Original URL: http://www.theregister.co.uk/2010/10/15/mod_pre_sdsr_roundup_and_nao/

MoD braced for painful weight-loss surgery next week

Buzz suggests it'll be liposuction, not amputation

By Lewis Page

Posted in Government, 15th October 2010 13:09 GMT

Analysis Next week the government will finally announce the results of the Strategic Defence and Security Review (SDSR), the process by which the armed forces and their plans for the future will be brought into line with the amount of money available to pay for them. So, what's the state of play?

The outlines of the situation are plain enough. Before the current economic crisis began, even before the Twin Towers fell, the MoD's plans for buying equipment had been allowed to escalate out of control. In essence, more expensive things were scheduled into the kit programme than the budget had provided for. This situation developed a full decade ago following many ruinous decisions taken in the 1980s and 90s. The current government's vehement assertions that the whole mess is Labour's fault are quite untrue - the previous generation of Tories should shoulder an equal share of the blame.

During the prosperous early Noughties, however, Labour - in particular the terrifically incompetent defence minister of the time, Geoff Hoon - did nothing to sort the crisis out and indeed made it worse. An excellent illustration of the cross-party culpability for the state of today's MoD is provided by the infamous Eurofighter (nowadays renamed "Typhoon"). It was originally ordered way back in the 1980s, brought to full ruinously-expensive flower under the Tories, and then - incredibly - mismanaged even more idiotically under Labour. According to the just-published 2010 National Audit Office defence major projects report:

Despite the likelihood that it would incur significant costs ... in 2004 the Department decided not to provide budgetary provision for [Eurofighter] Tranche 3 and removed the remaining funding of £978m ...

In July 2009 the Department approved an additional £2.7bn for the Typhoon programme including the purchase of these aircraft, which it believes met its outstanding financial obligations. This represented a new financial commitment for the Department, and was a significant contributor to the gap between estimated funding and the cost of the Defence budget over the next 10 years.

In other words the MoD simply pretended on its own account books that the Eurofighter contract didn't exist for five whole years up to 2009, even though everyone in the world knew that the UK had committed to Tranche 3. Many of us were arguing at the time that Tranche 3 should be cancelled: little did we know, the MoD was pretending to itself throughout that this had already somehow secretly been done, without reference to the partner nations or the penalty clauses in the contract.

Even a simpleton should have realised that the project would still continue to cost some money through 2010-2020, even if Tranche 3 could have been made to vanish in a puff of smoke. But the mandarins and brass hats of the MoD told Mr Hoon and his successors up to last year that Eurofighter simply didn't exist, and the ministers apparently believed them. The resulting fantasy plans thus seemed to almost match the funds available, and the MoD carried on sleepwalking towards financial disaster.

There's plenty of blame to go around here: one might easily smile a cynical smile at the sight of Amyas Morse, nowadays head of the National Audit Office, castigating the MoD over its 2004-2009 Eurofighter fantasy. Mr Morse's old job, funnily enough, was as commercial director at the MoD, "shaping the department's relationship with industry". If anyone at the MoD should have known - and told people - that the Eurofighter books had been cooked, it was Mr Morse.

But the cracks were papered over, both by noticeable increases in defence spending under Labour and by supplements to the defence budget from special Treasury "conflict resolution" funds. These latter were officially provided to cover the added expense of the wars in Iraq and Afghanistan, but are often used to provide things which really should have been there already*.

Contrary to reports, Army will take hits - but nothing important

As a result of all this, there would always have been a terrible day of reckoning about now for the MoD - regardless of external factors. Even if the credit crunch had never happened, even if the World Trade Centre was still standing, the British armed forces would still be collectively slipping a book down their trousers this weekend before the spanking that will happen next week.

Unfortunately the credit crunch did happen, and the cost of bailing out the banks and defibrillating the economy must now be met: so the spanking will be even bigger. What's the impact going to be?

We're now moving into the realms of rumour and leak, but decisions like this are pretty hard to keep secret. Following recent meetings of the newly created National Security Council (slash perpetual War Cabinet) it has apparently been decided that in fact the Defence budget will not be cut as harshly as that of some other departments. The cuts could be as low as 4 per cent, according to the Financial Times. Sparing the MoD is reasonable: it's a fairly small budget as government budgets go, and slicing another billion or so off it would cause far more damage than cutting the same cash from bigger departments.

