The debate over whether or not to commit to spending 2.5% of GDP on Defence immediately has resurfaced this week after Keir Starmer’s announcement of a Strategic Defence Review. It has featured in several items of the Radio 4 Today programme, where some of us have been interviewed.
The most recent on Thursday was the new shadow Secretary of State for Defence: James Cartlidge. This, by the way, is an excellent appointment. When he was the Minister for Defence Procurement in the last Government, he very quickly got his mind around the complexities of UK Defence and its often arcane ways, bringing a fresh perspective. If his Integrated Procurement Model, announced in late February this year, had been combined with PM Sunak’s defence reforms announced two months later in Warsaw, they may have had the desired reforming impact on how UK Defence does and doesn’t work.
Also announced in February, in a speech at Policy Exchange, the then shadow Defence Secretary, John Healey set out his own comprehensive plans for reforming UK Defence’s upper echelons, both the MoD and military, to reverse the slope of decline on which all the parliamentary and governmental oversight bodies – HCDS, PAC, IR&D, NAO – have reported with increasing frustration.
My analysis of these two sets of proposals was covered in a Policy Exchange blog article at the time. The bottom-line is that both were on the right track, even if Healey’s was then more fully rounded and thought through. But now we are in a position where Healey is the Defence Secretary, and his manifesto plans are government policy.
The obvious point of difference is that then Prime Minister Sunak announced a costed plan to get to 2.5% of GDP by 2030; Prime Minister Starmer has repeated that he has the same ambition but will not put a timeline on it. Rather, his position is that he will get there when “economic conditions allow”. This article is not about the timing or politics of the argument, nor an accountant’s assessment of just how much new money was actually being found. Rather it is about whether setting an arbitrary, round figure of GDP is a good methodology for defending the country or managing government finances.
On the ‘pro’ side of the debate are many sound arguments. NATO only works if everyone pulls their weight, and so each country spending about the same percentage of GDP is a good measure of shared skin in the game. This is especially important now that we have a likely Trump – Vance White House to deal with by the turn of the year, and they have been crystal clear about pulling expensive US support away from NATO if the European nations aren’t going to make the same financial commitment to their own defence. In fact, that argument does not depend on a Trump victory, as I covered in more depth in February in The Daily Telegraph.
The second argument is that, via the Integrated Review process, repeated after Ukraine, and two Defence Command Papers, we have all the data we need. Now we just need to up the budget to address the shortfalls. In a previous life, as the MoD’s director of military operations, I had to place restrictions on some munitions usage during our operations against Daesh in Iraq and Syria- at tiny fractions of the usage rates seen in Ukraine. I am very receptive to any arguments about increasing stockpiles, and there may be some genuine ‘no-brainers’ here.
The final, and I find most persuasive, argument relates to long-term planning and investment. Only with assured funding can the MoD and its industrial partners invest in weapons production to put the UK military back where it needs to be. This is correct to an extent, and certainly establishing that as soon as possible would be a good thing.
If those are sound arguments, then why aren’t they compelling? Put simply, yes, we know where the gaps are, but we haven’t investigated whether they result from a simple lack of resource, or are the consequence of a major systemic error. If the former, then, yes, spend more to fill the gaps. If the latter, then throwing limited resource into a failing and possibly outdated system is actively harmful; you waste time and money you won’t get back until you realise you need reform.
Let’s test the arguments individually to make the general point.
We do need to replenish munition stockpiles, but with what? In the UK, we have expended decades, and billions of pounds on over-engineered drone programmes, that produce numbers in the tens. These are not particularly survivable, and in Ukraine would last a few days. There is no production line behind them. This is not a war-fighting proposition, but it does give us some drones to exercise with in peacetime. Ukraine is rapidly prototyping drones in weeks and producing them in the tens of thousands. How would an extra 0.16% of GDP allow us to address this fundamental problem if we expend it on drones as we currently do?
A similar case can be made for what seems to be a no-brainer: more 155mm artillery shells. Well yes, but… The West has donated ten types of 155mm gun to Ukraine, and all need their own 155mm munition, so the only standardisation is the width of the shell. This a logistic nightmare, and contrary to the lessons of history that say: simplify, standardise and then scale across an alliance. A benefit of our hitting rock-bottom on our artillery fleet – our few remaining AS90, 155mm guns have been refurbished and donated to Ukraine – is that we can start over again. We could just buy an eleventh type… But it would be better to imagine what we need in wartime, across the alliance or likely coalition, and standardise now. With standardised ammunition we should also see economies of scale in production and we would keep vital production lines open.
