The Defence Cuts – Adam Smith’s Perspective

Adam Smith
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The government’s defence review, seeking to make big savings in the defence budget, will cut the number of full time soldiers by 20,000. To partly make up for this, the number of reservists will double to 30,000.

The Telegraph today speculates about whether the territorial units can make up for the loss of full time soldiers.

For an interesting perspective on this, we have to go to … Adam Smith’s Wealth of Nations. An economics book might be an unexpected place to find discussion on the way armed forces are organised – especially an economics book first published in 1776.

But in fact he has a whole chapter in which he discusses what he calls “militias” (reservists) versus “standing armies” (full time soldiers).

He notes that in primitive societies, most people are farmers, and they are also soldiers. As the society becomes more advanced, manufacturing takes over as the main employer of people. But he points out that making a living by manufacturing requires working all year round, whereas a primitive farmer can take the field for battle for months at a time without destroying the crops or livestock that are his livelihood.

Therefore, he postulates that as societies advance, they replace their militias with standing armies, whose salaries are paid by the State. If they do not, their militias become less and less effective, as they concentrate less and less upon training to be a soldier.

He also notes that as the art of warfare becomes more complex, there is ever more a need for soldiers to be full time, in order to become well-practised at it.

He therefore notes that while militias of civilised nations can easily be defeated by militias of barbarous ones, a standing army trumps a militia every time. He suggests that the defeats of the Greek republics, the Persian Empire and the Roman Empire were all caused by this phenomenon.

A militia, in whatever manner it may be either disciplined or exercised, must always be much inferior to a well disciplined and well exercised standing army.

The fall of the Greek republics, and of the Persian empire, was the effect of the irresistible superiority which a standing army has over every other sort of miliitia.

When a civilised nation depends for its defence upon a militia, it is at all times exposed to be conquered by any barbarous nation which happens to be in its neighbourhood. The frequest conquests of all the civilised countries in Asia by the tartars, sufficiently demonstrates the superiority which the militia of a barbarous has over that of a civilised nation. A well regulated standing army is superior to every militia. Such an army, as it can best be maintained by an opulent and civilised nation, so it can alone defend such a nation against the invasion of a poor and barbarous neighbour. It is only by means of a standing army, therefore, that the civilisation of any country can be perpetuated, or even preserved, for any considerable time.

But then I suppose we can no longer be thought of as an opulent nation, and our rulers are no longer much interested in preserving our civilisation.

The Murky World of Defence Procurement

 

Jim Murphy
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Jim Murphy – Cheap Shot

The media are reporting today that South Korean firm Daewoo Shipbuilding has been awarded the contract to build new fuel tanker ships (“MARS”) for the Royal Navy.

The unions and Labour are outraged that the ships are not to be built in Britain (although some additional work on the contract will take place here).

Jim Murphy, Labour’s Shadow Defence Secretary, said:

This is more bad news for British industry. First we lose out to France over fast jets and now we lose out to South Korea over Royal Navy tankers. The government do not have an active defence industrial strategy.

Let’s have a look at the history of this project then, shall we, under the previous Labour government? Here it is, courtesy of a parliamentary defence committee report in 2010:

Key Events/Decisions since Initial Gate approval (July 2005)

  • July 2005—Entry into Assessment Phase announced via Written Ministerial Statement. The Procurement Strategy at the time was the formation of an Alliance, comprising the MoD, an Integrator, a Design, Outfit and Build Alliance Partner and a Through Life Support Partner.
  • May 2007—The Minister for Defence Equipment and Support (DE&S) approved a decision to review the Procurement Strategy to take account of changing market conditions and the opportunities generated by the delivery of the Defence Industrial Strategy (DIS).
  • December 2007—Following approval of open competition by the Minister (DES), advertisement placed in the Official Journal of the European Union (OJEU) seeking expressions of interest from companies who wish to compete for the design and build elements of the MARS Fleet Tanker (FT) programme.
  • May 2008—The Minister (DE&S) approval to down select to four bidders (Fincantieri, Navantia, Hyundai and a consortium of BVT/BMT/DSME) to enter into Competitive Dialogue over the MARS FT programme.
  • December 2008—Equipment Examination announcement concluded that there was scope for considering alternative approaches to the procurement of elements of the MARS Programme. The Fleet Tanker competition was `paused’.
  • March 2009—The Minister (DE&S) decided that the Fleet Tanker competition should be cancelled. A review of the procurement strategy and requirement continued.
  • October 2009—The Minister (DE&S) approved revised Procurement Strategy to consider a range of possible solutions which takes account of market conditions and is more likely to secure best value for money.
  • October 2009—Advertisement placed in the OJEU and the Defence Contracts Bulletin seeking expressions of interest from companies who wish to compete to deliver solutions for the MARS Tanker programme. Interested companies will be asked to submit a Pre-Qualification Questionnaire (PQQ).

