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By Howard Wheeldon, Senior Strategist at BGC Partners

17 Jan 11. Faced with the need to retain sufficient capability to meet both current and anticipated demands through 2015 and yet facing up to vast changes in the amount of physical, tactical and equipment resources available as they try to please everyone spare a thought for Royal Air Force, Royal Navy and Army chiefs as they struggle to close huge cost/budget differentials. For now as they attempt to make various ends meet it may be a case of mind the gap!

Over the next few years UK armed forces personnel numbers and equipment are to be shrunk down all in the name of bringing our defence spending into line with what is now deemed appropriate and affordable. The speed of the change is already very apparent and just three months post the initial publication of SDSR gone already are HMS Ark Royal plus the whole fleet of VSTOL Harrier aircraft. While we may question some of the many SDSR decisions and particularly the manner in which these were taken plus how some were to be leaked before any formal communication could be given [Ark Royal’s captain and ships company learned that the ship was to be decommissioned on radio courtesy of the BBC] we do not question reasoning behind avoidance of subsequent delay. Thankfully we may at least be satisfied that both Ark Royal and the Harrier Force have subsequently been given a very fine send off by the Royal Navy and Royal Air Force respectively.

Given the still alarming outlook in terms of increased global tensions and the ongoing terrorist threat many in MoD ‘main building’ will I am sure agree my own view that whilst the die of defence cuts is cast for the next three years by 2014/15 the defence budget must again be allowed to resume a level of realistic growth. In the meantime we must rightly regard many of the cost and efficiency measures now taking place within our defence forces as being partially necessary to remove inherent waste. As to the rest it is recognition of change and affordability. I like it less than you but as both the Prime Minister and Secretary of State for Defence, Dr. Liam Fox have argued die on sweeping change and cuts is now well cast. However, we should take great care to see beyond the end of our nose meaning that by 2014/15 we have no choice in my view to be increasing the amount that we spend on defence. Indeed, dependent on events those that have most likely rightly question that in our affordability haste we have already pushed the knife into defence spending too far may well yet be proved right. For now though we have no choice but to accept that the bill for defence spending should be temporarily cut along with most other government expenditure.

Even so we should already be looking beyond 2014/15 when the bulk of what this most recent strategic defence and security review is aimed to be doing kicks in and the next will already be well under way. By then given that our history and continuing political desire to retain a significantly high enough place on the world stage with heads held high and that we will remain as the bag carrier for some other ‘allies’ meaning that we will of necessity remain saddled with huge NATO and other international defence and security responsibilities plus those of our dependent territories and that together with the need to ensure adequate protection of our own islands we will in my view have no choice but to significantly increase the proportion of our national income that is currently spent on defence.

Nevertheless whilst I and others may opine that the defence budget must begin to be increased from 2014/15 we must also be aware that neither we nor those charged with responsibility for defence are the real decision takers. The government is and far too much of the joy of deciding how much we spend on defence is beholden on the Treasury, the Foreign Office and of course, the current Prime Minister, David Cameron. Suffice to

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