We are almost out of our misery; release of the long-awaited Strategic Defence and Security Review is now only five days away.
The last SDSR was held in 2010 under Coalition leadership, meaning that this is the first “true blue” defence review since the Government of John Major. The most recent SDSR, evaluated during the conflict in Afghanistan, built UK capability around a mix of enduring capability and high readiness forces. The underlying assumptions of UK defence policy from 1998-2014 were that the Cold War was over and capacities for engaging in State-on-State warfare were no longer a priority.
But since that time we have seen the resurgence of state-on-state conflict, concurrent with ambiguous threats in the form of Middle Eastern conflict, failed states, terrorism, and cyber-attack. In light of the attacks in Paris and an increasing number of air strikes in Iraq (and sometimes Syria), the latter is evermore palpable.
While we can only speculate what the Government has in store for the armed forces over the next five years, there is much to feel positive about. Since May’s Conservative win, the Government has agreed to maintain the NATO 2% GDP defence spending, committed to a real-terms 1% year-on-year increase in the equipment programme out to the end of the decade, and given assurances that there will be no further reduction in regular force numbers.
More recently, Ministers including the PM, Chancellor and Home Secretary have strongly hinted at an increased focus on cyber capabilities, equipment for the Special Forces, and unmanned technology.
Here are some key areas we expect to see covered:
MPA
Since retirement of the Nimrod aircraft under Labour which provided the UK with long-range airborne maritime patrol capability, there have been calls for the UK to regain sovereign capability in this area. Seemingly every major player in the market has an offering, with the notable exception of the Nimrod’s manufacturer, BAE. In this SDSR, we expect news that the MoD is launching a competition for MPA capability – to the dismay of the P-8 lobby.
Apache
The MoD needs to resolve whether they will procure the next fleet of Apache attack helicopters through an FMS with Boeing, or run some kind of competition and allow Agusta Westland a bite at the apple. This SDSR should give us a steer on the Government’s plans. Though in financial terms not on the scale of the MPA decision, it will be a test of the Government’s approach to competition in the market.
T-26
In this review the MoD is expected to announce the build profile of the Type-26 Global Combat Ship. Several long-lead items have already been ordered, but no formal order has been placed. We suspect that the T-26 programme will be defined and committed to, but pushed down the 10-year procurement timeline – possibly with an increase in the OPV order. The latest Equipment Plan shows clearly that the next two years of MoD equipment budget are already committed to other programmes; it’s hard to see where funding for the combat ships could be sourced from in the near-term.
Estate Sales
Like all Government departments, the MoD is under pressure from HMT to reduce its resource budget. One of the few areas left where cuts can be made inside the MoD is Defence Estates. With the MoD being one of the UK’s largest public landholders, and despite previous measures, there is a sense this can play a greater part in deficit reduction. We are already seeing this trend in action with, for example, the recent sale of Admiralty Arch and the Old War Office on Whitehall for nearly £200 million.
Trident
Last but not least, the contentious battle surrounding replacement of the UK’s deterrent submarine fleet wages on. The current position confirmed by Parliament is a like-for-like replacement of the capability, with Main Gate due in 2016. The SDSR may simply reaffirm this position, or it could throw us a curve ball. Commitment was given under the Coalition Government that a further Parliamentary vote would be held in 2016 before a Main Gate decision. With Corbyn’s Labour installed, a failed vote could upset the UK’s long-held position on Successor. Additionally the Government, while remaining committed to the programme, could seek to defer Main Gate for financial or political reasons. For instance, a major restriction in further extending the current Vanguard fleet was the cost required to re-fuel the boats. But after 2014’s Dounreay reactor leak, and subsequent refuelling of much of the fleet, the MoD may feel better able to push the programme down the line should it wish to.
Despite some major decisions on equipment, the SDSR should be a largely positive experience for both the MoD and industry.