Key Events / Decisions expected in the next six months

  • 2010—Following evaluation of PQQ responses, approval for a short list of companies will be sought in early 2010.

Note that decision in 2008, under Labour, to “down select” to those four bidders. None of those bidders was planning to build the ships in Britain.

But then the government changed its mind, presumably for financial reasons, in 2009, stopped the process, and then restarted it in 2009.

What happened then, in 2010? Six bidders were selected after that “PQQ” process.

An MoD major projects report reveals that the six shortlisted bidders were:

A&P Group Ltd (UK), Daewoo Shipbuilding and Marine Engineering (Republic of Korea), Fincantieri (Italy), Flensburger Schiffbau-Gesellschaft (Germany), Hyundai Heavy Industries (Republic of Korea) and Knutsen OAS (UK) Ltd.

At least one UK bidder then – A&P Group. Indeed, in August 2010 A&P were celebrating being shortlisted:

The proposal is at an early stage of development however A&P Group are leading a group of UK based suppliers to offer an almost wholly UK based, low cost solution, to provide up to six new Tankers for the RFA to replace the aging RFA tanker assets.

But now it seems the Koreans have won the deal.

Says the BBC:

UK firms took part in the tender, but the Ministry of Defence (MoD) said none made a final bid to take part.

Now clearly I am not in a position to say whether that is the right decision or not. Perhaps A&P were not able to match the price the Koreans could offer. Or perhaps they withdrew for their own commercial reasons, or were unable to meet MoD requirements.

One thing is very clear, however. The whole procurement process has been a shambles. Eight years to go from start to choosing a contractor, for what is a relatively simple requirement! Most of that time was under the last government, so Jim Murphy ought really to crawl away in shame and stay quiet.

And another thing that is clear is that this is all very murky. What happened to A&P between August 2010, when they were gung ho about competing for the contract and now, just 18 months later, when they have apparently disappeared without trace and not even submitted a final bid? Were they excluded from the competition by the government? Or did they pull out themselves, and if so, why?

As ever with defence procurement, we are not being told the truth about what has happened. Cheap shots like Jim Murphy’s are out of order. But the government has questions to answer as well.

Too Many Projects and Not Enough Orders

Humvee with marine armor kit
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A report from the National Audit Office has highlighted the disastrous state of the Purchasing Department at the Ministry of Defence. (The Ministry calls it “procurement”, but Purchasing is what it is.)

The report says that since 1998, the Ministry has spent £718 million on armoured vehicle programmes that have been scrapped or have yet to deliver anything. Over that entire period, the Ministry procured less than 200 vehicles, at a cost of £407 million, through its standard purchasing system. (The Ministry calls it the “standard acquisition programme”. Musn’t use the word “purchasing”, you see. “Acquisition”, or “procurement”, but never “purchasing”. Otherwise somebody might ask why it is so hard.)

Over the same period, the Ministry spent £2.8 billion on vehicles through its “urgent operational requirements” system, or UOR. (Anywhere else, that would be called something like an “emergency order”, of course, but the MoD has to maintain the mystique.)

The NAO appears not to have realised the core problem here. It says things like:

Armoured vehicle projects have suffered from unstable budgets and continual changes to financial plans.

and

The cycle of unrealistic planning followed by cost overruns has led to a need to find additional short-term savings on a regular basis.

and

Without our projects maturing as planned it is going to be a long lead time before we can bring in modern, effective, flexible, armoured fighting vehicles.

It does not appear to have occurred to the NAO to ask whether a “project” is even needed to create an armoured vehicle. Armoured vehicles seem to be available off the shelf, from the likes of AM General, Armet and even BAe Systems.

Now, I am obviously aware that there is a close relationship between British defence contractors and the Ministry of Defence, with the MoD effectively underwriting the contractors’ product development costs. In other words, once a new armoured vehicle is built as a result of one of these projects, the contractor will then go and sell it all over the world.

However, where the dividing line is between a commodity item that should simply be purchased, and a more complex item that needs a project, is another matter. At one end of the spectrum, we’ve all heard the old stories about MoD specs for toilet seats and light bulbs. Those are obviously commodities that just need to be bought. At the other end of the spectrum, perhaps, are the aircraft carriers.

Armoured vehicles are somewhere in the middle. But my suspicion is that they really fall the “commodity” side of the line, and the MoD should be just buying them.

The MoD needs to be considering this with every procurement programme – do we need a bespoke solution for this, or can we buy something off the shelf? There are huge amounts of money that could be saved by asking that simple question every time, and the MoD cannot afford to miss that opportunity.

