“The era of cutting our defence budget must end, and it ends now". So said the UK Prime Minister to the House of Commons as he announced a multi-billion-pound increase in defence spending.
The exact amount of new money – as always with these types of announcements – remains disputed. The Prime Minister has claimed the uplift is £16.5bn over four years, whereas economists at the Institute of Fiscal Studies say it would be more accurate to say this announcement is worth a cash increase of £7bn by 2024.
Regardless of the way in which the sums are presented, this is a defence budget increase that is unprecedented in recent times and unexpected under current circumstances. As the pandemic piles on the financial pressure, a rise of this scale exceeded expectations. The outlook looks less optimistic for other government departments who may not weather the economic headwinds so well.
A multi-billion, multi-year spending commitment will give some much-craved certainty to the forces and all those operating in UK defence. From the Tempest project – the UK-Italian fighter aircraft development programme – to the renewal of the UK’s nuclear deterrent, the longer-term nature of the settlement brings renewed confidence to invest and deliver on key big-ticket items.
And it’s not going to go unnoticed by NATO allies. Defence spending will increase beyond the 2% as a share of GDP that the UK is committed to through its membership of the alliance. Despite significant moves to enhance defence spending by France, this week's commitment will firmly place the UK at the top of the list when it comes to defence investment amongst European countries.
The only NATO member committed to outspending the UK when it comes to defence is America. In fact, this week's announcement was quickly welcomed in Washington by the acting Secretary of Defence Christopher C Miller and it will surely not be lost on President-elect Biden.
With the battle for budgets seemingly won by the Ministry of Defence, what are the big candidates for investment?
Herein lies the biggest issue – the hotly anticipated, but delayed, Integrated Review will see, according to the UK Government, an examination of “all aspects of international and national security policy, such as defence, diplomacy, development and national resilience.” This in-depth study was set to be the basis on which spending priorities would be decided. This week's announcement indicates that the financial and policy aspects of this process have – at least in-part – been decoupled. The Integrated Review is now set to be published in early 2021.
Nonetheless, we do have a flavour of where defence spending will be focussed for the next four years following this week's announcement:
The role of new technologies in futureproofing the UK’s defence capabilities was clearly signposted throughout this announcement. There was talk of inexhaustible lasers, cyber weapons and autonomous vehicles. But this will undoubtedly raise concerns as to what parts of the armed forces will be shrunk or perhaps lost altogether.
There was a need to “act speedily to remove or reduce less relevant capabilities” said Boris Johnson, but what might those be? Speculation has focused on cuts to heavy armour – tanks in particular – and army personnel, potentially taking the number of full-time soldiers below 70,000. The truth is, we won’t know until the Integrated Review is finally published next year.
From the pandemic to Brexit, the defence landscape is shifting for the UK. To keep up with this change, modernising its defence capabilities have been firmly marked as a priority by these commitments.
So, although only part of the full picture has been put on show, this week's announcement undoubtedly marks a step change for everyone involved in the UK defence sector.
Next week’s Spending Review will illuminate the true scale of success for the Ministry of Defence in its fight for resources. The Review will set-out the budgets of departments across the UK Government for 2021/22. Difficult decisions are expected to be made as the economic pressures reduce the Treasury’s capacity to spend. We will be analysing the Chancellor’s plans when they are launched, but for now it seems as if defence can already consider itself one of the winners when it comes to government investment.
The Serco Institute recently published an in-depth study of how the defence sector – regular forces, reserves and commercial partners – can better work together through the implementation of the whole force policy. You can read the study here.