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\u003cp style=\u0022text-align: left;\u0022\u003e\u003cspan\u003eThe United Kingdom Ministry of Defence (MoD) emerged from the government\u0026rsquo;s latest spending round comparatively well. An above-inflation increase was welcome, tipping in an additional \u0026pound;2.2 billion (US$2.85bn) to the budget: \u0026pound;300 million for the 2019\u0026ndash;20 fiscal year and \u0026pound;1.9bn for 2020\u0026ndash;21. However, it is only a short-term settlement, and there is the likelihood of a Strategic Defence and Security Review (SDSR) sometime in 2020.\u003c/span\u003e\u003c/p\u003e\n\u003cp style=\u0022text-align: left;\u0022\u003e\u003cspan\u003eSuch is the state of flux in British politics that venturing a date for an SDSR is simply a bet. However, the last full-blown defence review was in 2015, and the intent was for a five-yearly review and refresh. There was an interim Modernising Defence Programme report published in December 2018, which did not make budgetary adjustments and essentially endorsed the force ambitions laid out in 2015. The next SDSR, whatever the exact date, likely will have to address fundamental issues, none more so than that of Britain\u0026rsquo;s defence and security aspirations after it has left the European Union.\u003c/span\u003e\u003c/p\u003e\n\u003ch3 style=\u0022text-align: left;\u0022\u003eAmbitions and investment\u003c/h3\u003e\n\u003cp style=\u0022text-align: left;\u0022\u003e\u003cspan\u003eSo far, there has been a gulf between the official government rhetoric of a post-Brexit \u0026lsquo;Global Britain\u0026rsquo; and the capacity to generate military capability to support the level of global presence implied in public statements. The size of the British armed forces, and the limited number of primary land, sea and air platforms, places a question mark against the UK\u0026rsquo;s declared level of political ambition. And this at a time when the European security environment is demanding greater attention closer to home than at any moment since the end of the Soviet Union in 1991.\u003c/span\u003e\u003c/p\u003e\n\u003cp style=\u0022text-align: left;\u0022\u003e\u003cspan\u003eCommenting on the increase, British Secretary of Defence Ben Wallace said: \u0026lsquo;Defence will always continue to require sustained investment for the long-term.\u0026rsquo; The MoD and Treasury finance-department officials may have discussed the possibility of a multi-year defence-budget settlement, but the current fiscal and political environment likely made this undeliverable.\u003c/span\u003e\u003c/p\u003e\n\u003cp style=\u0022text-align: left;\u0022\u003e\u003cspan\u003eEven with the new additional funding, the upcoming MoD planning round may well see some projects re-shaped or deferred. There also remains the possibility of the early retirement of systems now nearing the ends of their service lives to provide additional financial flexibility, not least to try to create financial \u0026lsquo;headroom\u0026rsquo; to invest in new technologies \u0026ndash; a theme and a challenge highlighted by numerous senior UK military leaders at the latest DSEI defence exhibition that has just wrapped up in London.\u003c/span\u003e\u003c/p\u003e\n\u003ch3 style=\u0022text-align: left;\u0022\u003ePensions and platforms\u003c/h3\u003e\n\u003cp style=\u0022text-align: left;\u0022\u003e\u003cspan\u003eHowever, more than 30% of the additional funding (\u0026pound;700m/US$910m) was earmarked to deal with an increase in pensions contributions, which otherwise would have needed to be found within the existing budget. Most of the remaining sum, \u0026pound;1.2bn (US$1.56bn) is intended to support the ongoing military modernisation programme, including investments in the \u003cem\u003eDreadnought\u003c/em\u003e-class nuclear-powered ballistic-missile submarine that will replace the \u003cem\u003eVanguard\u003c/em\u003e class; wider ship-building plans, such as the Type-26 and Type-31 frigates; and funding for cyber capabilities. In addition to this, \u0026pound;300m had already been added to support key acquisition projects in the 2019\u0026ndash;20 budget.\u003c/span\u003e\u003c/p\u003e\n\u003cp style=\u0022text-align: left;\u0022\u003e\u003cspan\u003eThe 2020\u0026ndash;21 Total Departmental Expenditure Limit (which is only part of the government\u0026rsquo;s spending on defence) will be \u0026pound;41.3bn, compared to \u0026pound;39.5bn in 2019\u0026ndash;20. This, Wallace suggested, will contribute to UK defence spending meeting the 2% of gross domestic product target threshold for NATO members. London\u0026rsquo;s spend has, by the IISS\u0026rsquo;s own calculations for the \u003cem\u003eMilitary Balance\u003c/em\u003e based on available UK defence-funding data, hovered around the 2% mark for several years, either marginally above or slightly below the NATO goal.\u003c/span\u003e\u003c/p\u003e\n\u003ch3 style=\u0022text-align: left;\u0022\u003eFunding gap\u003c/h3\u003e\n\u003cp style=\u0022text-align: left;\u0022\u003e\u003cspan\u003eThe MoD has been attempting to tackle a potential funding gap in its rolling ten-year Equipment Plan. As of the end of 2018, cost projections indicated a \u0026pound;7bn (US$9.1bn) shortfall between the estimated cost of the plan and allocated funding. The House of Commons Public Accounts Committee suggested in a report examining the 2018\u0026ndash;28 Equipment Plan that the \u0026pound;7bn figure was a best-case scenario. It noted: \u0026lsquo;[The MoD] also estimates that the gap could widen to \u0026pound;14.8 billion [US$19.2bn], but even this looks to be unlikely and overly optimistic. The escalating and continuing affordability issues have led to short-term decision making which has only worsened the longer-term affordability risks.\u0026rsquo;\u003c/span\u003e\u003c/p\u003e\n\u003cp style=\u0022text-align: left;\u0022\u003e\u003cspan\u003eShifting from short-term budgeting to ring-fencing long-term funding for core acquisition programmes, which would allow for the more effective planning and profiling of funds, has long been an MoD ambition. However, in the current environment, this may well have to remain an aspiration.\u003c/span\u003e\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eThis analysis originally featured on the IISS Military Balance+, the online database that provides indispensable information and analysis for users in government, the armed forces, the private sector, academia, the media and more. Customise, view, compare and download data instantly, anywhere, anytime. The Military Balance+ includes defence economics data, including budgets, expenditure and other measures, in local currency and USD, for countries worldwide.\u003c/strong\u003e\u003c/p\u003e","className":"richtext reading--content font-secondary"}), document.getElementById("react_sWVUcRtinkqCaJ4bcc0c2Q"))});
\u003cp\u003e\u003cspan\u003eEven with a defence budget increase of \u0026pound;2.2 billion, the United Kingdom Ministry of Defence may well see some projects re-shaped or deferred. Although the additional funding will support the ongoing military modernisation programme, it is only a short-term settlement, writes Douglas Barrie.\u003c/span\u003e\u003c/p\u003e
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