Defending defence: Why we should be rethinking cuts to the Armed Services

Decisions made on defence cannot focus solely on government budgets. With overseas military commitments and a strong industry the UK needs to put its money where its mouth is.

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Cameron should order a rethink on defence cuts
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Matthew Knowles
On 14 June 2011 10:30

Last autumn’s Strategic Defence and Security Review (SDSR) and subsequent proposals for further cuts in the defence budget have, quite rightly, seen the focus fall on the impact that they will have on the UK Armed Forces and foreign policy. However, the support to the troops from the domestic defence industry is also an additional issue with significant economic impact that so far has not been examined fully.

Defence makes up 10 per cent of the UK manufacturing base, employs around 300,000 people across the whole country – especially in otherwise deprived areas - and is worth an estimated £35 billion per year to the British economy. We should ask ourselves the question; is the UK in danger of throwing away one of its few remaining manufacturing success stories?

Recently Liam Fox, the Secretary of State for Defence, made a speech looking at the economics of national security. In it he said that “…our national security is linked to the health of our economy.” and that the government’s “…long-term vision for Britain’s defence depends upon a sound economic base that enables sustainable military power to be built - together economic power and military power are the foundation of global influence.”

Dr Fox explains frequently that the country has to make savings in defence because “Relative economic power is the wellspring of strategic strength. And conversely, economic weakness debilitates every arm of government.”

The industry recognises and supports the need to address the deficit. However, there are other areas of government where spending is not being reduced or where budgets have increased by three or four times over the last twenty years while defence has seen its proportion of government spending or of GDP halved since 1990. 

Defence had made its contribution to public spending savings before the current government was formed. Further cuts before other departments have made an initial contribution could be seen as unfair ‘double-dipping’.

The current spending decisions across government reflect political priorities. These are choices that have been made, not inescapable outcomes forced on politicians and this is taking place while the UK commits resources to new action in Libya despite still being engaged in Afghanistan.

Furthermore, investment is the seed corn of future defence capabilities but research and technology within the Ministry of Defence has been cut by 20 per cent over the last three years. The government is also making noises about buying more equipment ‘off the shelf’ to save money without being clear what the wider impact will be.

The evidence that money will be saved is questionable, meanwhile the unintended consequences are likely to be a reduction in new, battle-winning products from the UK industry for use by our own troops and a lack of new intellectual property to deliver additional export revenue to the domestic economy.

At present, defence is a successful export business for the UK with an average return of £5 billion per year. The UK is number one in Europe and second only to the US worldwide with a 21 per cent share of the global defence exports market. This success is based on investment decisions taken two, three or more decades ago.

Research from Oxford Economics found that each additional £100 million of investment in defence would generate around 2,000 new jobs and a total injection into the economy of £227 million from spending via the supply chain and the sector’s employees.

Additional government investment in defence would deliver an increase in economic activity, greater potential capabilities for our Armed Forces and further investment in developing new products for our troops and export markets. The government is missing a trick. It commits our troops to new activities overseas; it wants to increase exports, a welcome initiative which industry wholeheartedly supports; and it seeks to boost the economy but in defence its spending policies are working in the opposite direction.

The very real danger is that in the future that choices made today will render this globally competitive and successful British industry unable to deliver battle-winning capabilities for our troops or the significant economic benefit that it currently generates.

Decisions made on defence cannot focus solely on government budgets. With overseas military commitments and a strong industry the UK needs to put its money where its mouth is. The alternative – decline on the global stage and the loss of a large part of our remaining manufacturing base and the jobs and revenue that it represents – does not bear thinking about.

Matthew Knowles is the Public Relations and Campaigns Director for ADS Group, who tweet at @adsgroupuk

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