Opinion

Will Liz Truss's defence spending plans force MOD to cut back?

AS90 Self-Propelled Artillery moving at speed to target during Exercise Iron Storm (Picture: UK MOD/ Crown copyright 2022).

The UK has a new Prime Minister, Liz Truss, who took on the role less than 48 hours before the Queen died, plunging the UK into mourning, and will face a challenging and complex policy inbox to handle, as she attempts to steer the nation in the months ahead.

The challenges she faces are many, ranging from the energy crisis to longer-term bilateral relations with Europe. With an election due in just over two years, she will need to move fast to have an impact and secure her legacy.

During the leadership election campaign, Truss committed to increasing defence spending in the UK from 2% of GDP to 3%.

Committing to spending more on defence is always a popular move within the Conservative Party, which has traditionally been seen as a strong proponent of the Armed Forces.

The challenge facing Truss though is working out how to follow through and pay for it, given that such a move will require billions of pounds of extra funding to deliver.

It is also not clear how the money will be spent and what balance will be struck between genuinely new equipment and replenishing stockpiles and building resilience back into the Armed Forces.

It is too early to work out specifics of what will happen, and perhaps the only certainty is that the Trident nuclear deterrent and its replacement will continue to be funded.

Beyond this, it remains very unclear what may, or may not, happen to the Armed Forces. However, in the short term, two things are likely to happen.

The first is that some form of budget and spending review will happen which should set out in more detail the speed with which the budget will rise.

Watch: The defence issues Liz Truss faces.

It is possible that it may be some time before there is a meaningful rise in defence spending, given that the Government faces significant other financial commitments (for example, the need to spend more to address the energy crisis).

The additional funding required may not be available until later in the decade, making it unlikely that much growth will occur until after the next general election (which must be held by the end of 2024).

The other thing that will happen is that some form of strategic defence review will be held to address the changes in global security that have occurred over the last 18 months.

The last British national security strategy and defence review was published in 2021 and emphasised a wider 'global Britain' that would invest more time and resources in the Indo-Pacific, as part of a strategic pivot to the region.

Events in Ukraine since the Russian invasion have called into question whether this tilt is the right focus for the Armed Forces, or if some form of rebalancing is required.

The review, when it comes, will need to balance off two big questions – firstly, where do the UK's strategic priorities lie in the years ahead, and secondly, how much money is available to buy what is required to meet these goals?

The former question will really boil down to deciding how meaningfully the UK wants to support NATO and European defence over its own aspirations in the Indo-Pacific region, and how much it is prepared to restructure the Armed Forces to deliver this.

If the decision is taken to focus on helping strengthen NATO, then the review will probably call for increased investment in the British Army, particularly in ensuring that it remains able to operate in high-intensity conflict.

The current Army order of battle is looking increasingly frail, with the Challenger 2 tanks, AS90 Howitzer and Warrior Infantry Fighting Vehicle (IFV) all between 30 to 40 years old.

Replacement programmes have, in recent years, either been cancelled, delayed, or reduced in scope, and projects like the Ajax vehicle seem to be ever further behind schedule and vulnerable to being scrapped.

For the Army, there is a danger looming of mass 'rust out' as its vehicle fleets and underpinning capabilities hit block obsolescence, with replacements either late or cancelled.

The lesson from Ukraine is clear that things like effective artillery support, strong land-based air defences and effective logistics (as well as large stockpiles of ammunition) is still incredibly relevant.

For all the talk at the time of the last defence review of the Army moving to adopt autonomous drones and robots, there is still a clear space for traditional military capabilities at the heart of ground operations.

Second to this discussion will be one on headcount and whether it makes sense to continue with planned reductions to the Army to reduce it to just 72,000 regular troops – or to scrap these plans.

While emotionally it may make sense to retain a larger Army, there is a big affordability challenge linked to this – keeping the Army at closer to 80,000 calls for a larger number of additional vehicles, weapons, supplies and accommodation/base sites to be bought and kept open.

While this is entirely possible to do, it would require a lot of extra money – which may well eat up much of the planned budget increases that the Prime Minister has committed to.

Whether this makes sense or if it is better to reduce to previously planned levels but fully fund new vehicles and equipment is a serious dilemma facing the Ministry of Defence (MOD).

The RAF too will want to focus on looking at its ability to operate against a peer rival, potentially enhancing the ability of its forces to carry out air to ground strikes – maybe making more use of armed drones, and expanding its force of Wedgetail ISTAR and P8 Poseidon maritime patrol aircraft to better handle the complexity of the modern battlespace.

There is also likely to need to be a serious discussion about building back resilience into the RAF, which in recent years has reduced to a handful of main operating bases for its aircraft forces, and making better use of other airbase and civilian airport locations to reduce risks of their aircraft being taken out in a pre-emptive strike.

For the Royal Navy, any move to focus more effort on the NATO region is likely to prove emotionally challenging as it calls into question the shape and structure of the force that it has spent 20 years building.

The modern RN is designed for global operations at a long distance from the homebase and being used to carry out maritime activity from sovereignty patrols through to carrier airstrikes.

The threat in a NATO context has far less to do with this sort of 'flag waving' and far more about investment in Anti-Submarine Warfare (ASW) platforms like the Type 26 frigate, which will begin to enter service over the next few years.

The key Russian naval threat is their very capable force of nuclear attack submarines, which are almost on a par with some NATO ones.

These vessels could, if undetected, pose a threat to NATO ballistic missile submarines (operated by France, UK and USA), as well as potentially threaten reinforcement convoys of troops and equipment being sent to Europe from North America.

Such a move, reminiscent of the Cold War, is a serious challenge to handle and may need the Royal Navy to think carefully about where it focuses its operations, and whether this requires it to change its operational plans and deployments.

