By Mark Smulian | 27 September 2011
The Ministry of Defence’s difficult financial position is worse than it need have been because officials and politicians spent the past decade resisting spending reviews, a study by the Royal United Services Institute has found.
In a report Looking into the black hole, published today, research director Professor Malcolm Chalmers argues that the MoD’s books ‘may be balanced on paper’ following the government’s cuts in defence spending, but ‘the work needed to turn assumptions into detailed plans has only just begun’.The report says the MoD was ‘increasingly confident’ that it had balanced its budget but were this true ‘it would be a considerable achievement’, given the history of it failing to control spending.
A real-terms budget cut of 8.6% by 2015 was ‘a shock to many in the MoD and armed forces’, when the coalition imposed it, Chalmers says.
This opened up a £74bn funding gap, of which £47bn arose from spending cuts and £27bn from inherited commitments made while Labour allowed the MoD budget to grow.
Chalmers says these commitments had been unaffordable even had the defence budget continued to grow by the 1.1% a year seen since 1999.
Over this period there had been a switch to buying costly hardware for the army at the expense of personnel in the navy and air force.
‘The MoD could have managed this shift in spending priorities more systematically, and less wastefully, if it had been prepared to subject itself to regular post-election defence reviews,’ Chalmers says.
But he says strains on the armed forces from fighting in Iraq and Afghanistan meant ‘senior military officers became more resistant to calls for an immediate defence [spending] review, even while they accepted that it was increasingly necessary in order to close the funding gap’.
Ministers had also resisted spending reviews, fearing they would ‘have been seen as an attempt to rethink decisions they had already made’.
Chalmers predicts that the UK will ‘never again
be a member of the select club of global superpowers’. However, even with the
spending reductions it is still likely to be the only European Nato member to
meet the alliance’s target of spending more than 2% of gross domestic product
on defence in 2015.
An MoD spokeswoman said the ministry had ‘for the first time in a decade, brought our future plans and future budget broadly into balance’.
She said this had followed ‘tough decisions’ in the Strategic Defence and Security Review and a 1% increase in the equipment budget from 2015 onwards.
‘This now allows around £150bn to be invested in new equipment over the next decade such as 14 new Chinook helicopters.’
