Phillip Hammond, Secretary of State for Defence will be making a statement to the House of Commons later, that as usual, has been widely reported/leaked.
Watch here
http://www.parliamentlive.tv/Main/Player.aspx?meetingId=10761
So it would seem that the infamous black hole has been eliminated and the MoD finances are in balance.
I always thought the ‘black hole’ would become a catch all excuse for, well, everything, but good news on face value.
A couple of things spring immediately to mind though;
- There has been precious little detail on what the £38 billion figure actually comprised of
- There has been even less detail on exactly how the MoD have managed to eliminate it
- What controls are in place to stop new holes being dug
An interview at the weekend indicates measures to at least address the last point, he said;
For the first time in the defence budget we’ve got a reserve in each year, which means that if something comes up we’ll be able to manage it, drawing on our own reserve rather than having to cancel or postpone equipment. We’ve also put a sizeable contingency into the equipment plan, which has never been done before, so that if we do have a problem . . . we can manage it without destroying the rest of the programme or running crying to the Treasury
Although rather brilliant news the rather incredulous part of that statement is, all of.
How is it possible to manage a budget without a contingency?
I find that simply staggering.
Will be interesting hearing what the SoS Defence has to say but despite the reservations, this is good news for a sustainable MoD.
@ TD
‘There has been precious little detail on what the £38 billion figure actually comprised of
There has been even less detail on exactly how the MoD have managed to eliminate it’
That was my thought. This black hole has built up over many years but now seems to have been gotten rid of in 12 months. I can’t help thinking it does quite add up.
excellent, and more importantly; still destined to recieve 1% real terms increases year-on-year from 2015!
@ jedi
‘still destined to recieve 1% real terms increases year-on-year from 2015!’
As that is the new parliament, I’d say it was near on meaningless.
TD
The £38bill “black hole” was a political construct worked up by Dave the Rave’s friends in unform and a hyperactive select committee wanting an easy headline every six months.
From memory the vast majority of the figure was down to the various flavours of FRES and the MOD predilection to hand out Multi million development contracts to put a UJ on what already existed overseas.
There was a breakdown of the Defence Budget from 2 months ago that showed that real defence spending is 50% of the total and the rest is pensions, pen pushers, property and BWoS piss takes.
Consequently not really that difficult to balance the books if you have the confidence to hold the MOD / Top Brass to account. Next step is putting a squeeze on BWoS to get the equipment costs under control, the T26 threat of importing the hulls should be seen in this light. Hopefully the Support / Servicing / upgrade contacts for the RAF will be on the hit list very soon.
The question every big spender in the MOD / Services needs to be confronted with –
Does your wife / husband / partner / hinger on let you go to Tesco / M+S / Waitrose / Harrods by yourself?
If not then why not? If you can’t be trusted with the family housekeeping how can you be trusted with huge contacts?
Anyone can eliminate a black hole if you pay no attention to security threatsand leave gaping holes I’n capability. It’s not hard to run around cackling stuff and laying people off.
If bae wants to import hulls then why not just order of the shelf from abroad and let bae surface fleet go bust. Yards might get taken over by someone decent then.
What do people want? A balanced budget and a strategically stable and secure ministry or one that was unstable and which every major acquisition did more damage than good even if it actually materialised?
If the cuts and restructure have rebalanced the books than this is probably the biggest single achievement on defence since winning the last war. It would mean a ministry on a stable footing, where kit ordered would come into service and not wreck everything else.
If this has come to pass it is a truly momentous achievement once you strip away all the spin.
Phil @ 11.50
Balancing the books is the way the world works – well most of the time.
Handing out medals to the MOD for achieving this is just the “All must win prizes” attitude that cripples the MOD / Services.
All they should be getting is their wages and nothing else.
FBOT, think I agree with you there
Depsite the achievement, which Phil is correct in characterising as pretty damned amazing, lets not forget the reason for it
Who is handing out medals? I know you’re a glass half empty chap but how about we all just take a day or two to revel in some hopefully good news for a change. It doesn’t happen often.
