An additional 3,000 civilians will be axed from the Ministry of Defence after ministers realised the department’s “black hole” – the gap between revenue expectations and spending commitments – was bigger than previously thought.
This “black hole” has become one of the government’s most effective examples of Labour profligacy versus coalition (especially Conservative) fiscal discipline. But in truth, we’ve never really known how big it is or how close it is to being eliminated.
It is generally reckoned that when the coalition came in, there was a £10bn gap that needed closing over the course of the parliament, but the total overspend on existing projects could eventually be as high as £38bn. Read more
The Ministry of Defence is always strapped for cash but never short of intrigue.
Remember the urgent police inquiry that Liam Fox launched after a mole gave the Daily Telegraph his letter warning David Cameron about “draconian” cuts? Read more
Does the defence review add up? The head of the RAF has today given us an important insight into the maths. He has made public that David Cameron’s vision for the armed forces in 2020 is only affordable if you assume the MoD budget rises every year after 2015 by around 2 per cent above inflation.
For those of you who don’t think it sounds much, a five-year military settlement as generous as that was last granted in the early 1980s.
Is the rise a realistic basis for planning? A prudent approach? Should we really count on a military spending boom after 2015?
This review was, after all, supposed to balance the MoD books. Yet it looks like we’re back to buying kit on the never-never. Officials tell me the cumulative unfunded liability — if you take the usual planning assumption of the budget rising in line with inflation after 2015 — stands at £13bn to £15bn over the coming decade.
Coalition aides say this is completely different from the “black hole” they say they inherited from Labour. It all comes down to this statement given by the prime minister in the Commons:
“My own strong view is that this structure will require year on year real-terms growth in the defence budget in the years beyond 2015.”
On the basis of this “strong view”, Liam Fox’s team think it is realistic and reasonable to at least plan on the basis of real terms increases to cover their spending commitments. Defence chiefs also welcomed Cameron’s “strong view” of the future — but they are still pushing for a more “bankable” pledge. They want George Osborne to guarantee an annual uplift beyond 2015, a request that some Treasury officials will treat as light comedy. I don’t think such a guarantee has ever been given to a department. Read more
David Cameron aimed a broadside at the Ministry of Defence today (and by proxy at Liam Fox).
“That department does seem to have had a bit of problem for leaks which is worrying when that department is responsible for security.”
On one level this is fair enough. Leaks are extremely unsettling for ministers and senior officials.
But at the MoD, the problem hasn’t been leaks. It has been a willingness to cover up uncomfortable truths. How else did it end up with a black hole of £36bn? Some more transparency — whether authorised or not — would only have been beneficial.
The coalition certainly believes this in principle. But when transparency makes life difficult for them rather than Labour, they struggle.
Take James Kirkup’s excellent scoop today. Fox’s reaction was to say that it was written by a “junior official” and that it had not “been authorised, requested or seen by an MoD minister”.
Which begs the question, why not? Why didn’t ministers see this well argued, plainly written and insightful critique of the most important defence review since the Cold War? Read more
It is now received wisdom in Westminster that Liam Fox emerged victorious from his battle with the Treasury over defence funding.
The official history has David Cameron making a last minute intervention to boost defence spending, particularly for the army. The Treasury were only able to secure cuts of around 8 per cent in real terms, rather than the 10 per cent cuts they were pushing for.
The alternative interpretation is that Fox was short-changed and that this will become clear in the months ahead. The argument runs in two parts: Read more
The search is finally over. I’ve heard that Ursula Brennan will be promoted to become the most senior civilian official at the Ministry of Defence — taking over what is arguably the most rum job in Whitehall.
It is always good to see more women at the top of the civil service, which is still far too dominated by men. Brennan has shown herself to be a dab hand as deputy permanent secretary at the MoD, keeping a cool head in what can be a maddening institution to work in.
There will also be some relief that there is a degree of continuity at the top of the MoD. After all, as well as Brennan’s appointment as permanent secretary, there is a relatively new government, a new chief of defence staff, and a new head of procurement (which still hasn’t been announced in spite of a six month search).
But those wanting to see new blood brought in to this infamously dysfunctional department will be a touch disappointed. Read more