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| Armed forces may need to find £17bn of savings over next decade, report says | Armed forces may need to find £17bn of savings over next decade, report says |
| (30 days later) | |
| The armed forces may need to find up to £17bn of savings over the next decade unless ministers ring-fence the defence budget from further cuts – a target that would require drastic measures such as axing another 15,000 frontline jobs, according to a report published on Wednesday. | The armed forces may need to find up to £17bn of savings over the next decade unless ministers ring-fence the defence budget from further cuts – a target that would require drastic measures such as axing another 15,000 frontline jobs, according to a report published on Wednesday. |
| The study by the Royal United Services Institute thinktank (RUSI) says reductions in defence spending brought about by last year's autumn statement could have far-reaching consequences for the Ministry of Defence that raise new questions about the stability of the department's notoriously wayward budget. | The study by the Royal United Services Institute thinktank (RUSI) says reductions in defence spending brought about by last year's autumn statement could have far-reaching consequences for the Ministry of Defence that raise new questions about the stability of the department's notoriously wayward budget. |
| With this year's government spending review expected to squeeze more savings from around Whitehall, "the early omens from a MoD point of view, are worrying", the report says. The situation will become acute if the government commits to replacing the Trident nuclear deterrent fleet, a programme that could swallow 35% of the military equipment budget over the coming years. | With this year's government spending review expected to squeeze more savings from around Whitehall, "the early omens from a MoD point of view, are worrying", the report says. The situation will become acute if the government commits to replacing the Trident nuclear deterrent fleet, a programme that could swallow 35% of the military equipment budget over the coming years. |
| The study warns that if the MoD's budget is cut again in the 2015 defence review, this would leave the department needing to find savings of £17bn over the next decade. | The study warns that if the MoD's budget is cut again in the 2015 defence review, this would leave the department needing to find savings of £17bn over the next decade. |
| Wednesday's 17-page RUSI document by Professor Malcolm Chalmers sets out the current state of the MoD budget and number-crunches through different scenarios based upon figures already published and government spending targets. | Wednesday's 17-page RUSI document by Professor Malcolm Chalmers sets out the current state of the MoD budget and number-crunches through different scenarios based upon figures already published and government spending targets. |
| Though Philip Hammond, the defence secretary, announced last year the MoD's finances were back in balance, the autumn statement demanded a further £735m worth of savings over the next two years which, in turn, will affect the baseline budget for future years. | Though Philip Hammond, the defence secretary, announced last year the MoD's finances were back in balance, the autumn statement demanded a further £735m worth of savings over the next two years which, in turn, will affect the baseline budget for future years. |
| Spending on the military has not been protected, Chalmers says, and "there are indications that defence, along with some other relatively smaller departments, will be the main focus of savings efforts" in this year's spending review. | Spending on the military has not been protected, Chalmers says, and "there are indications that defence, along with some other relatively smaller departments, will be the main focus of savings efforts" in this year's spending review. |
| Unless the situation changes, by 2016 the MoD budget is likely to be £1.1bn shy of the amount commanders have been relying upon, and the gap will continue to grow inexorably unless the department is given extra funds, or spared further cuts. | Unless the situation changes, by 2016 the MoD budget is likely to be £1.1bn shy of the amount commanders have been relying upon, and the gap will continue to grow inexorably unless the department is given extra funds, or spared further cuts. |
| Chalmers suggests the MoD has done well to balance its books in recent years, but that this work is in danger of being undone. | Chalmers suggests the MoD has done well to balance its books in recent years, but that this work is in danger of being undone. |
| "If the 2013 spending review leads to further defence spending cuts, the extent of the prospective gap between planned spending and available resources could still be significant," he says. | "If the 2013 spending review leads to further defence spending cuts, the extent of the prospective gap between planned spending and available resources could still be significant," he says. |
| "The MoD may need to find around £11bn in savings over 10 years as a result of the decisions taken in autumn statement 2012 and spending review 2013. If spending review 2015 makes a further 2.5% cut in the MoD resource budget the requirement for 10-year savings could increase to around £17bn." | "The MoD may need to find around £11bn in savings over 10 years as a result of the decisions taken in autumn statement 2012 and spending review 2013. If spending review 2015 makes a further 2.5% cut in the MoD resource budget the requirement for 10-year savings could increase to around £17bn." |
| He adds: "It was hoped that four years of austerity would be enough for the government to meet its wider budget reduction targets. With Treasury agreement, the MoD therefore based its plans for the latter part of the 2010s on the assumption that it could look forward to real (albeit modest) increases in its budget. These assumptions now appear under threat." | He adds: "It was hoped that four years of austerity would be enough for the government to meet its wider budget reduction targets. With Treasury agreement, the MoD therefore based its plans for the latter part of the 2010s on the assumption that it could look forward to real (albeit modest) increases in its budget. These assumptions now appear under threat." |
| Chalmers says pay freezes and further substantial job cuts may be the only ways of finding extra savings if the military wants to protect its equipment programmes – which include two new aircraft carriers, the introduction of the Joint Strike Fighter for the navy and air force, as well as new fleets of helicopters and refuelling aircraft. The army desperately needs new equipment of its own. | Chalmers says pay freezes and further substantial job cuts may be the only ways of finding extra savings if the military wants to protect its equipment programmes – which include two new aircraft carriers, the introduction of the Joint Strike Fighter for the navy and air force, as well as new fleets of helicopters and refuelling aircraft. The army desperately needs new equipment of its own. |
| Another option would be for the MoD to conduct a mini strategic defence and security review that could question again whether military can meet its commitments with the money it has been promised, and if not, what needs to be jettisoned. | Another option would be for the MoD to conduct a mini strategic defence and security review that could question again whether military can meet its commitments with the money it has been promised, and if not, what needs to be jettisoned. |
| Defence sources questioned some of the figures in the RUSI report and said some of the calculations were "pure conjecture". | Defence sources questioned some of the figures in the RUSI report and said some of the calculations were "pure conjecture". |
| In a statement, Philip Dunne, the defence minister, added: "The MoD budget for 2015/16 will be set this summer and the budget for subsequent years will be finalised in the next full spending review. The Treasury has made clear that the MoD may plan on receiving a 1% real-terms increase in the equipment budget from 2015/16 onwards. This has been endorsed by the prime minister. Our armed forces will remain a formidable fighting force, backed by the fourth-largest defence budget in the world." | In a statement, Philip Dunne, the defence minister, added: "The MoD budget for 2015/16 will be set this summer and the budget for subsequent years will be finalised in the next full spending review. The Treasury has made clear that the MoD may plan on receiving a 1% real-terms increase in the equipment budget from 2015/16 onwards. This has been endorsed by the prime minister. Our armed forces will remain a formidable fighting force, backed by the fourth-largest defence budget in the world." |
| The shadow defence secretary, Jim Murphy, said: "The prime minister promised to protect the defence budget and the defence secretary pledged to balance the books, but both fell short. | The shadow defence secretary, Jim Murphy, said: "The prime minister promised to protect the defence budget and the defence secretary pledged to balance the books, but both fell short. |
| "It is essential that there is now reform to procurement, an advanced defence industrial strategy, consolidation where necessary and modernisation of our force structures. | "It is essential that there is now reform to procurement, an advanced defence industrial strategy, consolidation where necessary and modernisation of our force structures. |
| "There are tough decisions ahead for defence, but it is essential the UK's ability to project force globally is maintained." | "There are tough decisions ahead for defence, but it is essential the UK's ability to project force globally is maintained." |
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