The PM on Defence (3) [edited transcript]
I think we can begin by immediately following where we ended our last meeting.
If you have now read Called to Account and Bullingdon Defences you will be aware of the substantial savings available in the running costs of the MoD and in the acquisition of materiel. These will be hugely substantial savings if we are ruthless, and there are interesting possibilities in two of the more extravagant programmes: the aircraft carriers, and the F-35B JCA/JSF (alias the Lightning II).
The aircraft carriers are said to be essential if we are to remain in the “First Division”, but with current plans we have contentious issues to settle. Was it wise to build these carriers dedicated to one strike aircraft (in this case the F-35B which is yet unproven, is far over budget, is many years late, and is persuading the Pentagon’s own objective analysts that it is tactically useless)? How much would it cost to retrofit catapults and arresters if we are forced, when the F-35B fails, to choose another aircraft? Are these the carriers we need, or should we have chosen a different design? Were the full costs of a carrier fleet with its full complement of fully-armed escort vessels and supply auxiliaries counted? And how vulnerable to ballistic missiles will carriers be ten years from now? How vulnerable will they be to wide-diameter supersonic cruise missiles with high-explosive anti-tank heads on the day they sail into an area where they are unwelcome?
And if we do have such carriers, where will they operate? In the North Atlantic, of course, but the Indian Ocean will be owned by the Indians, and the China Seas will be owned by China. Almost all the Pacific is owned by the USA. And as there are cheaper ways of defending the Falkland Islands in the distant future against an aggressively oil-hungry and belligerent South American Treaty Organisation, are these new carriers necessary? Without them and their escorts there would be substantial funds to buy and operate many more far less expensive ships of the type we need to keep our vital sea lanes open, free from terrorists and pirates, and our coastlines free from illegal immigrants and drug traffickers. Michael tells me that the MoD is now looking at an inexpensive frigate, the Type 31, which will be very versatile, and if we have no carriers we may not need the very expensive Type 45 destroyers (of which we have six of the planned fourteen) — releasing a lot of money for many more ships. We have to find the answers to all these questions.
Then there is the F-35 itself. Is it needed in addition to the Typhoon? Is its seagoing variant, the F-35B, capable of operation as was intended, especially in respect of range? Is the American Lockheed Martin F-35 programme meeting its targets? Well, no, it is not, as I expect you all know already, but it appears difficult to find anyone in the MoD willing to admit that, even though it is very late, about $200 billion over the projected budget, and the Pentagon’s Director of Operational Test & Evaluation doubts it will ever be ready for operations. (We know the US Marines claim that it met the requirement of their IOC, their Initial Operational Capability, but that was after redefining their IOC as an Interim Operational Capability.) The cancellation of this aircraft for the RAF would provide a substantial saving, although no one has told me how much, apparently because the MoD does not know the figure. Do you, Michael? No, and if you did it would be a different figure next week anyway. Unofficially I’ve been allowed to know that the unit cost will total, when all the extras are added to the basic cost, around £150 million. That seems an awful lot of money for one aircraft that cannot fly very far. However, I am not persuaded we shall need carriers at all after 2020, even if they are not as vulnerable as some of our advisers fear. We need more advice on this, and especially we need to know just how big a carrier’s escort fleet must be, how much that will cost, whether we have that many ships, and, if we do have the ships, do we have the sailors to man them?
Well, why pretend? We already know we don’t have sufficient sailors. Apparently, in pursuit of the bonuses paid to the civil service for “efficiency savings” – which they thought could only be achieved through reducing manpower – the MoD discharged men essential for the continuation of naval operations. Michael, you have to take action on that MoD bonus culture.
These are all matters that require detailed consideration, and although you, Michael, will be advised by the Chiefs, who will probably disagree with each other, I think it may perhaps be useful if you learn the views of a few retired officers whose relevant experience would be helpful and whose opinions will not be shaded by what they think you want to hear. The MoD has been running on tramlines. Few there have dared to think imaginatively under the previous management, so we must encourage new ideas. There really have to be cheaper ways to fight wars.