As for why it happened, that’s a several volume book right there.
It is interesting that the budget will now have core programmes.
@ Topman – “As that is the new parliament, I’d say it was near on meaningless.”
I’m with Phil just above, fingers crossed.
Don’t get me wrong I hope it’s all true. I just remember reading that planning beyond a particular parliament is pointless and rarely done.
Depends how good the plan is.
If its a crap plan full of financial, capability and political holes then expect it to be binned by whoever comes in next.
If its a good plan that is achievable, sustainable and looks like it delivers what we need for what we can afford then it could survive almost intact.
Remember in 1997 the incoming Blair government made a big point of sticking to the previous government’s spending budgets for at least 2 years becuase those budgets were seen to be credible and sustainable.
“planning beyond a particular parliament is pointless”
i had read the same, but that was why they went to so much effort to negotiate it with the treasury.
cast-iron, no, but better than just a politician’s promise is my hope.
No parliament can bind a future one, but there is plenty of evidence of broad themes being followed by multiple parliaments in defence even if details changed. For example the force assigned to NATO barely changed in any grand sense from 1957 to 1992.
It’s interesting to not that the government has put the procurment decision on JCA number off to 2015. It would be impossible to balance the books when they had no idea what the cost of their single biggest project would be. However if as is entierly possible the JCA unit price comes in at above $200 million then can we really talk of balanced budgets. If Phil has set aside money for JCA with the view of if it doubles then we cut the number in half is this any way to conduct defence policy.
I will say it again the budget it balanced every year. And every year one program or another runs over its budget and we go right back to square one.
Hi PE @12:43,
One would dearly like to think so. You refer to 1997-2000, and I agree the plans were good. E.g. official British policy was to have a a common command structure as part of the British military’s “Joint Rapid Deployment Force”, and this was very much part of the reason for the formation of “Joint Force Harrier” in 2000, in which the RAF and Royal Navy Harriers were assembled into.
I see we deviated from a good plan, wasted £ 8bn+ in A-stan (don’t know if one should add anything from Iraq)and are only now starting to reconstruct what was in the works then (but the funding reallocation scuppered the plans, not the cuts). So we will have a new joint force, also a quite clearly formed Rapid Deployment Force which now is very sizable relative to the overall size of the services.
Or perhaps one should see the plans coming round to the original as validating your point (albeit a decade in between, and we are not anywhere near yet, so make it two decades)?
To quote Gen Sir David Richards:
- “We are now in a position to build.”
MoD budget stable for 10 years and no commitment to new plans without a 10 year funding plan. Guessing in a 6 year program that years 7-10 would be “No funding required”.
- http://www.flightglobal.com/news/articles/no-further-cuts-as-uk-balances-10-year-defence-budget-371854/
If anything, hope that helps existing service personnel feel more secure in their job security if nothing else.
(Although to set the cat amongst the pigeons, with an £8b contingency, wouldn’t part of that have been nice to fund the CATOBAR conversion on both carriers?…)
”Although to set the cat amongst the pigeons, with an £8b contingency, wouldn’t part of that have been nice to fund the CATOBAR conversion on both carriers?”
But again, would leave the MoD with no contingency funds. Realistically the only way the UK would have seen CATOBAR carriers is if the government of the day decided to spend a higher % of the UK national budget on defence and take it from somewhere else. As it is they spent it on foreign aid.
@ Other Chris
Interesting article. £ 8 billion sounds like a lot but out of a kit budget of £154 billion it’s only 5%. Given no one has any idea of the cost of JCA and I am assuming the Trident successor program is lumped in hear as well 5% does not seem like much of a contigency. Especially when complex weapons programs have tended to go double or triple their inital estimates.
It really sounds more like party politicing from a new minister desperate to build a reputation in the Tory party rather than a significant change at the MOD. I hope I am wrong on this. However unless the mod starts buying off the shelf and we acept our military will no longer field bespoke high end solutions I just can’t see how to bring order to chaos. It’s easy to point a finger when looking in but defence procurment must be one of the most difficult things in the world to get right. Arguably there is not a single country out there that builds it’s own kit that manages this.
