Friday, 5 April 2013

The hidden cost of cost savings?

Yesterday the Prime Minister delivered yet another hammer blow to defence in the UK by announcing that the defence budget would not be off limits if further cuts were needed after 2015. Such is the nature of coalition politics that the Conservative party must give some leeway to Liberal Democrat views, which is probably the most likely explanation as to why health and education have been ring fenced for the time being. Perfectly valid arguments about the law of diminishing returns and the danger that the Conservatives are alienating their political base (by continuing with what will hopefully be the last occurrence of coalition politics in my lifetime) have been cast aside in favour of appeasing Nick Clegg and co. 

This comes on the back of deep cuts already made in the defence budget over the course of this parliament. It's obvious then in this climate that the MoD needs to find ways to save cash, not least because the more it can save by removing wasteful expense then the less money it will have to be cut from genuinely highly capable and useful areas.

This has been the back drop to defence discourse for the last five or more years now, and so inevitably every discussion about new pieces of equipment or current formations eventually comes back around to the question of cost. And as each year passes and the treasury applies yet more pressure, the discussion surrounding cost becomes more acute and takes up more and more of our time.

But I have a new question today, one which I've been trying to ask for about the last week or two, before I kept getting pulled in other directions; is money really the main thing we should be concerned about when making decisions about defence?
On one level, as explained in the first part of this article, you could argue that it is due to the current economic climate. While each of us may have our own views on what should and should not be cut back in government, until we find ourselves in power or have a party that matches our opinions very closely that we can vote into power, then we have to accept the current reality. That reality is that this government is hell bent on cutting the defence budget.

So maybe on a grand scale we have to accept that budget cuts are inevitable. That still leaves scope for discussion on a smaller scale, mainly about what things should be protected regardless of cost. But it also prompts us to think about whether the case can be made back to the treasury that certain things are simply too valuable to the UK to be cut.

"Trident", the catch all name for the provision of the UKs Continuous At Sea Deterrent (CASD), could be presented as one such example.

My general opinion is that the CASD is a very, very handy thing to have around. If the power were mine to do it, I would like to ring fence the spending on the CASD as a separate program of national importance, with the MoD responsible only for training the crews and exerting operational control and support for it. The cost of the crew; the cost to train them, the cost to pay them, the cost to house and feed them, plus the cost of the construction and immediate support of the vessels would all be paid for outside of the MoD budget.

This to me is something that really ought not to be a cost issue. Unfortunately the government has decided to rope almost the entire costs of replacing the current CASD into the MoD budget, forcing the MoD to make cuts to the conventional forces if it is to accomodate this new spending. It's for that reason alone that I sometimes question whether we could deliver our nuclear deterrent ability in other ways.

Another example of this has been the draw down from Germany. I highly doubt that there is any longer a major risk to the continent of a Russian drive across the Northern Plains. That's not what irks me about the draw down. What makes Germany appealing is the vast areas of training space that it offers. In saving money by bringing forces home (indeed there is a double economy to be had because those forces will now spend their incomes in the UK), I wonder if we are going to lose regular access to significant training areas like those at Sennelager and Bergen-Hohne?

These training areas are very large and provide UK forces with the ability to practice and hone a significant array of capabilities. Do we really feel comfortable then saying goodbye to them in order to save a few quid? It could be argued that the reduction in size of our forces (particularly the armoured aspect) no longer warrants access to this kind of training area, not least because we still retain access to the BATUS facility in Canada, though I'd argue that the distance to BATUS combined with fact that its annual time of use is limited by weather would make it more of a prime candidate for cutting than the training areas in Germany.

Indeed while we're talking about a draw down in armoured forces, there is another area where cost becomes a questionable motive. I've been reading a book that was suggested by a commentator on Think Defence, which contains this very interesting quote, which I think is very apt to our current situation; "Soldiers in peace are like chimneys in summer, but what wise man pulls down his chimney when his almanac tells him summer is at hand?" (William Cecil, Lord Burghley, 1555).