I believe that with the probable exception of aircraft carriers we must insist on the retention of all the capabilities of the UK’s Armed Forces, funded in part by ruthless surgery and strict discipline, in part by the defence budget, and in part by a third element we shall discuss later. I have mentioned critical mass. There are recognisable limits to downsizing beyond which a fighting unit or a fighting service suddenly loses its ability to fight and, crucially, its ability to train the next generation. The Armed Forces can be pushed down only so far, and then suddenly everything is lost. I am hugely impressed by what was achieved in Afghanistan with inappropriate equipment and inadequate support, as have been commentators from many other countries with whom I have discussed what might be necessary to defeat the Taliban. (For the avoidance of doubt I shall stress here that we do not consider the Taliban to have ben defeated, whatever our predecessors may have claimed.) Our Armed Forces have a core of experience and skill recognised and envied (when politicians have refrained from interference), especially in maritime reconnaissance and urban counterinsurgency, and that expertise is a marketable commodity, a saleable asset. It has been bought with British blood and treasure. It must not be lost; it can earn revenues; and it is a national asset which it is our duty to preserve.
In respect of economic issues it has become fashionable to speak of “UK plc”, but then not to follow the logic of a large company. If any commercial enterprise was in the current financial position of the British Armed Forces then its directors, after ascertaining the full extent of the problems, would examine the savings possible from reorganisation (huge within MoD), from reductions in number (using Typhoons only, not the F-35s), from postponed investment (the Trident decision may perhaps be delayed for a few years), from replanning development (projecting power without a carrier fleet), and would certainly consider not only retrenchment, but also its alternative, expansion — which is what we are here to examine. Expansion, my friends — how shall we fund it?
The expansion of our Armed Forces is vital to prepare for the defence both of the UK and its interests in future war, whether with the deterrence of Trident and its successors, or the projection of sea and air power in support of the Army in a major campaign such as the Falklands, or the suppression of insurgencies threatening our allies or our home territory. The maintenance of these abilities requires expansion of the current strength of the Armed Forces, and the Forces should then be available to do the work for which other nations can pay if and when for political reasons they cannot honour their obligations. Germany has been an obvious example, the UN is another, and so is America. When Great Britain and the Empire fought alone against the Nazis for two years, the fight was for American freedom also — and yet America charged us for its support. Now, in the Middle East, America needs us, and although the war there is necessary for our future safety also, that precedent suggests America should pay for British support (as Washington offered when it hoped to persuade Harold Wilson not to withdraw us from East of Suez). If we are to assist in the struggle to save the world from future war, the world can pay, especially those of the NATO countries whose domestic politics prevent them providing their fair share of men and materiel. In line with this policy, and in recognition of the huge contribution our Armed Forces make and will continue to make to peacemaking in underdeveloped areas, elements of the ringfenced budget for overseas development aid will be diverted to the defence budget in recognition of this.
Trident falls into this category of external financing, for although it deters a nuclear attack on British interests, its principal use since its introduction has been to keep the United Kingdom in the First Division and sat firmly on our permanent seat in the United Nations Security Council. As such the deterrent is an expense for Central Government, both for the capital costs of Trident and its replacement, and also for its operational costs. The recent move of its costs into the Defence budget was financial gerrymandering, creative accountancy. However, the financial decision on the Trident replacement, as I have suggested, need not be taken immediately and would best be reserved until we know more about the American progress with the Ohio-Trident replacement.
