UK DEFENCE – MORE PAIN, MORE BLAME AND HAS ANYONE SEEN SIGNS OF GAIN?
By Howard Wheeldon, Senior Strategist at BGC Partners

30 Sep 11. On the very day that the Royal Navy confirmed a 1,020 reduction in numbers of personnel it is regrettable to read that at the same time some have chosen to play another round of the blame game. There is a time and place for everything and now just when more ships of the Royal Navy are being laid up and more personnel being made redundant is certainly not the time to re-open the political debate of who is to blame for the mess the Coalition government inherited. The latest cuts in Royal Navy personnel due to be formally announced to those involved today follow a similar course in terms of personnel numbers reductions to those announced by the Royal Air Force and Army in recent weeks. This latest batch of cuts is another stage in the government intention to cut UK armed force numbers in excess of 20,000 by 2015 so that the total numbers of those employed in the forces will reduce to around 158,000.

It is taken for granted by most involved in defence that the bulk of blame for the huge SDSR related cuts the Britain is going through right now is the fault of the last Labour administration. We have seemingly moved on a very long way since SDSR was formally announced just less than a year ago. As a responsible nation most recognise that Britain must balance the books and bring the ridiculous deficit built up by Labour back down with haste. We worry about capability though and many of us fear that in terms of air power and maritime resource the governments’ SDSR plan of cuts might be one step too far. Subsequent unforeseen events within the so-called Arab spring and large scale military actions involving the Royal Navy and Royal Air Force UK in Libya have taught us much over this past year not least that the nation must of necessity ensure that it has adequate defence forces available and that they are properly equipped. The government believes that they now are well equipped and that in terms of personnel and equipment Britain’s military capability as one of the top tier spenders on defence is sufficient to meet our future needs. Unfortunately we are yet to be told where the government wants Britain to be in the world, what it wants us to be and what should be our future long term, role in NATO. The UK defence budget is certainly large and even with an effective 8% cut it remains the fourth largest military budget in the world.

Between 2011 and 2015 the defence budget is expected to run at an approximately unchanged level of £33.5bn and the government hopes that in the clarification of Planning Round 2011 it has balanced the defence budget books. However the jury remains out on this and we caution that some of the statement from government may yet prove to be premature. In total SDSR related savings are expected to have delivered about £1bn of savings by 2014/5 and it is worth noting that costs related to the role now being played out in Libya that together with those used to cover the expense of Iraq and Afghanistan and other special situation including equipment acquired under the urgent operational requirement banner (together this is put at about £18bn since 2001) has and continues to be paid out of the Special Government Reserve. By spending 2% of GDP on defence Britain is still able to meet it principle NATO obligations but as wars in Afghanistan and Libya playing out at the same time together with the need to provide sufficient defence cover for the UK and its dependent territories has proved, only just. There is in fact in situations such as those witnessed through 2011 nothing left in the cupboard as a reserve.

Compare the £33.5bn that Britain spends on defence with the $663bn and 4.3% of GDP that, before a real and deep process of cuts begins to take place, the US actually spends on defence and the difference looks massive. The US has a total number of 1.6m armed personnel w