The Ministry of Defence’s long-anticipated Modernising Defence Programme (MDP) was published at lunchtime today. The year-long process - almost six-months longer than initially anticipated - has been a well-documented battle of wills between Defence Secretary Gavin Williamson, calling for increased investment in his department in times of global uncertainty, and Chancellor Philip Hammond, who has appeared parsimonious when weighing up defence’s requirements against those of other Whitehall budgets, particularly given the potential economic headwind that Brexit threatens. The conclusions then, which promises the retention of a full spectrum of military capability and to honour the overarching commitments set out in the 2015 Strategic Defence and Security Review (SDSR), can be considered somewhat of a victory for Mr Williamson – a budget increase of £1.8Bn, taking into account the additional £1Bn announced at the budget.
Of course, after a year of uncertainty, UK manufacturers supplying our armed forces can welcome the additional clarity the MDP provides over the Government’s plans for future investment in defence. However, delivery against the broad ambitions outlined in this relatively short publication necessarily demands more detail on individual programmes and budgets. Only with this information can the full implications for industry be known. Yet regardless of this, success will certainly depend on the sustainment of a robust manufacturing supply chain in order to deliver against MOD’s capability requirements on time and to budget. EEF and NDI will continue to press for a model that fulfils the MOD’s commitment to promoting economic prosperity through defence, campaigning for as much manufacturing work to be undertaken with the UK supply chain, even where the prime contractor is headquartered overseas.
One aspect of the MDP that is particularly encouraging is the announcement of a new £400m Transformation Fund, designed to allow investment in capability and resource to counter emerging threats to our national security. It is self-evident that, to quickly harness the new technologies that will be required to deal with such threats, flexibility in defence procurement planning is necessary. Long sort by Service Chiefs and capability planners in MOD, this new fund will in theory allow the department to exploit innovation potential wherever it is to be found within the supply chain without the costs having to be clawed back in the form of savings to the long-term plan to equip and sustain conventional forces elsewhere.
That, of course, is a fine principle that industry can wholeheartedly support. However, its purpose will be lost if this fund is allowed to be effectively diverted to subsidise any failure by MOD to deliver against the efficiency savings promised by the 2015 SDSR. It should not be forgotten that defence’s infamous funding black hole, stated in some quarters to be as much as £15Bn over 10 years, is partly due to MOD’s inability to come to terms with these efficiency targets, which has been well documented by the Public Accounts Committee. With delivery of the MDP also assuming the full and timely delivery of these savings, it remains to be seen if and how this can be implemented with a budget uplift of just £1.8Bn while maintaining the MOD as a functional department of state.