The UK is an island nation that needs a much larger navy, and its army has shrunk below critical mass. Defence Bonds (with interest at, say, 5 per cent) may be needed to finance this essential protection, but if the nation is to survive, the money for its defence against certain war must be found, just as it was found to save the falling banks. And why not? Quantitative Easing is justly criticised when it feeds an expansion of consumer credit used to support China’s exports, but there is every reason to use it for investment in the Armed Forces. Defence can be financed directly by extra taxation and by the public’s purchase of Defence Bonds, and then be used to reboot the defence manufacturing industry, recreating many of the thousands of jobs lost by our predecessors, and accelerating a continuing surge in economic expansion. The increased capabilities of the Armed Forces will be available for export to wherever the UK’s allies and/or the UN may need support and can pay for it, thus supplementing our foreign currency earnings.
Included in these capabilities the Armed Forces can export are our training schools, traditionally greatly admired abroad but with their potential as income limited until now by the need to train our own people. We can expand them hugely because we have the skills other nations seek, and until other nations have equivalents to Dartmouth, Sandhurst and Cranwell, which most of them will never have, the market is ours. Additionally, we have economies of scale that will make our fees very attractive. We know that the spaces we do offer are much wanted, and we know also that by training the officers and future commanders of foreign forces on our equipment we open doors for our exports.
I have been shown the latest data for the power output from the windmills. The figures are disappointing and confirm the poor reports I have received from Denmark, previously the most enthusiastic advocate of wind power. When we shall need most power, in a cold winter for heating and in a hot summer for air conditioning, our weather will be shaped by anticyclones, which means that we need nuclear power stations for those windless periods. These, naturally, unlike windmills, produce what we need throughout the year. (Those responsible for the arithmetic justifying the windmills may have been those who justified some of the defence procurement catastrophes.) I have now been persuaded that we should examine whether the projected investment of so many billions in wind power might be far better diverted to investment in defence.
Si vis pacem, pare bellum. At the beginning of the 20th century the UK was not ready for the Great War of 1914-18 either intellectually or materially. (Four years before its start the War Minister rejected the idea that aircraft could play any worthwhile role in war, and Lord Kitchener rejected as unnecessary a request for the use of reconnaissance aircraft at Gallipoli, and we all know the consequences of that.) At the war’s close the UK and the Empire found we had lost 990,000 men and the undisputed world leadership we had held at its start. The lack of preparedness was repeated for the World War of 1939-45, when the UK did not have the power to curb Nazi ambitions at the critical time. (Four years before its start the Chief of the Imperial General Staff still preferred cavalry to tanks and he refused to read the writings of Fuller and Liddell Hart who predicted and advocated armoured warfare.) At the war’s close the UK had lost 450,000 men plus the greatest empire in known history. The threat from Soviet Russia that emerged soon afterwards was later neutralised by a NATO built on a platform provided by the USA, without whose faithful support an impoverished Western Europe would be under Communist rule today.
The emerging threat at the beginning of this present century is from an economically unstable world defined by the Islamist threat of jihadism, nuclear proliferation, overpopulation, struggles for resources, and an America with its power declining as the newly industrialising countries surge in population and GDP. If we now cannot learn the lessons taught by the near-past, the harsh lessons of the 20th century, and if we persist in relying on the support of unreliable European allies led by a newly enfeebled America, then we invite defeat.
The defence of the UK requires a ballistic nuclear deterrent (that is Trident, its submarines and the replacements), a navy capable of keeping the vital sea lanes clear of terrorists and pirates (with a large number of small, appropriately armed ships), and an army capable both of fighting insurgencies overseas and of training territorial soldiers in very large numbers at home. The RAF must be capable of logistic support for the forces overseas, of long-range maritime support for the Royal Navy, of Close Air Support, and of retaining an air-fighting expertise appropriate to those threats that might emerge and then perhaps be resisted. The overall ability of the Armed Forces must be increased substantially, and all the investment deferred during the last two decades must now be provided, but the waste of billions of pounds can be stopped with the application of intelligent disciplines and the expulsion from the MoD of politicised and incompetent civil servants. The nation can have what we know is essential for our defence, and it can have it at an affordable price. We cannot afford not to have it.