The case to focus on European defence is compelling, even compared to 18 months ago. The increasingly aggressive activity of the Russian government, through the invasion of Ukraine, as well as wider acts of destabilisation in other eastern European nations, and its ongoing threats against the Baltic states (Estonia, Latvia and Lithuania are all NATO members) is of concern.

Across NATO, there has been a general rise in defence spending and commitment to European defences, as well as expansion of joint exercises and defensive planning.

NATO has been reinvigorated by the Russian invasion of Ukraine, and as seen at the Madrid Summit this summer, is now increasingly focused on defending against the threat posed to its borders by Russia.

The UK has long prided itself on being a leading player in NATO and will want to continue to be seen in this way.

Such a commitment matters to London as it ensures Washington DC sees the UK as the leading European NATO power and helps ensure longer-term British influence in developing NATO policies – a key security goal.

To meet this commitment though will require balancing off support to NATO with wider national interests globally.

One of the key changes made in UK security thinking because of Brexit was the desire to shift interest into the Indo-Pacific region, the so-called 'tilt' which will see an increase in the level of defence commitment to the area.

This has included the permanent deployment of offshore patrol vessels and plans to forward deploy a Royal Marine Littoral Response Group, and Type 31 frigates.

When coupled with increases in Army and RAF exercises in the region, there has been a marked uptick in the UK commitment in the last 18 months.

There are significant benefits to doing this. From a trade and defence co-operation perspective, the more that the UK does in the region, the more likely it is to increase defence exports – for example, Indonesia has already purchased a licence for the basic Type 31 frigate design.

A more sustained British presence also improves relationships with the US and Australia, who are deeply concerned by the growing threat posed by China, and potentially opens the door to more joint exercise and operations in the region, which could increase British influence.

Such a move calls for a very different set of defence capabilities to focusing on NATO, and may be unaffordable and unsustainable, even with a rise to 3% in spending.

Therefore, one of the first big challenges facing the Prime Minister is to work out where she feels her Governments strategic priorities lie, both in the short and medium term, enabling the MOD to carry out the detailed work of delivering this.

This work will take the form of trying to understand what military equipment is needed, what type of force structure and how much will be required to pay for it all. Solving the money question is going to be the second big challenge for the MOD.

If the Prime Minister continues to want to meet the 3% spending target, then the role of the Treasury is to find a way to turn this into reality.

It is not as simple as applying a large lump sum of cash into the MOD's budget, instead the money needs to be carefully assigned to meet very specific budgetary needs.

The MOD will need to identify what it is that it wants to spend the additional cash on, determine when it will need this, and put together a multi-year plan that spends it all in the required time.

For an entirely hypothetical example, the MOD may want to buy a new type of armoured vehicle, perhaps costing a total of £1bn, beginning the project in 2025 and completing it in 2030.

Most people would divide the spending into five years and uplift the MOD budget by £200m each year – but the system doesn’t work like that. It may be the case that only a small amount of money is needed at the start, with a lot of extra money in one year, then slipping off again at the end.

What this means is that it requires a lot of very complicated planning to work out how to spend additional money, ensuring that the right money is available at the right time, and not written off.

Delivering this spending uplift needs the MOD to have a very clear idea about what it wants to buy, which in turn requires the Government to issue clear strategic direction on what it wants the Armed Forces to do.

There is also an inherent tension between what the Armed Forces need and what the Government wants to spend money on.

It is likely that the Prime Minister will wish to see more money spent on additional ships, tanks, and aircraft, showing a physical increase in the size and shape of the Armed Forces as part of her legacy.

But the MOD will probably be less willing to invest in more equipment and instead try to restore stockpiles and build resilience.

The lesson of Ukraine is that munitions stockpiles get used far more quickly than planners expect and that every bullet counts.

MOD planners focusing on trying to prepare for potential conflict and defence against Russian invasion of Eastern Europe will want as much additional ammunition, logistics and other support as possible, not additional equipment that brings its own additional logistics burden.

Trying to strike a balance between what MOD planners think they need to deliver Government goals, and what the Government wants to meet political views will be extremely challenging and require compromise and negotiation on both sides.

What does seem likely is that there will be extra money available, even if the Treasury tries to keep this to the smallest amount possible, and that the MOD can look to the future with a level of reasonable confidence about its budget.

The risks that it faces though in doing this is that no promise lasts forever. There is no certainty that the PM will be in office in 2030, or whether instead another political party will form the government then.

This means that the MOD must make some very serious financial plans and commitments without any certainty that the funding is going to be there longer term to deliver on these commitments.

Similarly, any rise in spending now must be planned and funded for the long term, as money will be needed for years to come to fund the new vehicles and equipment likely to be purchased.

This means that the MOD must plan on the assumption of a lot more money to come, but with no certainty that this will remain the case – and, if not, be ready to make some fairly substantial changes to its budgetary plans as a result.

The next six months are likely to prove a fascinating time for UK politics as the new Prime Minister attempts to define her vision of Britain, which will shape the nation for years to come.

The MOD may well find itself a beneficiary, but it will need to make tough decisions about where to focus its operational efforts and purchasing plans, without any certainty that they will come true, given a general election must occur by 2024.

In the worst case, having planned on growth to the budget, people and equipment numbers, the MOD may find itself, in a few years' time, forced to cut back on all three of these.

This article is the latest contribution in our Lima Charlie columnist section.

This is part of a series featuring unattributed contributions from experts and insiders providing opinion, insight and analysis on today's Armed Forces, the wider politics of the military and observations on military life.

Under the pseudonym Lima Charlie, our contributors aim to explore the issues facing today's military and their comment remains unattributed to allow our writers to present their analysis candidly and under one editorial voice.