After what seems like weeks of speculation over both the size and span of the post Integrated Review defence budget, on 19th November Boris Johnson finally declared his intent. The Prime Minister announced the “biggest investment in the UK’s Armed Forces since the end of the Cold War, confirming an injection of £16.5 billion over four years.”
But while this is undoubtedly good news for UK defence, it shouldn’t be forgotten that the Integrated Review is not just about the money.
Initial Reaction to the Announcement
Unsurprisingly, reaction to the Prime Minister’s announcement, from practitioners and commentators alike, has been almost universally positive. For example, Sir Stephen Lovegrove, permanent secretary at the MOD tweeted that the Prime Minister’s announcement was “Fantastic news”, and The Times called it “welcome”. Overseas the news was also greeted positively with The Washington Post reporting that acting US Defense Secretary Christopher Miller said the United States “applauds the announcement” which he said would allow the British military to “continue to be one of the finest fighting forces in the world.”
Financial Management Implications
The announcement of extra money for the defence budget will clearly give Service Chiefs more freedom of manoeuvre when it comes to making choices over the next generation of military capability; however, it is the reassurance of a fixed budget over time that is the real positive. Taking a ‘teach’ from the recent Australian Defence Strategic Update, the multi-year settlement will allow the MOD to plan and manage a spending profile for the next four years. This should do much to alleviate the Department’s short-term financial focus, regularly called out by the National Audit Office, which often forces decisions to defer expenditure that ultimately leads to increased costs in the long term.
The MOD should not, however, ignore the perennial “chicken and egg” problem that rearises as a result of its generous budget allocation. In other words, does the money drive the requirement, or vice versa? One temptation would be to throw the new money at the Department’s existing funding shortfall, estimated to be as much as £13 billion over the next ten years. Alternatively, the MOD could double down on the modernise element of its existing “Mobilise, Modernise, Transform” strategy. Defence now has a conceptual headmark, its recently published Integrated Operating Concept, which should ideally influence its capability direction of travel. However, even with this welcome uplift in funding, there will not be the money for anything like the full amount of new capability the Armed Forces would like. As ever, prioritisation of military capability that is best placed to mitigate those risks the government considers greatest, will be key.
Finally, it would be foolish to think all of the Defence’s financial troubles are now over. The MOD has struggled for years to manage its multi-billion-pound budget and short-term financial pressures are not solely to blame. Defence’s higher-level management structure and processes make it almost impossible to manage and deliver all of its military capability programmes within performance, time and cost. The Department must swiftly improve its ways of working to ensure the prime minister’s largesse is not squandered; moreover, it needs to recognise that its go-to excuse of being constrained by an annualised budget no longer applies.
More Words of Caution
It should also not be forgotten that the Integrated Review is about far more than the defence budget. Following the Queen’s Speech in December 2019, the Prime Minister confirmed that the Integrated Review would be “the most radical reassessment of our place in the world since the end of the Cold War, covering all aspects of international policy from defence to diplomacy and development.” Only last month, in its response to a House of Commons Defence Committee report, the government confirmed the review was focussed on the following five thematic workstreams:
1. Resilience.
2. Foreign Policy.
3. Defence.
4. Science, technology and data.
5. Strengthening government systems.
Additionally, in its call for evidence document, released in August 2020, the government gave its most detailed outline of the thinking behind the review. Among the identified key trends and drivers of change were: the tangible effects of climate change and the deterioration in the national environment; the impact of technology which creates opportunity, potential risk and increases the agency of non-state actors; and increasing instability and challenges to global governance.
The Integrated Review was expected to be released on 25th November, the same day that the government plans to announce its now one-year Spending Review. However, in his update to Parliament on 19th November, the Prime Minister confirmed that the review would now conclude “early next year.” With all the hullabaloo surrounding the big increase to the defence budget, and the associated speculation on where the new money will be spent, there is a real danger that, as Tobias Ellwood (chair of the House of Commons Defence Committee and Conservative MP for Bournemouth East) has pointed out, many of the other, equally difficult issues that needed to be tackled by the Integrated Review could be quietly forgotten.
Conclusion
There’s no denying the budget increase and multi-year settlement are extremely good news for Defence. Unfortunately, that does not mean that all of the international security issues facing the UK have gone away. Defence reviews are hard work, especially one as ambitious as Boris Johnson demanded. It is vital that all involved stay the course and do indeed deliver a product that is the most radical reassessment of the UK’s in the world since the end of the Cold War. If that doesn’t happen, the hike in the defence budget will have been nothing more than a very expensive papering over the cracks.