That still leaves a lot of financial pain and grief, though, bearing in mind that only a substantial budget increase would allow the status quo to continue. The Army is taking its share of the bad news, contrary to what most defence correspondents are reporting: a large part of the UK's armoured-warfare juggernaut is to be shut down. This doesn't matter at all in terms of British clout or capability - it's now widely acknowledged among modern soldiers that classic tank warfare has moved into the realm of history for advanced nations** - but it will save vast amounts of money. Under previous plans, some £14bn was to be spent in the near future replacing today's tanks and infantry vehicles with amazing new invulnerable-yet-airportable supertanks. It now appears that many will not be replaced.

The navy, it seems, will get its two aircraft carriers in some form. What isn't clear is what sort of aircraft they will have, nor how many, nor how soon. But there was no option to actually save any money by cancelling the two vessels, as the previous government had signed yet another devil's bargain*** with BAE Systems (owner of the remaining British shipbuilding industry). Under this deal, if the carriers were cancelled the government would have had to order other ships to the same value. Wisely, the Coalition has decided it would rather have carriers than dozens of feeble, pointless frigates. Just how many of the current frigates will go remains to be seen, but rumour suggests fewer than one might expect: the navy will probably keep its six Type 45 destroyers and as many as nine or 10 of the present 13 Type 23 frigates (the antique, worthless Type 42s and 22s would have gone soon in any case).

This leaves the brunt of the cuts to fall on the RAF: certainly the airmen are panicking, if this speech two days ago by Air Marshal Timo Anderson is anything to go by. It seems likely that the entire fleet of Tornado GR4 deep-strike bombers will go, saving colossal sums of money in running costs and down-the-road replacements.

Naughty, naughty air marshal misleads ignorant hacks

Air Marshal Anderson mentions the Tornado specifically no less than eight times and tries to push several untrue suggestions in its defence, indicating that he at least thinks it is under threat. Firstly, he tries to hint that Tornado has something to do with air defence of the UK against 9/11 style attacks: it does not. (The always-laughable Tornado F3 variant was formerly used for alert fighter duties protecting the UK, but it is going out of service as this is written, replaced as it should have been long ago by Eurofighters.) Bombers naturally have nothing to do with air defence, but nonetheless by mentioning the word "Tornado" in the same breath the air-marshal adroitly managed to confuse the issue in the minds of many journalists and their readers. The RAF are past masters at this sort of manoeuvre.

Secondly, under the unbelievably cheeky heading "value for money", Anderson mentions ongoing Tornado GR4 operations in Afghanistan. What the Tornado mainly does there is provide airborne spyeye imagery using the RAPTOR recce pod. Occasionally it acts as a cramped and unsuitable airborne command post, or shoots Brimstone missiles at ground targets.

There might be more expensive and manpower-intensive ways to provide this airborne spyeye and strike capability, but it's hard to think what they could be. In every important respect, a Reaper roboplane carrying the same missile is actually better for use in Afghanistan than a Tornado GR4, as well as being vastly cheaper. Sure, you need to win control of the skies before you can use a Reaper: but that's why we have fighters - specifically, the Eurofighter. We don't need wildly expensive bombers designed for hostile airspace any more: the cold war is over.

Getting rid of the Tornado makes excellent sense, so it's to be hoped that the mutterings out of Whitehall are true and this is what Cameron, Fox and Osborne have decided upon.

All in all, then, across the three services, the mooted cuts seem quite sensible. It's to be hoped that this is what we actually get, and that it isn't accompanied by short-term savings generated by delaying things and thus paying more for them in the end. This is a classic MoD tactic much used in recent decades, so much so that the NAO report says it is now costing us more than £3bn a year.

The main unknown that will be revealed next week is just what the Coalition leaders plan to do about the new carriers' air groups. Watch this space. ®

Bootnotes

*As an example, every serviceman or woman deploying to Afghanistan nowadays receives a large black holdall packed with all the various things that are lacking from their standard-issue kit. This has apparently been described by one grateful soldier as "a big warm hug from the Army", but he was wrong. It is, bizarrely perhaps, a big warm hug from the flinthearted bean counters at the Treasury. The good old Army was actually the organisation that failed to get him all that kit in the first place.

**Even if you can find an enemy with lots of tanks and artillery to have a fight with, it makes far more sense to simply blast them in safety from the air using precision weapons, than to fight them on their own terms. Tackling enemy tanks using tanks of your own - in these days of all-weather aircraft, airborne radar and guided weapons - is rather like killing rottweilers by getting down on all fours and biting them to death.

***One notes that the previous government will have signed that devil's bargain willingly and knowingly - indeed it may well have been Labour's idea rather than BAE's. Gordon Brown was well known for using navy shipbuilding to channel pork into his political strongholds in Scotland.