Quite. The implication being that just because soldiers are of limited value in times of peace, does not mean we can just wholesale rip our armed forces to shreds each time the fighting ends. Like Cecils' Chimneys (catchy nickname), the armed forces are highly likely to be needed again at some point and as such need to be equipped and ready to deploy. 

Armoured forces in particular have seen plenty of action in the last few decades, even proving their use in counter insurgency operations. Tearing them down because our politicians cannot envision their future potential smacks of economics being put ahead of recent history.

This question about money also goes right down to the equipment level scale. Think about the Type 45 destroyers for a moment. "Fitted for, but not with" is a common phrase attached to them, as a result of decisions to save money by not equipping the destroyers from the start with Close In Weapons Systems (CIWS), Harpoon anti-shipping missiles, or the 16 Mk.45 Vertical Launch System (VLS) cells which they have room for.

As a result the ships were left without a close in defence capability against air attack (that was one of the prime lessons taken from the Falklands experience), they were left without the ability to engage other surface ships at long ranges, and were left without the ability to fire the Tomahawk Land Attack Missile (TLAM), which has been a weapon that has seen significant use across the world since its development.

Now we could go into the cost arguments for these. The threat of a close range air attack was considered quite minimal. The need to fire a missile at another surface ship was considered minimal. And the need to contribute TLAM strikes when we have other strike platforms, including other assets capable of launching TLAM, was deemed less important. Fitting for, but not with, allowed the potential for upgrades in time while reducing initial cost.

But is that really the right way for us to go about an important business like defence? Is it acceptable for example to constrain the ability of our Navy to conduct land attack missions, or to put them at slightly increased risk of attack from the air, just to save a couple of million quid here and there?

When you consider how low our overall stocks of weapons like TLAM are reported to be (under 70 rounds, exact official figures not surprisingly (and thankfully) kept secret), despite the fact that this a weapon system that nearly always forms the vanguard of western military operations in the modern era, you have to wonder whether we are taking this whole money saving thing a little too far?

The military has always been an odd child as far as finance is considered. A point I've made in previous posts is that the economy of defence does not always sit well with modern accounting and management practices, as what would be considered wasteful hoarding of war stock by a private sector company is considered prudent maintaining of reserve munitions by the modern military. 

Of course there are certain items on the military books that we have to think twice about. The various parachute display teams of the armed forces might be considered a good start. But in an age of cutbacks and wind downs, we have to start seriously asking ourselves whether saving money is really always the right reason for getting rid of perfectly adequate military personnel and equipment, or to stop us bringing newer, better equipment on board.

Just how much capability are we prepared to sacrifice on the altar of government spending cuts and general "efficiency", especially when other departments get away Scot-free?


  1. I thought protecting the health budget was one of the PM's "brilliant" ideas. Then that decision is no where near the level of stupidity as increasing the foreign aid budget. Though at least there is some tackling of the bloated welfare state, something that will definitely not happen under the other two parties.

  2. Does this PM have brilliant ideas? I thought he just dreamt up random policy and then claimed credit it when it all went well, while leaving others on the hook to face the music in parliament alone when things went badly?

  3. To understand how "cuts" are made, you have to understand the decision making process behind them and also the budgets from where they are funded.

    The T45s are all being fitted with CIWS in early maintenance periods - at least three have the fit already. The reason they weren't fitted at build is that the funds for it would have come out of the acquisition budget, increasing an already overrunning cost - particularly as they would have to be "new" mounts, given the number that were being put on trucks and sent to Iraq and on Herrick. The decision was made to fit them after IOC, on the basis that this allowed re-use of mounts removed from T42 and CVS, rather than new-buys and more importantly, the costs fell in a less "sensitive" budget.

    That's not saying it makes sense, it's just an example of the convoluted process in place to deal with the fact that buckets of money are held by wildly disparate budget holders. It is to be hoped that Levene refomrs manage to stop some of this by putting the budget-holders largely in one organisation.

    The next challenge will of course be to esnure taht teh relevant budget holders (Fleet, Land, Strike) can actually manage these budgets. One of the more interesting elements will be who provides independent "should cost" audits - a capability which is largely lacking at the moment.