Indeed good news…across the 3 services, RAF gets Puma HC2 to balance the rotary force structure, good commitment on RN T26 and the Army finally gets updated AFV’s beyond the myriad of vehicles Afghanistan pushed on us. I hope, also Apache life extension – much needed after nackering a few airframes.
But I cant help think of the ‘black hole’ as its real namesake in space…they never vanish and are self supporting; it’d take a lot of effort to ensure we remain in the black (or at least lower numbers red) – TD and comments are right in that its a little too quick in coming, but the SoS Defence seems to be far more competant at his role, he knows the real ‘enemy’ is the treasury… just wish he was in the chair a year earlier.
“It really sounds more like party politicing from a new minister desperate to build a reputation in the Tory party rather than a significant change at the MOD. I hope I am wrong on this”
An awful lot of change is going on at the top which to me shows real desire to change the culture and to change the way the whole organisation works. I think they stand some chance of success this has been the closest to a wholesale re-start than has been done probably ever.
I think history will look kindly upon the decisions made since 2010 as pragmatic and sensible.
Better to have a fundamentally stable and thus credible edifice with a few short term capability gaps, than a crumbling, swaying, self consuming edifice with short term capabilities with no replacement and support structure.
Phil @ 16.02
I fear you are wearing the rose tinted spectacles today.
You are what an optomist would describe as a full on, radio rental happy clapper.
Post SDSR the situation has been a shambles – the MOD got a star at WeightWatchers by cutting off an arm and a leg.
We had a 30% cut in capacity, significant capabilities dumped and all to save 8% of the budget.
Naked politics being played here as Phil the Bean Counter now claims things are under control.
Consequently to believe things are now going to get better is a leap of faith beyond me.
Regarding the Navy the carriers might now be stable – until the next glitch in the F35 saga but what about the other issues?
T45 – still one club golfers – whatever happened to the positive talk of Oct 2010 when they were supposed to grow up?
T26 – what are we getting, when are we getting it, why are we getting it, what numbers are involved?
MHPC capability – has there been any news on this, any progress any ideas as to what were are aiming for?
The only progress that has been made is that we are now stable, low in the water but we have stopped sinking.
I am not so familiar with the RAF and RN top guys, but Hammond – Richards – Wall – Carter all come across like very competent
- let’s see what I think after the Army announcement, but may be there is light at the end of the tunnel
FBOT you bang on but I think your cynicism is baseless in this case. You don’t have a clue what the detailed financial problems were or have a handle on any of the real, detailed figures and planning assumption. You are criticising with hardly any of the real facts.
Now yes this website is for such discussions, fine, but don’t act like you are lecturing from some plinth of special knowledge.
Your rhetoric and hyperbole and sound-bite arguments aren’t convincing.
Defence was screwed for a number of reasons. Capabilities were gapped because there simply was no more money for them. Decisions had to be made. They were made. Just because they don’t fit into the back of the fag packet ideas you have does not make them invalid decisions. We have not missed Harrier, we have not missed Ark and I daresay thus far we have not missed Nimrod.
Nothing rose tinted about my spectacles. I can see how screwed up Defence was. Everyone can. But I’d rather have a fundamentally stable organisation than an unpredictable, chaotic one even if that means smaller structures.
There’s sod all point building a house on bad foundations.
Phil,
Sorry to butt in but: “…We have not missed Harrier, we have not missed Ark and I daresay thus far we have not missed Nimrod.”
Libya, Libya and Libya?
We “won” in Libya without them. Hence they werent missed.
Yes.
I’m sure as much as it would have stroked some ego’s to have 6 under-ladened Harriers fly off our little through desk cruiser to bomb some pick up trucks for a few days until the bombs ran out on board, they weren’t needed.
The job was done without them by more powerful, better armed planes with more time on station and more endurance.
Phil,
We had HMS Ocean there with just Apache embarked – if that were Ark with Apache and Harrier we would not have needed to do the stupid long range Tornado strikes and put 8-10 Typhoon out there with AAR tankers maintaining their wasteful 5h sorties to and from Libya.
