Friday, 30 October 2020
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defence expenditure
As the civil servants and senior military officials of Britain’s policy community contemplate the 2015 Strategic Defence and Security Review (SDSR), Nick Watts Deputy Director General of the UK Defence Forum spoke to Liam Fox who was the Secretary of State at the MOD at the time of the 2010 SDSR. Fox reflected that when he approached the last defence review he established a template against which the review was carried out. “We looked at costings, operational capability, the cost of regeneration, but particularly the ‘real world’ risk.” He says that for every decision relating to equipment, either in terms of purchase or deletion, the MOD was able to take a number of calculated risks.
 
When ministers revisit the decision this time, they will find that the level of these risks will be increased.
• Failing states: This risk has increased most notably Pakistan and Yemen.
• Belligerent states: This risk too has increased notably Russia and North Korea.
• Trans National Terrorism: This is an increased risk with the rise of Al Shabab and Daesh/ISIL among others.
• The risk to global financial stability: Fox believes that this is greater even than a year ago.
• Commodity competition: Has also increased.
• The cyber threat: Is massively increased.
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By Nick Watts

The government's proposed Defence Industrial Technology Policy (DITP) will be published in December. Or rather, it will be the basis for a discussion between industry and government. Both sides have much at stake, so the outcome is important. Getting the right answers means asking the right questions. The government and the MOD each need to ask three questions when formulating the DITP:

How can the UK secure the necessary operational sovereignty to guarantee the provision of key strategic capability into the future?How best can the government partner with industry to ensure the continuation of a viable defence sector in the UK?How can the government help the UK's defence sector to explore and exploit opportunities in the export market?

 For its part Industry also needs to collectively consider three questions, as it engages with the government and MOD:

How will industry adjust to the stated aim of MOD to reduce the number of operating platforms: how will this enable the UK to retain a viable defence industry? To what extent can exports help pull through programmes for the UK market?How can industry help MOD reform its acquisition process, to ensure that programmes get developed quickly and that equipment is delivered on time and on budget?

The DITP will be a Green Paper, a discussion document. This is intended to guide the subsequent discussions so that a White Paper can result. The White Paper will represent the government's settled view on the future of the MOD's industrial and technology policy for the life of this parliament, and at least until the next SDR in 2015. In the context of the SDSR and the CSR, there is much gloomy talk in the air. Yet both sides of this discussion have a mutual interest in ensuring that the other survives to fight another day.

The context, while not promising could be a lot worse. After the fall of communism the subsequent peace dividend took its toll on both the armed forces of the west and the defence industry. The notorious "Last supper" of 1993 encapsulated this. US Defence Secretary Aspin told the leaders of the 15 largest US defence contractors that the DOD was not going to solve industry's over capacity problem. The result was a wave of consolidation which has produced stronger contractors now. In Europe and the UK a similar series of consolidations took place.

The world in 2010 is far different from 1990, when policy makers were trying to get their heads around what the changes of 1989 meant. The SDSR set the context within which the industrial and technology questions need to be considered. The arithmetic of the CSR is another factor affecting the DITP. The contemporary setting does not allow the laissez faire approach adopted by Les Aspin in 1993, however much the government may wish.

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