The MOD funding crisis couldn’t be more grave

General Lord Houghton’s critique shows just how serious matters now are for Britain’s Armed Forces

When a military figure of the calibre of General Lord Houghton, the former head of Britain’s Armed Forces, vents his frustrations in public over the Government’s handling of the defence budget, it is clear the funding crisis goes far deeper than ministerial squabbles.

During his tenure as Chief of the Defence Staff, Sir Nick (as he was then) was the very model of Whitehall discretion. While taking pride in his qualities as a “plain-speaking Yorkshireman”, he eschewed making pronouncements on the dire state of the British military, telling me on several occasions (to my intense journalistic frustration) that he would be more effective winning his Whitehall battles behind closed doors.

To that end he saw the financial settlement for defence agreed by David Cameron and George Osborne at the conclusion of the 2015 Strategic Defence and Security Review (SDSR) as a validation of his efforts. Defence spending was fixed at two per cent of GDP – the minimum Nato requirement – and the government committed itself to spending £179 billion on new kit over the next decade.

Having endured years of criticism over defence cuts, Messrs Cameron and Osborne believed this was the end of the matter. “You’ve got the money. Now shut up and get on with it,” would be a fair summary of their attitude towards the top brass at the time.

And yet here we are, three years later, with senior members of the Government embroiled in the most public spat on defence spending since the Falklands War, and former Service chiefs like Lord Houghton breaking ranks and laying bare the reality of the predicament in which the British military now finds itself, and the Government’s responsibility for creating this mess in the first place.

Lord Houghton’s devastating critique that the Government is “living a lie” with its insistence that Britain remains one of the world’s leading military powers is derived from his concern at the way the defence budget has been mismanaged since the 2015 SDSR, in particular the Treasury’s insistence that the military find “efficiency” savings to the tune of around £2 billion a year.

This wheeze was devised by Mr Osborne to justify his claim that he was making adequate financial provision for the military. The reality is that, as Sir Jeremy Heywood, the head of the Civil Service, now readily concedes, the level of savings required was never feasible. Consequently there is a direct correlation between Mr Osborne’s requirement for efficiency savings from the military and the £2 billion deficit that has now appeared in the Mod’s annual running costs.

During his tenure as military chief, Lord Houghton wrote several letters to Mr Cameron explaining his concerns about how the MOD budget had been structured. But, to judge by the way Philip Hammond, the current chancellor, has accepted the Osborne formula of forcing the military to pay for its own budget increase, it appears Lord Houghton’s warnings fell on deaf ears. Hence his explosive intervention on yesterday’s BBC Radio 4 Today programme.

Mr Hammond’s refusal, moreover, even to acknowledge that the current defence budget is built on a fallacy – namely that the MOD can find savings to fund the Government’s ambitious equipment programme – lies at the heart of the unseemly political row that is taking place between the Chancellor and Defence Secretary Gavin Williamson. Mr Williamson might not be winning many friends with the way he is conducting his campaign to get extra funding for the MOD. But at least, unlike some of his recent predecessors, he is putting his career on the line for a cause he genuinely believes in.

It is also vital, with the Nato summit looming next month, that Mr Williamson prevails in persuading the Prime Minister that there is a genuine case for increasing defence spending by at least £2 billion a year, a figure that would, at the very least, avoid the military having to make yet further cuts to its already depleted arsenal.

Any further diminution to the strength of Britain’s Armed Forces would certainly not go down well in Washington, where senior members of the US security establishment, such as Defence Secretary James Mattis, are said to be seriously concerned about Britain’s ability to participate in future war-fighting missions.

John Bolton, the Trump administration’s combative National Security Advisor, is said to have raised similar concerns when he met

Sir Mark Sedwill, Britain’s national security council chief, in London this week to discuss the agenda for President Donald Trump’s forthcoming visit to London.

The message from Washington is unequivocal: if Britain wants to remain a key member of the transatlantic alliance, then it needs to have the military strength to be an effective ally. But, as is now becoming abundantly clear, Britain can only do this if the Government admits that our Armed Forces are in desperate need of more money, and acts quickly to fix the Mod’s funding crisis. FOLLOW Con Coughlin on Twitter @concoughlin; READ MORE at telegraph.co.uk/opinion