Often, all the MoD should be doing is having a look at what’s available in the market, choosing the ones that best fit the requirements, negotiating a price, and placing an order.

Instead, they seem by default to start by defining their “requirements”, by which they mean their definition of perfection. And then they issue that as a specification, and invite suppliers to bid to build to that perfect spec. They end up funding “projects” to create new military vehicles aligned to that “perfect” spec, and lo and behold, they end up being extremely expensive.

What’s more, these are projects up in the tens or hundreds of millions of pounds. They are huge projects, and in the nature of huge projects, they tend to experience cost overrruns and delays, and sometimes fail. The issue is not that they are spectacularly poor at running projects. The issue is that they are running projects that don’t need running in the first place.

All this is even more stupid when you consider that these vehicles are for use in war. War is unpredictable. Any spec will turn out not to be perfect for the actual conditions encountered. Is there any reason to believe that a new armoured vehicle built specially to an MoD spec is any more likely to be effective on the battlefield than one bought off the shelf?

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Fine Words Don’t Look After Soldiers

Ministry of Defence, Whitehall, London; viewed...
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The Ministry of Defence – Why Does the Minister Need the Courts to Tell Him to do the Right Thing?

The government has hinted that it intends to enshrine the “military covenant” in law.

That sounds great, doesn’t it? Who could possibly object to the idea of actually having a law to protect service people from bad treatment?

The practical side of this, however, is a different matter.

First of all, this will mean yet another case where the courts will be sitting in judgement over the government of the day. The courts are already second guessing our elected politicians to too great an extent.

Courts are not accountable to elected politicians. That is their great strength – but also has a potentially sinister side to it. Because they are not accountable to the elected politicians, they are not accountable to the people either.

The courts should act as a check on the executive – but there does need to be a balance, and elected government should not fall over itself to abdicate its responsibilities to them.

What if there is a legal case some time, and the government loses? The government will presumably be paying a fine…to itself, having paid large sums to lawyers to debate in court whether they are guilty or not.

Of course, having a new law is no substitute for getting on with looking after the service personnel in any case.

Lord Dannatt, former Chief of Staff, put it like this:

There’s a little bit of a danger, that just putting it in law, the government could think this is job done.

The really important thing is that the things are provided…

The real issue, of course, is that too much of the Defence budget is wasted on paper-pushers at the Ministry of Defence. It is notoriously inefficient and badly-run. Perhaps the government has found it cannot control the civil servants at the Ministry, and hopes the courts will do better.

More of the Defence budget needs to go to the troops – and if that happened, there would not be any need to have new laws to protect the armed forces. The government does not need to order itself, via the courts, to sort the problem out. They should just get on with the job and stop waffling.

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Britain and France Working Together on Defence

The government is today announcing a big defense co-operation treaty with the French.

The treaty comprises a whole list of co-operation measures.

There will be co-operation on work on nuclear weapons maintenance, with the possibility of developing a joint deterrent later.

That seems to me to make absolute sense in an age of tight finances. The significance, though, is the idea that in future, in matters of nuclear deterrence, we will be working, not with the Americans, but with the French. If a joint deterrent is developed, then clearly we will not be buying any more American nuclear defence kit.

The agreement will create a Combined Joint Expeditionary Force. (Please nobody mention Suez!)

The CJEF commander will report to a joint military headquarters, answerable to ministers in both Paris and London.

Dr Liam Fox, the British Defence Minister, commented:

We’re talking about joint expeditionary forces with our forces in all three services working together to develop common practices, better interoperability and to look to see where we get better common equipment.

thus clearly missing the point – a joint expeditionary force is a great deal more than common practices and equipment.

I could imagine a situation where the French and the British both wanted to mount an operation, and mounted it together using the CJEF. (Please, please, nobody mention Suez!)

However, unless there were a need for such a joint operation, I really can’t see what this CJEF will do with its time. If the British government needs troops for a national operation that does not involve the French, will they be pulled out of the CJEF, or will the CJEF simply “lock up” thousands of our troops and make them unavailable for our own purposes?

As it stands, the CJEF makes no sense in the absence of a Suze-style (woops – sorry, it slipped out) operation. The significance, though, is the idea that the armies of Britain and France will in future be used together and not as separate forces. The CJEF could evolve into something much more.

The agreement also envisages co-operation on aircraft carriers, with the French apparently able to use the British aircraft carrier and vice versa.

I could imagine a situation where the French and the British both wanted to mount an operation, and mounted it together using whichever carrier was available. (I promise not to mention Suez again!)

However, can we really envisage the French allowing the use of their carrier for a purely British operation – or vice versa? Not right now. But the significance is the idea that in the future, the navies of Britain and France will be used together. This aircraft carrier co-operation could evolve into much more.

