In this speculative piece, we look at how the effects of the global pandemic may impact UK defence decision-making.
Besides the appalling human suffering, stress and dislocation, the pandemic is causing a financial earthquake across the globe. As the British state has intervened on a giant scale to help its citizens, the public finances and the economy of the UK are being changed in a way that was unimaginable just a couple of months ago. The Coronavirus jobs bailout scheme alone will cost the Treasury about £10Bn every month and the government has promised to back more than £300bn of loans to businesses. At the same time, tax receipts will fall dramatically as the UK enters what will be the deepest recession in 300 years. The Office for Budget Responsibility (OBR) has forecast that the deficit will rocket to £273bn, the largest since the Second World War if lockdown lasts for three months and the Bank of England predicts GDP will decline by 14% in 2020.
The extreme measures to protect individuals and business may be fully justified but even if COVID-19 is controlled quickly, the financial and psychological legacy will be felt for a long time. To return the public finances to an even keel the Chancellor will eventually have to make more dramatic policy decisions. While not attempting to endorse or analyse complex economic theories, there are probably three main options; (1) Cuts and austerity, (2) Debt-supported spending intended to grow the economy, (3) Experimentation with radical new economic models such as Modern Monetary Theory (essentially printing more money) or a ‘Green New Deal’ that abandons the norms of capitalism.
Boris Johnson was known to be unhappy with the conventional Tory policy of austerity pursued in the wake of the 2008 financial crash (which included the disastrous 2010 defence review). Severe public spending cuts in most departments are unlikely to be politically tolerable and borrowing to stimulate growth is a more likely path. However, some departments, such as the MoD, that are seen as being of less immediate political consequence could still be hard hit. The proud boast that we spend the NATO recommended minimum of 2% of GDP on defence was not really questioned when the assumption is that the economy would always be growing. If this commitment was maintained rigidly now, then a 14% reduction would amount to a brutal ‘haircut’ of at least £5.5Bn annually to a defence budget that was already inadequate. Drastic cuts, exceeding the severity of 2010, maybe avoided but cannot be discounted if the economy does not bounce back quickly or if a very serious financial crisis develops.
Health security v national defence
Even before the pandemic, the election promises of the government were ambitious and involved greater public spending aiming to ‘level up’ the more deprived parts of the UK with the affluent South East. Now the Treasury will have to bear the cost of a new public health infrastructure to deal with the current virus and ensure against future pandemics. Addressing bio-security will be expensive and bound to inhibit commercial, social and military activity to some extent. Although Europeans are only dimly aware, COVID-19 is the actually the third coronavirus outbreak of the 21st Century (following SARS and MERS) and it would be negligent not to be fully prepared for more.
Demands to plough an even greater share of public money into the NHS at the cost of almost everything else are likely to gain yet more political momentum. Keeping people healthy is obviously an important priority and the work and bravery of health workers has been outstanding. But public admiration and appreciation is in danger of becoming a mawkish deification of the NHS that threatens to make a balanced assessment of both our health and security needs impossible.
“We’re going to go through a very dangerous period post-COVID-19. The world order was not in good nick before this, countries are following their own rules and the US disengaged from the international table. I’m afraid we see many of the ingredients seen in the build-up to the Second World War. International organisations unable to wield authority, the UN, WTO and WHO aren’t functioning as they should, countries are siloed… a very dangerous set of parameters which could easily lead to greater conflict.” (Tobias Ellwood, MP, Defence Select Committee Chairman, BFBS Sitrep, 14 May 2020)
Until the pandemic, there was a tendency in Europe to turn a blind eye to China flouting international law, human rights abuses and intellectual property theft, essentially tolerating this behaviour in return for Chinese inward investment, cheap consumer goods and a quiet life. When the Chinese government initially covered up the COVID-19 outbreak, imprisoned the first doctor to warn of the threat in Wuhan and delayed informing the rest of the world, the tide of public opinion may have turned.