If it were Ark with Apache and Harrier then you’d be in a parallel universe as all the Harriers were supporting HERRICK and there would have been almost no qualified pilots for such operations.
Ark would have sailed around with Apache as the Tornado’s were dismantled to much weeping and gnashing of teeth from people like me and the Harriers flew from KAF.
@Simon
In addition to what others have said about the Harriers not being available due to be committed to HERRICK (just look at how little sea time they had while the Harrier Force was covering Afghanistan).
Remember the decision was between cutting Harrier or Tornado in full; not a little of both.
The RAF would still have had a large presence in Italy: E-3Ds (854 and 857 NAS both committed to Afghanistan too), Sentinel, tankers (in support of other nations as well) and lastly Typhoons – because Harrier GR9 couldn’t enforce a No-Fly Zone (the supposed reason for ELLAMY).
Nor would Nimrod have been availabe for ELLAMY as the previous Government made the decision in December 2009 to withdraw MR2 in April 2010 while delaying MRA4 to April 2012.
While ELLAMY might be an argument for having Carrier Strike, it cannot be regarded as an argument in favour for what passed as “carrier strike” for the past 6 years.
@ Phil – “Better to have a fundamentally stable and thus credible edifice with a few short term capability gaps, than a crumbling, swaying, self consuming edifice with short term capabilities with no replacement and support structure.”
Very happy to agree, which is why i don’t give much credence to:
“I fear you are wearing the rose tinted spectacles today.
You are what an optomist would describe as a full on, radio rental happy clapper.We had a 30% cut in capacity, significant capabilities dumped and all to save 8% of the budget.”
Because the money to fund that 22% of capability did not in fact exist.
Either the MoD is sat on an accumulating surplus year on year or there was a funding deficit. I know which i believe.
On the subject of the “black hole”:
It originally came from the National Audit Office’s 2009 Major Projects Report. The report actually estimated the gap between estimated funding and the cost of the Defence programme over the next ten years as between £6 billion and £36 billion.
The wide range is because the gap was highly sensitive to the budget growth assumptions used. The assumptions were fairly general, based on the economic situation at the time.
£6 billion: The Defence budget remains constant in real terms over the 10 year period, and using the MOD’s forecast for defence inflation of 2.7%.
£36 billion: No increase in the Defence budget in cash terms over the same period.
Unsurprising the headlines (including, it must be said, the Public Accounts Committee) focused on the worst case scenario. (Actually it could have been worse but that’s not really here or there).
Hence the “black hole” magically shrinks if the budget growth is higher than assumed by the NAO’s “worst case scenario”!
Someone mentions a contingency fund and all of a sudden people are lining up to spend it on MPA or whatever
Not going to happen
It is a contingency fund to cover cost expansion and prevent (as much as a few billion can) programme rescheduling to meet short term budget pressure
Does anyone seriously think it won’t get used, as a contingency that is.
The 10 year EP is going to be published as per previous governments, not the new vision of a fully published, open and detailed plan as previously very much promised
I give the contingency fund 9 hours before it is spent.
Taking the baton from Phil…
“If it were Ark with Apache and Harrier then you’d be in a parallel universe as all the Harriers were supporting HERRICK and there would have been almost no qualified pilots for such operations.”
To Sir Humphrey’s very considered piece, as I could not add any opinion, being of the same opinion, just inserted some facts, as follows:
“A good “seeing the forest from the trees” article
Also the “gapping of the capability” context and the limits of the Harrier force well explained. The fact that only 40 of the 70-strong fleet of Harriers were in a flyable condition, at the time of binning them, was not touted much in the open.
