, the defence secretary has failed to convince the prime minister and chancellor to provide any additional core (multi-year) funding for the MoD. In the absence of such a commitment, he has not been prepared to agree the capability reductions that would have been necessary to bring the MDP to a conclusion.

Time will tell whether this approach is able to deliver additional long-term funding for the MoD. The prime minister’s agreement to substantial real-terms increases for the NHS over the next four years has severely limited the amount available for other government departments, including defence. Given the high degree of political fluidity at the highest levels of government, anything is possible in the coming months. If additional funding is not forthcoming, the longest defence review in modern history could end up being absorbed into the further review of national security priorities that is likely to be required for the post-Brexit Spending Review in 2019.

The views expressed in this Commentary are the author's, and do not necessarily reflect those of RUSI or any other institution.