The absurd Chinese ‘9 Dash Line’ territorial claim over most of the South China sea, and threats to invade Taiwan has put it on a collision course with the US and many Asian nations and conflict looks ever more likely. Although it could seem far away and someone else’s dispute, what happens in Asia has big implications for UK interests. There is likely to be more support for a tougher line on China and the planned FONOP by HMS Queen Elizabeth in the South China Sea in 2021. A robust, co-ordinated and measured international response would make it much harder for China to pick off nations one by one or risk being drawn into a war and is the best hope for long term peace and stability.
Russia’s oil-dependent economy is in floundering and Putin’s approval ratings have plummeted. Authoritarian regimes that are in trouble are often tempted to distract from problems at home with foreign adventurism. While the Russian people struggle in the pandemic, Putin seems more concerned by superpower pretensions, heavy investment in the military and, in particular, a new generation of nuclear weapon systems which far exceed purely defensive needs.
Swinging the axe?
This infographic lays out the three core pillars of Naval Service capability and its supporting elements. This was roughly how the RN successfully presented its case to government in the run-up to the 2015 defence review. Today the core functions and outputs remain essentially unchanged and are just as relevant. It is clear that the interlocking and mutually supporting elements of a balanced fleet are still needed and there is little left that can be cut without impacting credibility.RN-Core-Imparatives-2020-1
Each of the three pillars has an army of critics and naysayers, especially the expensive nuclear deterrent. As the defence spending has fallen since CASD began in the late 1960s, the deterrent has inevitably assumed a bigger and bigger proportion of the budget. Further cuts to conventional capabilities could not only weaken the protection the deterrent submarines require, but would begin to undermine the purpose of Trident if the UK has little left but its nuclear shield. There are many that believe we should abandon Trident and strengthen our conventional forces. Not only would be a colossal strategic blunder, but it is unlikely the MoD would be allowed to keep hold of the savings that would eventually be realised after the heavy costs of decommissioning, especially in the current climate.
There are very few options left for ‘salami slicing’ the RN, ie. multiple small cuts in the hope of maintaining core capabilities and avoiding uncomfortable headlines. To save the £billions the Treasury might demand from defence, in the case of all three services, it would mean removing core capabilities. Extreme measures such as dispensing with the LPDs, mothballing or selling one or both of the aircraft carriers and cancelling the Type 31 frigates would be the result. Instead, a government that actually believed defence of the realm is its first priority, should be looking at the global situation and strengthening the armed forces.
Adapt and overcome
Despite the difficult situation, there are some reasons for optimism. Although not the circumstances of choice, the economic downturn is also likely to help resolve the forces manpower shortages. With fewer attractive opportunities available in the civilian world, expensively trained and experienced personnel are less likely to leave and recruitment is also likely to surge. Having spent so much to furlough and support employees during lockdown, the UK should be in a good position to quickly restart much of its economy. The defence sector has continued to work as far as possible and maintain progress on strategically important projects.
If a policy of public expenditure for growth is adopted, it may also be considerably easier to make the case for defence spending, at least on predominantly UK-manufactured equipment. The time has surely come for the MoD to adopt a mandatory assessment of the local economic befits, money returned to Treasury and long term gains when deciding where to award contracts. Much of the defence manufacturing base in the UK is in Scotland, the North or South West of the UK and stimulating the regional economies with new orders would also be in line with the government’s ‘levelling up’ agenda. Prioritising UK manufacturers may come with difficult choices. For example, purchasing more F-35s (predominately US-made) beyond the 48 already ordered could be curtailed along with other off-the-shelf purchases of tried and trusted foreign weapon systems.
The value of having a domestic supply chain, greater resilience and stockpiling has been highlighted by the pandemic and this has always been especially relevant for defence which is supposed to be ready for sudden crises. The West is chronically dependent on China for goods and materials of strategic importance and there is likely to be a move to find more reliable suppliers. Huawei may be the tip of the iceberg and allowing Chinese ownership and involvement in any business of strategic importance must now be subject to heavy scrutiny.
2020 has been tough and not remotely like what anyone expected. It is easy to say with hindsight what could have been done better but there is an opportunity to learn lessons and be better prepared for the unexpected in future. Adversity has mostly brought the best out of the British people – adapt and overcome.