Minister to order defence review as experts warn of ‘£20bn deficit’
MINISTERS are set to launch an emergency defence review before the end of the year to tackle a growing black hole in military finances.
Defence Secretary Sir Michael Fallon is reported to have warned Theresa May in March of the need for a review and cuts, or extra funds.
Experts say the deficit in projected defence spending could soar to £20 billion in 10 years if no action is taken. This is based on inflation forecasts for operations and maintenance and the 38 major procurement programmes, of which 12 are not yet fully funded.
Sir Michael is understood to have been told that the review would have to wait until after the general election.
In the meantime, the squeeze on finances has led to exercises with Nato allies being cut back or cancelled. This has adversely affected recruitment and led to the resignation of key trained servicemen and women.
Under new proposed cuts the Army will be reduced from 82,000 trained personnel to 65,000.
At one point in preliminary discussions, Whitehall officials asked the head of the Army, General Nick Carter, to slash his ranks to 55,000. By hard bargaining, he pushed it to 65,000.
But General Carter has said he needs an Army of 75,000 for the present level of Special Forces and a rapid reaction division of four brigades.
A big part of the problem is the slide in the pound after the Brexit vote in June last year. Prices for new equipment such as the P-8 patrol aircraft from Boeing, Apache attack helicopters and the F-35 Joint Combat Aircraft from Lockheed Martin were set initially with an exchange rate of $1.52 to the pound — it is now about $1.23 to the pound.
The price of the F-35 has gone from about £100 million each five years ago to £161 million each. Both the Navy and the Army have had qualified audits for major programmes — “they’ve been in special measures,” says independent analyst Francis Tusa.
“All three services were allowed to modernise at the same time after the end of major operations in Iraq and Afghanistan. It has put a colossal strain on the whole system.”
In its defence reviews of 2010 and 2015, the Cameron government pledged a rise in defence spending of half or one per cent above inflation, after 2015.
But since 2010 the combat effectiveness of the UK’s forces has been halved. Contributions to allied exercises have affected. The Tiger Meet 2017 Nato exercise has drawn combat aircraft from the US and European allies, including seven Grippen fighters from Sweden. Britain’s contribution is one Puma transport helicopter from the RAF and one Merlin helicopter from the Navy.
There will be pressure from the Lords for the emergency review, led by historian Lord Hennessy, who believes it must be accompanied by a new National Security Strategy.
A new NSS paper is on its way. According to one of those involved: “This time it’s got to be more realistic than what we got before in 2010 and 2015 — with waffle about British influence in the world. We must state what we really can do, can afford and really need to do to face the real threats of today.”