Defence spending: Too little, too much

Two people are pulling on a piece of string. At one end George Osborne is tugging hard to cut defence spending. He wants savings of up to 20% and hopes to shunt the immense cost of Trident replacement on to the Ministry of Defence's books. At the other end Liam Fox, the defence secretary, is pulling vigorously to protect his department's pet schemes – new jets, new ships, new vehicles and capabilities in space and cyber warfare. This summer Mr Osborne is drawing up his spending review. Mr Fox is working on the strategic defence review. These two projects are in contradiction, yet taking place at the same time. One aims to save money, the other to spend it. One will count the cash, and then offer to fund only what is affordable. The other will decide what is needed, and then ask for the money to do it. Britain's hubristic claim to be able to support global military status on the cheap is being exposed. Something will have to give. As Mr Fox told the Commons defence committee yesterday, "we have to match our resources with our commitments, limit what we ask them to do or increase funding. It is very clear in the short term at least there will be no increase in funding." So there will, instead, be less defence. This is no bad thing. Britain spends too much money – £40bn a year – on defence. A smaller budget and smaller ambitions could be good for the country, if managed in the right way and co-ordinated with allies, especially in Europe. Britain's defence budget has been bust for years, cut by a third after the cold war, yet is expected to sustain a series of wars and expeditions and the paraphernalia of a semi-superpower, such as Trident. The prospect of cuts is forcing debate about what equipment Britain needs, the role it should play and the threats the country might face. Labour, in power, ignored these questions; the last strategic defence review was in 1998, before Iraq and Afghanistan changed priorities. After that, Labour lavished promises on the military without a strategy to support them. It backed immensely expensive re-equipment programmes, including Trident, the Joint Strike Fighter and two aircraft carriers that dwarf anything in British naval history, and signed a series of other questionable deals just before the election, without providing the money. This week's shocking National Audit Office report into the financial management of defence procurement suggests the gap between what was purchased and what can be paid for may reach £36bn over the next 10 years. In 2009 the MoD was £700m over budget. This year it will be £500m. Add in Trident, as the Treasury is right to want to do, and the shortfall is even more pressing. And that is before cuts. One option – the wrong one – would be to slice 10% off everything. The delivery of aircraft carriers could be delayed a second time, the cost spread over a longer period. The JSF fleet could be reduced to 50 (though each plane will still cost as much as the cancelled loan to Sheffield Forgemasters). A better answer is to axe some projects and capabilities entirely. Mr Fox agreed with this yesterday but he remains wedded to Trident replacement, the most pointless and expensive project of all, and excluded from the defence review . There is a chance, though, that the Treasury will succeed where CND failed: cancelling the next generation of nuclear weapons and cutting back on the one Britain already has. Note that the coalition agreement does not guarantee Trident renewal. Even this would not be enough. The army, facing the loss of up to three of its eight brigades, thinks the navy should take the pain, cutting aircraft carriers. The RAF will lose jets. This opens the way to a bolder military reconstruction: there are too many bureaucrats, generals and admirals across three rival services. A single combined force would cost less and do more. But would any Tory prime minister dare abolish the Royal Navy and the RAF?