We are aware, and doubtless Philip will keep telling us, that we may not have all the money the Armed Forces need, but we must clarify the distinction between cutting programmes and cutting capability. The first we can afford; the second we cannot. A rough estimate suggests we ought to plan on at least five per cent of GDP for the next ten years’ investment, and to provide this, as I have said, from savings created by ruthless surgery and strict disciplines, and from the Defence budget, plus from what I described as unconventional means — from ministries such as the FCO (for the nuclear deterrent) and International Development (for peacekeeping), from other countries and organisations (such as America, the EU and the UN), from Defence Bonds, and from foreign companies seeking to invest in the UK’s famous and well-proven innovatory skills in the defence industry. Additionally, we can divert funds from other budgets such as wind power. We shall make this work because we must make it work, and to ensure the nation understands the desperate seriousness of the situation, to ensure the nation understands how my predecessor misled everyone, us included, by the manipulation of some figures and the concealment of others, I intend to include this text, these words I have said to you this afternoon, in my speech at the Party Conference.
Philip, if you have problems with your Treasury people, refer them to the growth of our GDP during the years the Luftwaffe was nightly hammering our manufacturing industry. The increase in the annual rate of growth (not just the increase in the GDP) is staggering. At the same time, in America, where industry was not troubled by air raids, the increase in the GDP rate of growth was incredible, and it laid the foundation for America’s economic strength today. Investment in our defence industries, especially at the SME end of the scale where we often appear to be unrivalled, can pull us out of the mess in which the last government has left us. It will kickstart economic growth again, as pouring money into welfare payments never will, and because of our historic international reputation in this field, Defence, it will bring in foreign investment.
But, anyway, there is no choice. The nation must understand this. Inadequate Armed Forces may constitute a viable political compromise, but they will never form a successful defence. Potemkin destroyers, and aircraft with guns that cannot fire, will certainly make our future historians smile, but they belong to the past. We must never again allow such incompetence. We must now invest for the future.
I shall conclude my Conference speech with a comment on Morale — which currently in our Armed Forces Is at its lowest-ever recorded level. This would not normally distress the MoD, but it is reducing the chances of hitting the 30,000 target Philip set for the Reserves. There are three elements that concern me: Competence, Honesty and Morale, and of these Morale is the most important. Field Marshal Lord Slim told us that Morale Must Endure, that of its three foundations, Spirit, Intellect and Material, the Spiritual component has primacy — but, and we all know this, the Spirit of the Armed Forces, specifically their esprit de corps, has been crushed continuously during the last twenty years or so. (The two books I asked you to read, Called to Account and Bullingdon Defences explain how.)
I want Honesty: it will start here in this room and drive the Conference. It will recognise that the Morale of our Armed Forces, crucial to our national security, has been crushed by the MoD’s incompetence and dishonesty as manifested by its extravagant waste of money on ill-defined, badly researched projects, its incompetent direction of the campaigns in Iraq and Afghanistan, its criminal negligence in the dereliction of its Duty of Care, and the dishonesty of its bonus culture. Fixing this may be interpreted as Michael’s job, but it is in reality the responsibility of us all — for our national security is at stake.
Morale must endure.
Thank you all. We shall resume our discussion of Morale after Conference.
We have been unable to confirm the authenticity of this leaked text, but shall leave it online until it has been formally denied.
Field Marshal Viscount Slim wrote —
Morale is a state of mind. It is that intangible force which will move a whole group of men to give their last ounce to achieve something, without counting the cost to themselves; that makes them feel they are part of something greater than themselves. If they are to feel that, their morale must, if it is to endure–and the essence of morale is that it should endure–have certain foundations. These foundations are spiritual, intellectual, and material, and that is the order of their importance. Spiritual first, because only spiritual foundations can stand real strain. Next intellectual, because men are swayed by reason as well as feeling. Material last–important, but last–because the very highest kinds of morale are often met when material conditions are lowest.