Sunday, 1 June 2008

Problems stacking up …

Mick Smith of The Sunday Times offers an interesting, if superficial report today on the ongoing struggle to balance the MoD budget.

He tells us that Gordon Brown has overruled services chiefs and told them to delay replacing "ageing weapons, vehicles and aircraft" to plug the infamous "£2 billion black hole in the defence budget".

Smith has it that the heads of the armed forces had suggested cancelling two programmes outright to preserve the rest of their replacements from "salami-slicing", the prime minister having been "understood" to have vetoed individual large-scale cuts for fear of negative publicity.

Smith may be right about the delay, but his sources may be misleading him about the provenance of the opposition to the "cuts". It rather depends from whom he has taken his "briefing" in the MoD, notoriously ridden with competing factions. Our understanding is that the prime minister's office was in fact seeking cancellations, rather than subjecting the Services to death by a thousand (salami) cuts.

Anyhow, we learn that "at least eight programmes" will now be delayed (or so it is claimed), with FRES being the highest-profile postponement. This now seems to have acquired the general and misleading description of "a new generation of armoured vehicles", which Smith seems to think was "due to come into service next year".

In the dreams of some, this may have been true, but has not been on the cards for some years. When we first reported on FRES in 2004, it was very clear then that the projected in-service date was not going to be met.

What we have learned not to expect, however, is any deeper analysis from defence (or any) correspondents. After the MoD announcement in May, when the provisional winner of the FRES competition was revealed, it looked like the generals were going to get their way, buying a fleet of unnecessary and hugely expensive armoured vehicles.

If that project is to be delayed, is good rather than bad news, especially if – as is suggested – it will save £800m from the 2008-11 budget. Interestingly though, if true, it parks the problem fairly and squarely in the Conservatives' domain, should they get elected in 2010. Then, one of their first big decisions may well have to be whether to reactivate the programme, or face the approbation of a high profile cancellation, right at the beginning of their term.

The political implications here are getting quite interesting. The Conservatives have publicly supported FRES and are promoting themselves as supporting the Armed Forces. Yet they are going to have every bit as big a problem as the current government in seeking to fund all the planned procurement projects. Their best hope in this respect was that Brown wielded the sword, saving the new government from the embarrassment of having to do the dirty deed.

As it is, Smith is telling us that "procurement chiefs" are expecting the budget crisis to get even worse, citing – as usual – an unnamed defence source”, who claims that, "The service chiefs are in 'survival mode', trying to avoid making any decisions to kill off programmes in the vague hope Gordon might go."

This seems to contradict what Smith has to say in respect of the "cuts" coming from Downing Street, but it is nevertheless the dynamic to which we alluded in an earlier post. There, we cited Allan Mallinson who then opined: "…all the service chiefs can then trust to is an incoming Tory government brave enough to make an overall adjustment to public spending, thus finding the extra money to reinstate the long-term projects."

Given David Cameron's refusal to commit to additional spending, and the likelihood that the public coffers will be empty by the time the Conservatives take office, it looks like the service chiefs may be disappointed.

Furthermore, FRES is not the only programme slated for delay. Others include the Integrated Soldier Technology (Fist) programme – although, after US experiences with a similar programme, this is also probably no bad thing – especially as postponing this programme will push £100m of spending three years into the future.

There is also a software upgrade designed to give the army's Bowman communications system a battlefield tracking system to avoid friendly-fire attacks. This has been delayed indefinitely, Smith claiming that it will push back more than £300m. Again, this is probably no bad thing – such a system is only really needed in the free flowing conditions of manoeuvre battles, and has less importance in COIN operations. A delay would allow the technology to mature and to take account of the developments made by our allies, the Americans, with whom interoperability is essential.

More worryingly, the RAF will receive no replacements for the three Hercules transport aircraft lost in Iraq and Afghanistan, or the nine scrapped over the past year due to fatigue problems. This will saving £600m, but leaves the RAF airlift capability dangerously stretched until the Airbus A400M programme comes on stream. Oddly enough, though, Smith does not mention the Super Lynx, which is a primary candidate for the chop.

The Royal Navy, though, seems to have survived virtually untouched, being forced only to accept that it will now only get six Astute submarines instead of the 12 (Smith says nine) originally planned and six new Type 45 destroyers, also instead of the original 12 (Smith gets this wrong as well, citing seven). But both these cuts were already accepted in return for the carriers, we are told, but no questions are asked about how a mere six Type 45s can provide adequate coverage for two carrier groups.

Most of all though, in common with most of the journalist fraternity, Smith does not seem to have understood the significance of the MoD’s non-review, even though the clue is in his own report.

"We have recently concluded our planning round which prioritises across the defence programme," says the MoD. "Some decisions will be put on hold while the examination of the equipment programme is carried out."

In other words, everything is to play for. Nothing is cast in stone and we may simply be seeing the expected round of manoeuvring and leaks public briefing, in order to influence the outcome of the non-review. Either way though, problems are definitely stacking up for the Conservative Party.