As it stands, therefore, this treaty is pretty meaningless. Its significance is in the direction it sets for the future. And it cannot be understood except in the context of the European Union.

Defence is, of course, one of the areas in which France and Britain are a long way ahead of our other European partners in terms of industrial and practical capability.

As the European Union slowly evolves into a single country, this treaty represents the British and the French marking out their determination to dominate the defence capability of the new Union. The treaty is intended to last 50 years. I would have thought that long before then, the CJEF will have evolved into the core of the Army of the Unites States of Europe, and the Anglo-French fleet will be the core of the new European Navy.

If I were the German, Italian or Spanish, or even American, Defence Minister, I would be looking on this treaty rather glumly.
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Government Should Seek European Support on the Falklands


HMS Antelope Explodes in 1982 as Britain Retakes the Falklands

In 1982, British forces recaptured the Falkland Islands after a conflict with Argentinian forces, which had invaded and occupied that British territory. Ever since, successive British governments have maintained the position that there will not be negotiations with Argentina on sovereignty over the Islands, unless the Islanders want it – which they do not.

The American Secretary of State, Hillary Clinton, has now called for talks between Britain and Argentina on the future of the Falkland Islands.

Once again, that much-trumpeted “special relationship” is turning out to be not so special after all. The US attitude is especially galling considering British blood is being spilled almost every day to support the American forces in Afghanistan, and that Britain was one of the few countries to support the American invasion of Iraq.

Obviously, the US is always going to put its own national interest first. Any country would do so. What is clear from this episode, though, is that the relationship with Britain is not particularly high on the list of American foreign policy priorities.

In this latest spat over the Falklands, our government should be lobbying European leaders hard for support. If Europe really does want to be of any significance on the world stage, it cannot stand back from issues like this. Other European governments, especially the French who also have distant possessions, might be expected to sympathise with the British position on this.

Of course, the British government recently had a British politician, Baroness Ashton, appointed to the position of European High Representative – effectively European Foreign Minister. Sadly, Lady Ashton is a non-entity and has so far not broken cover on this new issue.

If the Falklands are a British overseas territory, then they are a European overseas territory, and the British government should be demanding European support to protect the status of that territory. This episode could and should be the first real test of the European Union’s aspiration to running its own foreign policy.

Unfortunately there is no sign at all of our utterly spineless government looking for any support from anybody. In fact, the British government seems to be completely unaware of the dangers in these developments on the Falklands. The Times quotes a Downing Street spokesman as saying, with masterful complacency, “We don’t think that [US mediation] is necessary”.

If the unthinkable were to happen, and it was again necessary to defend the Falklands by force, it is doubtful whether Britain any longer has the military capability to do so. At the very least Britain would need to abandon its support for the American adventures in the Middle East while the British forces were occupied in the South Atlantic.

Britain may well be no longer in a position to defend the Falklands on its own, but European diplomatic support on this issue would help mightily to counteract this new American diplomatic pressure.

Defence Promises – Lies or Fantasy?


Is He Lying or Does He Really Believe All This?

I normally hesitate to use the word “lie” in connection with politics. It tends to lower the tone of public discourse, and of course, with accusations of lying flying around, it can become impossible to have any sensible public debates.

However, it is becoming harder and harder to avoid that “L” word in connection with the shabby excuse for a government that is currently running our country.

The Times reports today that Labour will commit itself to billions of pounds extra for defence. The Prime Minister is apparently going to promise a new generation of warships and fast jets (including the two new aircraft carriers), £1.5 billion extra for the war in Afghanistan, and protection for defence from any cuts next year. He will promise to keep troop numbers above 100,000.

Apparently a government source said there would have to be “tough decisions elsewhere” to pay for these pledges. What tough decisions? And where? Answer came there none, of course.

The government have continuously promised to cut spending “as the recession ends”. They have not told us what they plan to cut, or when. There are two possibilities: either they really believe they don’t need to make cuts, or they do understand the need for the cuts and are lying about it.

Either way, here they are, still making commitments to additional spending.

There is no money left. It’s gone. The cupboard is bare, after a decade of Gordon Brown’s mismanagement. Just to repeat yet again that awful fact – the government is borrowing around £200 billion this year – more than a quarter of everything it spends. It is borrowing more this year than it is spending on the entire National Health Service. No commitments to additional spending are credible or possible. In fact, massive cuts are needed, and the sooner the better.

Therefore those promises on defence are worth…nothing at all. Either they are lies – or what might be even worse, perhaps Mr Brown really believes them and is completely lost in his fantasy world.

Either way, Gordon Brown and his mates are unfit for public office, let alone to run a government. Whatever faults David Cameron and the Tories may have on this subject, they are paragons of virtue compared to Mr Brown’s dodgy crew.