Reduction in UK Defence budget

Warning of 10-15% reduction in defence budget
By James Blitz, Defence and Diplomatic Editor

Published: July 2 2009 03:00 | Last updated: July 2 2009 03:00

Britain's defence budget will be slashed by between 10 and 15 per cent in real terms between 2010 and 2016 as a result of fiscal pressures and the political need to maintain spending on health and education, a leading think-tank will argue today.

In a detailed examination of the constraints facing defence expenditure, the Royal United Services Institute says cuts on this scale - equivalent to a £4bn reduction in the annual budget - are its "best estimate" of the outlook for the Ministry of Defence budget.

As the UK prepares for a Strategic Defence Review, which is likely to begin immediately after the next general election, the RUSI paper "Preparing for the Lean Years" is one of the first to put a hard figure on the scale of the cut the armed forces will face.

Andrew Lansley, the Conservative health spokesman, recently suggested that a Tory commitment to increase resources for the National Health Service would mean other departments could face a 10 per cent reduction in expenditure limits. The RUSI has arrived at a similar figure for the defence budget after examining factors affecting armed forces spending.

The RUSI argues that the government has already determined that a large part of its planned spending cuts in future years will come in the capital budget. This will hit the MoD hard, the institute says, because of all the big departments, defence is one of the most investment-intensive, accounting for 16 per cent of total capital expenditure in 2009-10.

Second, the RUSI argues that history shows that the MoD is unlikely to obtain an overall budgetary settlement comparable to that of most other departments. "This is something which [the MoD] has not been able to achieve since the early 1980s, the high point of concern over renewed Soviet expansionism," writes Professor Malcolm Chalmers, the paper's author.

The RUSI looks at areas where the MoD could find necessary savings.

One idea is to scale down the UK military presence in Afghanistan, where operating costs amounted to £2.6bn in 2008-09. "The conditions for this clearly do not exist at present . . . yet it is a possible source of savings over the years to 2016," the paper says.

Another potentially promising area is pay. In recent years the Armed Forces Pay Review Body has recommended rises significantly above the levels for which the MoD has planned. "Persuading the AFPRB to accept a reversal of this trend could yield significant savings," says the RUSI.

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