    In terms of what gets chosen for cuts or deferrals, from the long lists of options chosen, tends to depend on output from Dstl on capability requirements which are then assessed by the budget-holders. It's going to be interesting to see how cross-budget-holder capabilities are decided post-Levene. Your example of the armoured formatoins being reduced is an interesting example of this. The thinking will have probably gone something like - we can reduce overall armour (lost of bodies and cost) by using attack helos as "the scenarios" in the DPA show that we won't need huge formations of armour as we're not going to operate on our own at scales greater than "X".

    All of which is fine, provided that teh assumptions made ("someone else" will provide air cover and deliver the assets to theatre) remain valid. Trouble is, who owns fixed-wing air (could be multiple organisations - RAF, RNFAA, USAF, USN, NATO, FR) and do they know what they are assumed to be doing?

    Not easy, particularly where the scenario development tends to go into country-specific detail rather than focussing on generic threat levels, which incurs delay, which delays guidance on policy and ssumptions etc etc.

    Sometimes we try and be too clever in balancing capability across areas.......

    1. Afternoon NaB,

      Yes, I understand the logic of the Phalanx decision given the budget state. But only in the context of "it is important that we manage this budget very carefully". In that light it's the absolute right decision, and considering the budget problems defence has, it isn't a bad context.

      The article was more of a "should we be running defence in this manner?". Which is really another way of saying "should we be measuring defence outputs by value for money and cost control, as opposed to declaring roughly how much capability we're prepared to support and then making sure that equipment/force structure is properly ready from day 1?".

      More of a thought exercise than anything I guess. I wonder what the headlines would have looked like for example if Libya had involved a Type 45 with no CIWS, which had then been engaged and struck by a shore based AShM? Aside from the questions about the failing of the radar/missiles, the press would have creamed themselves for the chance to jump all over the "sailors sent to warzone without proper defence's due to bean counters" headline.

    2. I did realise what you were getting at with the article. Theoretically, all reviews are based on the "this is the capability we're prepared to support" principle offset against an initial "this is the capability we need" assessment.

      However, the reality is that the UK has reached point below which there is very little point in investing in anything other than self-defence for the home islands. You either do expeditionary to a credible degree (and a QEC with a decent number of F35 will provide that) or you don't. Similar argument for EAW by the way - it will be very interesting to see how E3D is justified if things get tight. Do we need it for defence of UK? Not against current threat. Is it essential for EAW - yes, but only if you have the fast jets and tankers to make the whole thing work. Otherwise you're in the bizarre situation where you're utterly reliant on others to do crucial parts of your mission against any threat level. That's why things are so f8cked up atm (plus the two unfunded wars we've fought) - no-one is willing to articulate the argument that says you need to spend some more to do what you want now, or you need to spend and do a lot less. Mainly because the resulting furore would dwarf the recent brouhaha over capbadges.......

      The Libyan campaign could well have had the beancounter headline if the Libyan AF had come out to play as well. Running DCA (the original idea as opposed to the CAS for the rebels it became) would have been "interesting" with Typhoons from Italy, despite the extensive US tanker support. In the event, I think they got the headline anyway in relation to the number of VLSW that Westminster "allegedly" deployed with......

    3. True about the Westminster. I guess where there's headlines to be had, the press will find a way, even if they have to bend the truth/reality to do it.

      It is a worry about things like Sentry. When you consider that Sentinel is under the spotlight, despite being quite cheap to run and having proven itself a useful asset, it really does make you wonder what else might be sacrificed on the altar of austerity?

      Regarding QEC, I'm mulling over an idea for a post for TD (as a thank you for the all the tweets and links he's given me) that may just give him a heart attack, as part of his wider series about the run up to SDSR'15.

      I think we still have it within ourselves to do expeditionary warfare on a good level, with a bit of tweaking here and there. The question is whether we can find the will to support it and the concensus among the various services to build towards it. Which probably explains why we're having so much trouble!