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By Yvonne Headington

18 Jun 10. Speaking at the Royal United Services Institute (RUSI) on 14th June 2010, Defence Secretary Dr Liam Fox confirmed that the future Defence programme, as set out by the previous Government, “is entirely unaffordable”. Dr Fox went on to explain that current personnel and equipment commitments “mean that the budget is very heavily committed for each of the next four years, severely limiting our room for manoeuvre”. He said that the previous Labour Government had relied upon delaying projects, leading to increases in long-tem costs.

The Defence Secretary was setting out the Government’s approach to the current Strategic Defence and Security Review (SDSR) which is promised to be “strategic, cross-government and comprehensive, covering all areas of defence and security”. The process will be overseen by the newly-established National Security Council and informed by a new National Security Strategy.

The Ministry of Defence (MoD) is to be re-organised into three pillars: Strategy & Policy, Armed Forces and Procurement & Estates. Procurement reform will be accompanied by a number of industrial consultations, which the Defence Secretary will announce to Parliament “shortly”.

Outlining the strategic environment, Dr Fox said that the SDSR will strike a balance between the immediate demands of Operations in Afghanistan “with planning for alternative futures”. The UK is unlikely to act alone and the UK’s relationship with the US remains “critical”. Equally important is the need to enhance bilateral Defence co-operation “particularly with nations who share our interests and are prepared to both pay and fight, such as France”. A Defence Diplomacy programme will be considered separately within the review.

Given current financial difficulties Dr Fox underlined the Ministry’s “tough and unsentimental” approach to the Review in order to do the things that need to be done. “But while the SDSR may be resource-informed,” he said “it is policy-led”.

It was subsequently confirmed by William Nye, Head of the National Security Secretariat within the Cabinet Office, that an updated National Security Strategy was being developed alongside the SDSR. Addressing the official Air Power Conference in London (17-18 June), Nye added that the final Strategy would provide a clearer focus on national interest and would probably be published in the Autumn.

Within the MoD a team of around 30 people has been tasked to co-ordinate the Defence contribution to the SDSR, which is being conducted in parallel with a Government-wide spending review. The SDSR will be underpinned by a defined ‘foreign policy baseline’ due to be agreed by the end of June, according to a report in the Financial Times of 17th June. Completion of the ‘threat assessment’ is anticipated by mid-July, followed by a draft budget submission to the Treasury by the end of July. The forward equipment programme will then be addressed in the Autumn. One sticking point remains: the search for a new Chief of Defence Matiériel to replace General Sir Kevin O’Donoghue. Although Dr Fox is said to favour somebody from the private sector, much depends on whether the public purse can accommodate an attractive salary.

In the meantime the Government is reassessing all spending approvals granted between 1st January and the May General Election. In a Written Answer to the House of Commons on 16th June, the Defence Equipment Minister Peter Luff, explained that this exercise was necessary in order to ensure that approvals “offer good value for money and are consistent with the Government’s priorities”. The following day the Chief Secretary to the Treasury, Danny Alexander, announced a series of public sector programme cuts and suspensions, including a review of the MoD/Department for Transport Search and Rescue Helicopter (SAR-H) replacement programme. The Soteria Consortium (comprising CHC, Royal Bank of Scotland

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