The Chancellor’s decision to scrap the three year CSR (Comprehensive Spending Review) and replace it with an emergency one year settlement for departments created a particular problem in defence.
The MoD had been tasked with rethinking defence policy for the age of cyber-warfare, as part of the government’s Integrated Review of foreign and security policy, expected to appear just before the new US President is sworn-in.
How could the MoD and the Armed Forces do anything serious with a patched together one year settlement when many modernising decisions have multi-year consequences?
On top of that, the MoD already has a funding black hole, a result of two botched defence reviews under former Chancellor George Osborne’s guidance.
But the Treasury insisted. Defence would just have to suck it up. One year’s money like every other department.
The protests of Defence Secretary Ben Wallace have won through it seems. Whitehall sources say that Boris Johnson is now persuaded that there must be a four year settlement for defence to enable modernisation and restructuring.
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A settlement of between £15bn and £16.5bn extra over four years is envisaged. An announcement is expected soon from the Treasury and the MoD.
A crucial factor was the victory of Joe Biden. Boris Johnson wants to be able to point to Britain’s role as a defence and security partner, and show how important the UK is as Europe’s biggest spender on military forces. Plus the UK is the US’s main partner of intelligence-gathering and analysis. The shift to investment in cyber-warfare kit enhances that. It should help open the door to better relations with a Biden White House. That’s the government’s hope, anyway. Let’s see.
Ironically, before his departure Cummings played a part in convincing Johnson to change tack on defence on the basis that the Treasury was being short-sighted and needed to do more. Cummings was a big Rishi Sunak supporter. Well, Cummings effectively appointed him when he dispensed with Sajid Javid earlier this year.
On the settlement, there will be much arguing in the military and among strategists about whether it’s enough. The Treasury will demand guarantees. Defence projects have a habit of getting out of hand and running over budget, Treasury officials point out.
Still, it’s an interesting turnaround, a sign of Boris taking back control, a win for Wallace, and a first major defeat for Rishi Sunak.