A very quick view ahead of final publication of IR Refresh later today.
So, with massive reluctance no doubt Prime Minister Rishi Sunak has confirmed ahead of meetings later today in the US to discuss the next moves on the Australia, USA, UK AUKUS partnership that the UK will increase defence spending by £5bn – half in the current year and half in the next and less than half of what was being asked in order, we are told, to meet necessary challenges such as replacing our extremely run down ammunition stocks, modernise the UK nuclear enterprise and fund the next phase of the AUKUS programme.
That is not to suggest that list of issues outlined in the details of the IR Refresh so far announced is not interesting or indeed relevant but most look as if they should have been a UK Foreign Policy refresh rather than placed on defence. Indeed, you may also be forgiven for thinking that you had imagined most of these were already being done by the UK and MOD. The announcement contains not one mention of Army, Royal Navy or Royal Air Force, of equipment capability or previously expressed Army manpower concerns
The IR refresh lists (the full document will not be published until later today) the following examples of how the money will be used:
The Prime Minister has also set out an ambition to increase defence spending to 2.5% of GDP in the longer term, and said that the UK will lead a conversation with Allies on future posture and burden sharing at the NATO Summit in Lithuania this summer. We will review defence spending after 2025 in light of this ambition. He talks of raising defence spending to 2.5% of GDP but as I have always believed, this is a rather stupid arbitrary figure and has little if any meaning. In any case, GDP only has to decline in order for the objective it to be fulfilled.
IR23 was commissioned to respond to emerging geopolitical threats, from Russia’s illegal invasion of Ukraine to China’s economic coercion and increased competition between states. These trends were identified in the original IR and have intensified in the last two years, with far-reaching consequences for the security and prosperity of the British people.
The report identifies a number of priorities to tackle those threats head-on. The first and foremost is dealing with the fundamental risk posed to European security by Russia, and denying Moscow any benefit from their illegal invasion of Ukraine.
The IR Refresh also sets out how the UK will adapt our approach on China to deal with the epoch-defining challenge presented by the Chinese Communist Party’s increasingly concerning military, financial and diplomatic activity. It contains new measures to bolster the UK’s economic security, technology capabilities and international development offer in the face of that threat. The Prime Minister has set the direction across government for a consistent, coherent and robust approach to China, rooted in the national interest and aligned with our allies.
IR23 confirms that the UK will continue to play a leading role in Euro-Atlantic security, while also consolidating the strategic shift we achieved with the Indo-Pacific tilt. As the first step to deliver on those priorities, the Prime Minister is in San Diego today [Monday 13 March] for a meeting with President Biden and Prime Minister Albanese to advance the next phase of the AUKUS submarine programme.
The creation of a new National Protective Security Authority within MI5, established from today [13th Mar] to provide a wide range of UK businesses and other organisations with immediate access to expert security advice.
Establishing an Economic Deterrence Initiative to strengthen the power of our sanction enforcement, closing off routes for human rights abusers and oligarchs to evade sanctions.
Doubling funding for a government-wide China Capabilities programme, including investing in Mandarin language training and diplomatic China expertise. We will also roll out a College for National Security curriculum, to bolster national security capabilities across government.
Setting up a new Integrated Security Fund worth £1 billion to deliver on the core objectives of the Integrated Review at home and around the world, including in economic and cyber security, counter terrorism and human rights. This replaces the existing Conflict, Stability and Security Fund (CSSF).
Publishing a refresh of the UK’s Critical Minerals Strategy to ensure the UK has reliable access to the vital components for everyday and future technology.
Providing an additional £20m in funding for the BBC World Service, ensuring it can continue to provide 42 vital language services – including in countries targeted by hostile states for disinformation.
The PM has not of course told us of any additional costs that will be added to the Defence Budget and that will, if that occurs, whittle down any benefits of this so-called increase in the overall defence budget. There have been several so-called increases in the defence budget seen from 2015 right up to mention of one by the Johnson government although I feel certain that HM Treasury would by now have whittled whatever it was away.
Call me a sceptic if you will but I have seen too many of these before and how the value of them subsequently gets whittled.
Another issue to be aware of is one that have already alluded – bunging more onto the defence budget from other government departments. Here is a flavour of what I mean:
29th July 2010 the then Chancellor, George Osborne, announced that the MoD would have to fund the capital costs of replacing the Vanguard class submarines (now Dreadnought) from within its own core equipment procurement budget, instead of from the Treasury Reserve as had been expected.
The Secretary of Defence at the time, Liam Fox argued strongly that funding Successor from within the MoD would be hugely damaging to the rest of defence. He lost his argument with Osborne, but time has proved him right about the consequences.
Dreadnaught is certainly crucial capability and HMG has earmarked £31bn for the capital costs of the Dreadnought programme with an additional £31bn contingency fund. Of Course, one cannot be absolutely precise in relation to cost figures and percentages BUT capital costs of the Dreadnought nuclear deterrent operation account to something around 6% of the current defence budget and capital costs of build the four new Dreadnaught submarines over the account for a similar 6% of the overall defence budget. Vital capability it is but why did the Cameron/Osborne push the whole cost of UK Nuclear Deterrent Capability onto an already very stretched MOD budget?
In addition, in 2016 the MOD confirmed that war pensions (£820m) and pensions for retired civilian MOD personnel (£200m) and some intelligence gathering costs that had previously been on other government departmental budget was also moved onto to the defence budget. Contributions to UN peacekeeping missions (£400m) were also added on to the Defence Budget at this time. A year earlier it has also confirmed that around £450 of the costs of Conflicts Pool which had previously been managed by the Foreign Office and Department for International Development would be moved onto defence.
For the fiscal year March 2023 and ignoring anything announced today UK defence spending is budgeted £60.2bn. the above figures up and adding in a few smaller ones that I have not included here gives you a figure of around £14bn to £15bn annually in respect of additions moved onto the defence budget that were not included in the 2000’s. If correct and I accept that I am providing this from a back of envelope calculation, the graph momentum increase of costs allocated as opposed to cash used is up about £12bn between 2014 and 2022 and which effectively means that even with the IR Refresh making a case out that the real defence budget has increased since 2014 is somewhat harder to believe.
CHW (London – 13th March 2023)
Howard Wheeldon FRAeS
Wheeldon Strategic Advisory Ltd,
M: +44 7710 779785