Hammond: Budget Cuts Could Mean 'Restructuring' of UK Forces

Oct. 13, 2013 - 03:45AM
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Defence Secretary Philip Hammond told the Parliament's Defence Committee that additional big budget cuts could force the UK to 'ask some serious structural question about the type of forces we are able to maintain.' (Carl Court / AFP)

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LONDON — Britain may have to follow the example of the Netherlands and reduce its range of military capabilities if defense spending takes a significant hit after the 2015 election, according to Defence Secretary Philip Hammond.

Rather than allow military capabilities to slip a number of areas, it might be better to consider a reduced spectrum of forces, he told the UK Parliamentary Defence Committee on Oct. 9.

“The Dutch have taken the painful decision to scrap the core of their amphibious capability. They have taken a conscious decision that rather than spread the jam thinner, they will take a hit in that area to protect other areas,” Hammond said.

In September, the Dutch government announced it was selling the Karel Doorman logistics support ship even before it has been delivered, reducing Army formations and selling a number of CV90 armored vehicles as part of a €348 million (US $470 million) budget cut.

The British military is familiar with the consequences of deep spending cuts, having seen the Conservative-led coalition government here ax the Nimrod MRA4 maritime surveillance aircraft program, as well as taking a capability holiday on aircraft carriers and maritime strike in response to a nearly 8 percent defense budget reduction and removal of £38 billion (US $61 billion) in unfunded program commitments.

Overall, the budget balancing has resulted in heavy reductions in programs, capabilities, and military and civilian personnel.

Despite that, Hammond said the UK is not in the same position as the Dutch yet, as the government has the scope to drive out more cost inefficiencies. The MoD avoided capability and personnel cuts in a new round of budget austerity measures across most government departments for the financial year 2015-2016, largely by pledging to root out inefficiencies.

That’s not a trick the MoD will be able to pull off again when a new government after the 2015 general election sets its budgets for 2016 and beyond, said Malcolm Chalmers, the research director at the Royal United Services Institute think tank here.

“They were able to avoidsignificant capability cuts in the spending review for the financial year 2015-16, primarily due to large one-off efficiency savings which will be hard to replicate, and they will likely have to look at further capability cuts,” Chalmers said.

“A lot depends on where the economy is going after 2015 as to whether there are further real cuts in defense budgets,” he said. “On the basis of what the chancellor [of the exchequer] has said about the need for further austerity beyond 2015-’16 in total government spending, if that were to continue, then I think it will be hard for defense to avoid further real-terms cuts.”

Chalmers said if defense is hit by another round of big budget cuts, the British Army likely would be the most vulnerable, opening the discussion on further reductions in personnel numbers.

Hammond, however, warned that further significant budget reductions could go beyond hollowing out capabilities and deeper into structural cuts to the armed forces.

“We have reached the end of the process where we can salami-slice [capabilities],” Hammond told lawmakers. “We would have to ask some serious structural questions about the type of forces we are able to maintain.

Hammond, who was being quizzed by the committee on the upcoming 2015 Strategic Defence and Security Review (SDSR), said he had heard nothing to suggest the budget would face a significant hit.

The government assumption is for zero growth in real terms for the defense budget as a whole between 2015 and 2020, but with a 1 percent annual increase in equipment spending.

Analysts here said structural reforms could mean anything from further contracting out of areas such as the fire and rescue service, to major changes like merging the Royal Air Force Regiment or the Royal Marines with the British Army. Both issues were discussed prior to the 2010 SDSR.

Whether Britain finds itself with a Tory, Labour or another coalition government in 2015, it would be best to anticipate the prospect of a further cut in the defense budget in real terms, said Howard Wheeldon of Wheeldon Strategic Advisory.

“That will probably lead to some of the structural reforms Hammond talks about being realized,” he said “The current perception — or should I say received wisdom — is that in real terms between 2015 and 2020, the UK defense budget will remain unchanged at roughly £33.4 billion, but that within this, the allocation of equipment spend will rise in real terms by 1 percent in each of those years. We will see but, I suspect, a great deal of trouble ahead.”

Several analysts, including Wheeldon, said they expect any structural changes to be flagged in the 2020 SDSR rather than the review being worked on for 2015. ■