As Britain embarks on its first defense review since 1998, both press and official comments continue to hint that spending cuts are in the offing. The argument, to the extent there is one, is that since the U.S. does it all, and can pay for it all, Britain does not need to over-insure in expensive capabilities, especially those relevant to land war. This is a curious argument to make at precisely the moment when the U.S., under President Obama, is embarking on a procurement holiday. Equally wrong-headed is the increasingly popular argument that Britain no longer needs its strategic deterrent: an alliance of tightwads, nuclear weapon haters, and advocates for defense spending realignment threatens to disarm Britain unilaterally.
In an important speech to the International Institute for Strategic Studies this week, William Hague, the Conservative Shadow Foreign Secretary, explicitly rejected what he described as “strategic shrinkage.” Hague said that Britain must “seek to retain her influence wherever possible and, in some places, seek to extend it,” adding that “we must not disconsolately cease to make the effort.” This is the right vision for Britain, for the U.S., and for NATO. The only problem is that Britain’s current 35 billion pound defense budget is obviously not large enough to sustain Britain’s forces, never mind expanding them. A spending increase, partly balanced by a serious review of Britain’s procurement policies and plans, is the only way to achieve Hague’s aim.
In this light, it’s interesting to look at the “partnership” announced on Tuesday between the Ministry of Defence and BVT Surface Fleet Limited. BVT is responsible for building Britain’s Type 45 destroyers and its two new aircraft carriers, the latter being essential to the future existence of the Royal Navy. The capabilities are necessary, but the “partnership” is problematic: it is explicitly designed to provide BVT with a minimum income from MoD contracts of about 230 million pounds per year over the next fifteen years. It may not be entirely coincidental that BVT’s ship-building facilities are in Labour-held constituencies in Glasgow: the Minister for Defence Equipment and Support, Quentin Davies, was not shy about noting that the “guarantee of fifteen years’ worth of work is especially pleasing to announce in the current economic climate.”
The announced goal is to preserve Britain’s naval defense industrial base. But as the TaxPayers’ Alliance points out, this is a wildly inefficient way to procure defense equipment, because it is a fifteen-year no-bid contract that will force future governments to award work to BVT regardless of its competence, or lack thereof, and will give the firm, which is now Britain’s national champion, leverage in any future negotiations with the MoD. If Britain wants to fulfill Hague’s vision, the next Conservative administration needs to take a long, careful look at these sorts of contracts, and to recognize that the purpose of defense spending is to buy defense capabilities, not to serve as a national industrial policy and a job-creation program.