Reviving Howard Wheeldon's Commentary Series

I have been approached to revive the Commentary series which Howard Wheeldon used to produce. It was widely emailed to many in the aerospace and defence sector. Howard’s family have kindly given their permission for me to continue this with their blessing. A well informed Commentary on matters relating to the UK’s aerospace and defence sector (including security policy) is an important element of the national conversation, especially at the moment. To do this I will be drawing on 20 + years of working in this arena, as a freelance journalist, policy advisor and consultant.

Memorandum to the Prime Minister

Prime Minister

The first priority of any government is the security of the realm. In modern times this also includes our allies and those who share our values. You have come into office at a particularly turbulent time both in the international arena and the domestic scene. The choices that you face are not easy, but to govern is to choose. In which spirit this memo addresses the choices you face in the defence arena, as they affect the UK’s standing in the world as much as its economic well-being.

Defence does not fit into the Efficient Markets Hypothesis

The Strategic Defence Review was foreshadowed during the election campaign. A well respected team has been chosen to run it. The outcome will reflect on how the UK is seen by our allies and our adversaries. The outbreak of war in Europe in 2022 represents a failure of deterrence. Whatever the outcome of the conflict in Ukraine, the members of the NATO Alliance will need to retain a high level of readiness and a ready supply of equipment to deter a revanchist Russia.

In this context the case for an uplift of defence expenditure to 2.5% of GDP must be axiomatic in any reading of the global situation. Rumours in the media regarding possible cuts to future programmes undermine the UK’s credibility, as it has been shown that developing capability that can deter and defeat an aggressor takes time and resources to mature. Much of the equipment used by the UK in the Gulf and Libya began its development in the 1970s.

The world is not governed by rational actors. Russia and China have watched as the West vacillated in the Middle East over the Arab Spring and the uprising in Syria. The abandonment of Afghanistan encouraged Putin to strike in Ukraine and China continues to stalk Taiwan. Iran meddles in the Middle East and flirts with a nuclear capability. The battle for hearts and minds in the global south is waged via debt diplomacy and coercion.

Against this background the SDR cannot afford to send an equivocal message to our potential adversaries. Neither should it signal to our allies that we are no longer a credible and reliable ally. The 21st century has seen the emergence of a different kind of warfare. Hybrid warfare or ‘sub threshold warfare’ has been used by non-state actors to exploit asymmetrical methods which avoid a direct military confrontation with a technologically superior west. The same methods are now being used by hostile states against the west.

Around the world economies have been responding to the downturn resulting from the Covid pandemic by introducing measures to support their economies. We seem to be entering into a new era of protectionism, with the US, the EU and China taking steps to protect employment and access to the materials needed for their economies and people to prosper. The UK government has to consider how it will respond to this, and in the aerospace and defence industry it has some strong cards to play.

Lessons from Ukraine: Innovation

The Ukrainians are now convinced this is an ‘innovation war’ that will be won by innovating and scaling new technologies. The aerospace and defence sector supports over 400,000 jobs directly across the UK. It contributes around ￡36 bn in exports. The sector relies on orders from the MOD as well as from commercial airlines and overseas customers.

The sustainability of the supply chain is a crucial element of the UK’s defence capability. Many SMEs need to have balance sheet resilience to get through the peaks and troughs of cash flow. The development of new technology often involves considerable financial risk. Industry and the MOD should work closely on ways to mitigate the risks involved in the early stage development of what might prove to be war winning technology. This will give industry the confidence it needs.

As well as requiring steel, defence manufacturing needs other metals too e.g. Nickel, Titanium and increasingly Lithium. For micro-electronics, silicon is needed. Currently the west is heavily reliant on China and Russia for the supply of these materials.

The enemy gets a vote

Predictions about the course of the war in Ukraine have varied, but it is apparent that Russia will remain a threat to NATO and Europe however the conflict is resolved. In which case the UK and western allies will need to maintain a high level of readiness and the stocks of ammunition and equipment necessary to provide a credible deterrent.

Given the need to be able to fight at short notice, the readiness of the UK’s sovereign defence manufacturing capability should be monitored by the National Security Council, to ensure that this matter remains at the heart of government contingency planning. As with the banking sector, stress tests should be applied to the supply chain to identify blockages or shortfalls. There is no evidence that this activity has been or is being undertaken.

Defence Exports – winning friends

Defence exports are more than simply selling kit, they are often part of a wider defence relationship. The GCAP and AUKUS programmes represent significant steps forward in deepening the UK’s network of alliances across the world. To support this effort the UK can partner with allies to invest and develop world beating technology.

The UK needs to learn the lessons of how to do this from our French ‘friends’ – making defence exports part of a wider cross-governmental approach, linking defence exports to other elements of diplomatic statecraft.

?The Armed Forces

In the military, Service chiefs should not allow themselves to be drawn into the unseemly inter-service rivalry that characterised the periods before previous SDRs. The UK’s military is already too small to take on the roles that Government and the British people expect of them. The shortcomings that have arisen regarding the availability of assets in both the RN & RAF need urgent attention and resolution, not just business as usual.

The Royal Navy has had some well publicised problems with the availability of submarines. These are front line strategic assets, not just ordinary boats. The former Chief of the General Staff spoke in terms of ‘Op Mobilise’ and the current incumbent has spoken about increasing the lethality of the Army. It will be interesting to see what this means in a world where the supply of munitions is short. The RAF has encountered problems with fast jet training, and a shortage of qualified aircrew. Alongside this problems persist with service accommodation.

Increasing service pay may assist with recruitment, but poor housing and a lack of training opportunities will see qualified and skilled personnel leave the services. The represents a waste of taxpayers’ money, perhaps somebody could draw a picture for the bean counters in H M Treasury to illustrate this. The armed forces remain the most successful vehicle for social mobility in our society, equipping people with the skills that a modern economy needs after they leave.

Defence acquisition

Defence acquisition has been beset with problems that have seen taxpayers’ money squandered and capability delayed. The outbreak of war in Europe should be a reminder that the MOD is in the business of furnishing the armed forces with warfighting capability, and it needs to be ready now – not in 5 years’ time. Defence Equipment and Support (DE & S) introduced a new Integrated Procurement Model to improve its process of getting capability into the hands of the front line in February this year. Let us see how this beds down and if it results in real change.

Conclusion

As Prime Minister you will have to adjudicate among the competing claims of inter departmental budgets. The MOD remains one of the top spending departments of state, but it is more than just that. It is the steward of the lives of the extraordinary men and women who step forward to safeguard us all. It deals with some of the most sophisticated technology in the world.

As a member of the P5 on the UN Security council, the UK has global responsibilities, not just regional and national ones. We cannot send our diplomats and statesmen naked into the conference chamber when we are dealing with the sort of autocrats who are in the ascendant at the moment. Your stated ambition is to achieve a 2.5% of GDP budget for the MOD when resources allow. As Prime Minister, you have the power and the authority to make this happen. If you adopt the same approach to the MOD budget as you have with the NHS – reform first, MOD and industry will rise to the challenge.