Not surprising, really, as the total of 60 GR9s were from only 34 new-build GR7s, the rest conversions of earlier conversions. Take away the combat losses on the ground in A-stan, add the 13 trainer versions (as such combat capable, but never used so)… and there’s your 40″
Cheers, ACC
Yeap,
“It is a contingency fund to cover cost expansion and prevent (as much as a few billion can) programme rescheduling to meet short term budget pressure”
And it is a small contingency, 5%
- means that under the new rules of the game, the Service Chiefs will have to slaughter their own sacred cows first, in case of overruns
- the 5% percent is cover only after that, and discretionary (SoS less likely to be held hostage to “events”), so from now on much more a question of how critical is it to keep the show on the road (rather than cut it, or cut numbers… the more widely used remedy)
ACC,
“…- means that under the new rules of the game, the Service Chiefs will have to slaughter their own sacred cows first, in case of overruns…”
Interesting – I have not followed the exact wording of any statements, but what you report seems to be a step back from the “capability-based” approach of the last 12 years, and I am surprised if that is the case. Not saying you are wrong, but the eyebrow is up at the hairline on this. There’s all sorts of anomalies as well – what happens if SOLOMON runs over budget? It’s pretty Joint. What do the Army do if the RAF shit-can support helicopters to give extra funding to some new Gucci jet that’s looking pricey? Or the Navy if the Army over-spend on FRES and mothball the Commando Logistics Regiment?
Surprised especially if the RN and RAF Chiefs signed off on it – it is “their” programmes that tend by their nature to be big complex items with a tendency to overrun the budgets. No credit to the Army on that, it’s just easier to salami slice numbers when you are dealing in 1000s of platforms (e.g. FRES UV as originally scoped). Not so easy when you are talking in terms of £billion platforms or a handful of jets.
@ Phil
Does KAF stand for Kevins’ Air Force? I can’t keep up with all these TLAs.
kandahar airfield
Phil,
If I had to make the decision at the time between Harrier and Tornado I’d have made the same decision – keep Tornado, ditch Harrier – the welfare of the guys on the ground in Afghanistan was/is priority.
However, it doesn’t mean that Harrier, Ark and Nimrod were not missed in Libya.
It also doesn’t mean that they aren’t missed now (e.g. Olympics cover – although I think that’s a bit of a stunt). It also doesn’t mean that they won’t be missed as a stop-gap before F35B is delivered.
@ Topman aka Kevin
http://tactical.facepalm.de/images/facepalm.jpg
Dude…….
ACC @ 18.43
Would it not have been easier to round up the remaining Harriers into a large warehouse and wait for the inevitable large fire? That is the traditional MOD of hiding equipment failures, shrinkage and poor levels of equipment servicing and support, isn’t it?
We should have halved the rosters of both and did some “Jaguar” style VFM fleet management.
That way we would have sweated the GR4s that wee bit harder – sorry BWoS but your fees are needed elsewhere – and we would have had a carrier strike capability.
If we were really smart we could used the money this solution had saved to put radar on the GR9s.
well you never know…
@James
The ongoing move away from CAP areas to separate Land, Navy, Air and Joint commands will give much more accountability as the 4* and accompanying brass have a lot more responsibility.
However, where it will likely all fall down is in cross cutting areas. Supposedly Joint command is meant to stitch those sorts of things up but it looks pretty difficult for it to do that at the moment.
Btw, Land command gets the Joint Helicopter Command – but as expected the RN are squealing like stuck pigs
@FBOT
The large savings to be made are from rolling up maintenance and support structure behind the frontline platforms (and the extremely effective support contracts you have a pathalogical hatred of).
Your proposal of trimming both Harrier and Tornado fleets is classic salami slicing. Massively hinders your capability and doesn’t actually save much money.
At SDSR someone actually made a proper decision, which should be applauded. It’s easy to criticise things from narrow single service viewpoints, but think about the view across all the defence options.
How does halving each fleet save anywhere near as much money? How is that efficient?
didn’t land command have jhc for the last 5 years ?
Hi James, RE
“what happens if SOLOMON runs over budget? It’s pretty Joint.”
- Joint is now the 4th budget (or 5th, as SF also have theirs?)
- should be used to the full, rather than some obscure split payments
@Topman
Slightly at cross purposes there. JHC budget holders were CAP ALM but the CAP areas are now been scrapped in Defence Reform and the onus shifted onto the frontline commands.