There will be some types of munition in which we have made a long-term bet but have low stocks. And we should replenish those now. But we should review how we will need to fight, factory to foxhole, in wartime and build that system and its stockpiles.
As for long-term planning and resourcing, the argument here is an extended version of the one made above, but at a wider operating system level. How will we fight in the future? Would we now buy more NLAW anti-tank missiles since they were useful during Russia’s initial invasion? What is the role of the main battle tank in the emerging era? How do drones integrate with NATO air and sea power, areas where it traditionally held an advantage over land-centric, post-Soviet forces? A more fluid battlespace might not give rise to exactly the type of warfare we now see in Ukraine but some innovations will certainly carry across.
So we need to investigate the questions that arise from Ukraine and come to some conclusions as to what we need to invest in now and in the future. This will almost certainly require a different defence industrial base behind it, one that can absorb rapidly the advances of smart start-up companies and dual-use tech (tech with both a civilian and military). This will be a significant break from the current paradigm that sees us dealing primarily with the big ‘primes’ of defence industry, while spending evermore to buy fewer and fewer very expensive, and irreplaceable, pieces of high-end equipment that are bespoke to the UK. There is also a persuasive argument that our defence primes have become a little to risk averse, relying too much on assured UK Govt funding for their profits, and dividends, and not investing enough from capital markets.
Reimagining the topography of our defence industrial base, with our allies, will not be easy. But if we rush to 2.5% immediately, promising ‘jam tomorrow’ to those currently doing well out defence you will make a lot of people happy; they just might not be the people you need come wartime.
Finally, and in reverse order, that first point on 2.5% signalling intent and resolve – especially to friends and foes. Addressing this argument requires us to be honest with ourselves about the state of our defences, which we haven’t been to date. Travel the capitals of our allies and you will now hear criticism, polite criticism but it is increasingly pointed. They have compared our inputs, which as the sixth largest defence budget in the World is impressive, with the size of our actually available front-line and its readiness, which usually isn’t. And if our allies know this, then our foes and their espionage agencies certainly will as well.
How our friends and foes evaluate us dictates our credibility, and credibility is the bedrock of deterrence. If we wish to deter our foes, in concert with our allies, then they must fear and respect us respectively. If we try and impress and influence others on the basis of a 0.16% increase in GDP over 6 years, without the necessary reform that improves our input/output ratio, then we are likely to achieve the opposite of what we intend.
For all the foregoing reasons, then, I advocate a comprehensive assessment of our current state and an imaginative review of what we will need to prevail in war in the future (there are simply too many theories and concepts to be explored here). It is more than likely that having done so we might conclude that we need to spend more than 2.5% of GDP, as many of our allies now do (who would have thought that Poland would have such a strong case for leadership of Euro-NATO). But we would have a body of evidence that justified the demand having addressed the profligate failings of the current paradigm.
If Trump – Vance are elected and do as they have signalled, then Euro-NATO will get quite a shock. The costs of replacing US capacities will be significant. Rachel Reeves might look back and wish she had agreed to 2.5% GDP now. And that is the real reason to reject the setting of arbitrary round number figures for mandatory spending. The floor becomes a ceiling and the ceiling becomes a target. Justifiable, costed outputs are divorced from the necessary inputs. GDP may go up and down; so why should the capacity of our defences move with it in lockstep? National defence is too important to become a political football, with arguments settled over arbitrary spending pledges.
For many reasons we now have a great opportunity to make root and branch reform of the UK’s national defence architecture. Considering its importance, too little attention was paid to Healey’s first main speech at Policy Exchange (cited earlier), because it was concerned with the apparently dry subject of institutional reform of a Head Office. But those reforms were designed to create a leadership oriented around actual wartime outputs and the placing of named individuals accountable for their delivery. That needs to be put in place as the defence review is initiated; we may then, finally, get the meaningful reform we have talked about before previous Strategic Defence Reviews, but have rarely seen.