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Graph from RUSI’s briefing paper: SDSR 2015 – Hard Choices Ahead

As Chancellor, Gordon Brown steered clear of the armed forces that he was accused of under-funding.  George Osborne sees the political danger of doing the same and wouldn’t be inclined to in any event, since his record and instincts are liberal and interventionist. He was an defender of the Iraq War – post-invasion – a supporter of the Bush presidency and its neo-conservative reflexes, and a backer of air strikes on Assad in 2013.  The Chancellor is known to view the Government’s defeat on the matter as the most depressing moment of this Parliament.  So he is careful to ensure that visits to the armed forces don’t vanish from his diary.

None the less, Osborne is not prepared to buckle to the current campaign on defence spending – of which the article by David Davis on this site earlier this week was a part, which has also seen public pressure from four former Conservative Defence ministers (including Liam Fox, who is running his own operation on the matter) and which is also propelled by a big push from America. As Davis wrote, the U.S military is concerned that we may soon no longer be able to “deploy troops with accompanying fighter aircraft and naval vessels without relying on American forces”.

The Treasury view is that Britain’s military chiefs are primarily concerned about the maintenance of the defence equipment budget, and that the Government is meeting its obligation to keep it in good order, since there is a commitment to increase it by one per cent a year in real terms throughout the next Parliament. Osborne is also scarred by his experience of the 2005 election campaign, during which he was Shadow Chief Secretary.  It was preceded by another party campaign for a bigger defence budget, led by Nicholas Soames, then Shadow Defence Secretary.

Michael Howard yielded to it – to no visible political benefit whatsoever.  This experience points to the institutional Treasury stance, which is that the Ministry of Defence is always in danger of becoming the client department of a military-industrial complex in which civil servants and lobbyists pass through revolving doors, procurement projects are tilted to vested interests and run wastefully over budget, the department possesses a property estate that it is incapable of managing, and senior officers seek to keep troop numbers up by lobbying for wars abroad (an accusation voiced by Sherard Cooper-Cowles).

This view also holds that because the best part of a sixth of Conservative MPs have served in the armed forces, most in the army, the Tory backbenches have a preoccupation with the size of the army that it is out of proportion to the issue’s importance.  The Treasury could also point to Davis’s piece for evidence against his own case.  “Whether it is our aircraft carriers, Type 45 destroyers, Astute-class submarines or the Eurofighter, almost every major MoD procurement project over the last few decades has been subject to lengthy delays and massive cost overruns,” he wrote.

Friends of the Ministry of Defence dismiss this take as five years out of date, claiming that it has been transformed from “a sick child into a can-do department”.  Philip Dunne set out its case in the Commons on Thursday.  The black hole in the defence budget that Labour left has been filled.  The National Audit Office’s major projects report for 2014 showed a reduction in cost of almost £400 million in the department’s largest projects.  No less waspish a figure than Margaret Hodge has said that the department has “seen a step change and improvement in performance, which is incredibly welcome.”

During the last Parliament, the department’s stock in Whitehall plunged through the floor – symbolised by it not possessing a full-time Defence Secretary at one point.  (Des Browne was also Secretary of State for Scotland.)  Since then, Fox first put a proper management structure in place – under Labour, the department didn’t even have a finance director – and Philip Hammond then utilised it.  “Liam rolled the pitch and Philip played on it,” said one source.  These friends also point to the performance of the armed forces during the floods, their role in the Ebola crisis, and their popularity during the Olympics.

Where does the truth lie?  One informed view claimed that the management of the department “has got better from a low base, though not nearly better enough” and that “there is now a good Permanent Secretary and there have been strong Secretaries of State.  The current officials are a big improvement”.  But the central question isn’t whether or not whether senior officers and the department’s ministers lobby for bigger budgets – after all, most of Whitehall does that. Nor is even about the degree to which the Ministry of Defence should improve its management performance.

Rather, it is whether or not sticking to the two per cent target is necessary.  And, here, the balance of the argument has tilted.  Before Putin’s carving-up of Ukraine, it could reasonably be argued that Britain’s main security commitment should be internal – in other words, that resources should be switched from defence to policing, and domestic rapid response, in order to tackle the terror threat from ISIS and Al Qaeda.  But whatever one’s view of the origins of the conflict in Ukraine may be – and mine is that Russia is far from solely to blame – Putin’s conduct has changed all that.

He may well have no intention of swallowing up the Baltic States by one means or another.  But we cannot be sure that this is so. (See the cyber attacks on Estonia by Russia in 2007.)  So since we are committed to defending them as part of NATO, we shouldn’t send Putin a signal that we might not honour such a commitment – or be in no position to.  And a decision effectively to abandon the two per cent target would now risk being read as such a signal in the Kremlin, especially since David Cameron has, reasonably enough, urged other NATO member countries to hit it.

The Treasury has a point when it mocks the inconsistency of Conservative backbenchers over targets – for some of the same ones who cling to two per cent on defence also criticise setting one of any size for aid, arguing that the value of a programme is not to be found in targets.  But the case for sticking to two per cent is very strong.  It also runs in harmony with Cameron’s previous indications on defence spending for the next Parliament.  My sense is that the Treasury has now closed the door on such a commitment post-election.  Tory MPs should keep knocking on it.