Defence and the Election Outcome

The general election has produced two, somewhat-contradictory, outcomes for defence.  

On one hand, the clear commitments made by the Conservative Party in its election manifesto point to an end to the defence-budget cuts of the last five years. On reasonable assumptions, it is estimated that the Ministry of Defence (MoD) might get a real-terms increase in its total budget of up to 1 per cent per year over the next Spending Review period.

At the same time, the upsurge in nationalist sentiment – in both its Scottish and English forms – will ensure that the bar on future military interventions, especially if they involve significant risks of casualties or entanglement, remains high. Until the Scottish election and the EU-membership referendum have taken place, the government will be especially keen to avoid new commitments which might give credence to domestic critics of the UK’s international role.   

Such a posture – more resources for the armed forces, but greater care in deploying them – is likely to be welcome domestically, given the mixed record of recent interventions. As new crises emerge, however, the UK might find it difficult to maintain this caution  without damaging its reputation as an ally that is prepared to play its full part in collective security.   

The Spending Outlook

At the 2014 NATO summit in Wales, the prime minister committed the UK to spend 2 per cent of its national income on defence. It soon became clear, however, that the government was not willing to commit the resources to defence that would be necessary to fulfil this commitment beyond 2015/16. The resulting controversy, not least in the US, proved more damaging to Britain's credibility as an ally than if the UK had avoided making such a clear commitment in the first place.

The subsequent debate on defence spending levels continued until the months immediately before the May election, with RUSI’s own work providing an important point of reference for politicians and policy-makers. Partly as a result of this debate, the Conservative Party, in its manifesto, committed itself to increase the equipment budget at 1 per cent above inflation until 2020. It also committed the government to maintain the size of the regular armed forces (including an army of 82,000), and to increase the size of the reserves to 35,000.

If the Conservatives had entered a coalition after the election, as was widely expected, these commitments could have been watered down in negotiations. With the Conservatives now having formed a single-party government, however, it is reasonable to assume that these commitments will form the basis of the MoD’s spending settlement with the Treasury.

It is hard to see how these commitments can be met without an increase in total, real defence spending. Some real-terms increase in rates of service pay, and in related on-costs, is probable over the next four years.  When this is considered together with the protection of total numbers of personnel, total service-personnel costs will rise in real terms. Some savings should still be possible in spending on civilian personnel, infrastructure spending and training. But these areas, which only take a relatively small share of the total budget, can only be squeezed so far before undermining the operational benefits derived from more stable equipment and personnel budgets.

As a consequence of the Conservative-manifesto commitments, therefore, the MoD’s total core budget seems set to rise by up to 1 per cent per year, in real terms, over the period of the next Spending Review. This is broadly comparable to the trend rate in the MoD budget before the financial crisis, between 1999 and 2010.

Such an increase would not be enough to meet the 2-per-cent NATO target, except in the event of another, deep recession. On current (arguably optimistic) growth projections, defence spending will still fall to around 1.8 per cent of GDP by 2020. But it does mean that the UK is set to join the widening group of European states – now including Germany and France – which have announced additional resources for defence.

This reversal in defence’s fortunes has been driven partly by strategic factors, including growing concern over Russia (for Germany, as well as other exposed NATO-member states in Eastern Europe) and domestic terrorism (for France). But it is also the product of the slow, but sustained, recovery from the post-2008 recession. Across Europe, prospects for defence spending still remain closely linked to wider economic and fiscal trends.

In the case of the UK, the next event to watch could be Chancellor George Osborne’s first budget, followed by the detailed Spending Review  due for completion by the end of 2015. New commitments on defence and the NHS are going to make it more difficult for the Conservatives to meet their manifesto commitment to find savings in total departmental spending of £13 billion. Something will have to give. Other budgets critical to national security – the Home Office, intelligence agencies and Foreign Office – are no less vulnerable to cuts than they were before. But the main consequence of the new resources being allocated to defence (and health), along with the further commitments given during the election campaign, might be a slower-than-planned reduction in the level of borrowing. 

New spending commitments on defence will not allow the 2015 Strategic Defence and Security Review (SDSR) to avoid hard choices on priorities. With the real costs of defence pay and pensions growing, and with the ring-fencing of service-personnel numbers, there is a risk that other elements could be squeezed too far, to the detriment of operational readiness. But a modest real-terms increase in the MoD budget should provide enough resources to reverse the two most visible capability gaps left by the last SDSR (the carriers and the maritime patrol aircraft), and to move to the next stage of the successor-submarine programme. The combination of these three commitments – each highly symbolic in its own right – should help reverse the perception that the UK has lost its ability to maintain a wide range of military capabilities. 

Mending the Fractures

Yet the international credibility of the UK does not depend only on capabilities for projecting power, military or otherwise. It also depends on whether it can defeat (or at least contain) the dual risks of a further drift towards a breakup of the union with Scotland, and the continuing possibility that the British people could vote to leave the EU in the referendum on the UK’s membership.

Both issues have an important defence and security dimension. The SNP has always drawn political sustenance from those issues where, it argues, the evident wishes of the Scottish people are ignored by Westminster. It will have a further opportunity to make this argument in 2016, when the final decision on ordering new Trident-armed submarines is due to be made by the UK Parliament. Given the results of the UK election, it is possible that only one of Scotland's fifty-nine members of parliament in Westminster will vote in favour of a programme.[1]

The growing importance of nationalism – both Scottish and English – is also likely to raise the bar on the deployment of UK forces for allied operations. The vote on the deployment of UK forces against Daesh  was delayed until the Scottish independence referendum was completed in September 2014. Even then, approval was given only for operations in Iraq. A similar degree of caution is likely to apply as the UK approaches a referendum on EU membership, due by the end of 2017. This would reinforce the government’s ongoing reluctance to agree to new military operations – especially if they involve substantial combat forces on the ground – unless it has first secured a broad political consensus for doing so.