Are defence cuts an intergenerational issue?

David Kingman asks whether Britain will have to cut into its defence budget as the population ages – and would this be fair on future generations?

As part of the spending review announcements in October 2010, the Coalition government declared that it intends to cut the Ministry of Defence’s budget by 5% in real terms between now and 2014.

This amounts to about £1.72 billion in cash, which will be shaved off the budget through a variety of retrenchments, including both redundancies and equipment cutbacks.

Some 17,000 positions in the armed forces are set to be eliminated, as well as the jobs of 25,000 civilian employees. At the same time, Nimrod reconnaissance planes, the aircraft carrier Ark Royal, the Navy’s Harrier jump-jet force and the Astor-Sentinel surveillance aircraft will all be retired early. There will also be more minor equipment cutbacks; 600 tanks, armoured vehicles and pieces of artillery will be taken out of service, four frigates and destroyers will be scrapped, and five army headquarters will shut.

As a whole, the Armed Forces will have lost nearly 10% of their personnel, leaving 158,000 soldiers, sailors and airmen at the government’s disposal. This still leaves a large military force to project the UK’s influence across the globe – but it may be just the start, as the Ministry of Defence faces serious financial challenges in the future which could greatly further erode its effectiveness.

A ‘soft target’ for cuts as the population ages

The biggest problem facing the Armed Forces is the cost of Britain’s ageing population. There is a serious danger that they will be seen as a soft target for further cuts as the government has to messily re-orientate its spending towards looking after growing numbers of retired people in a relatively short space of time.

According to the Office of National Statistics, 17% of Britain’s population is currently over the age of 65. In 30 years, this will have risen to 23% – nearly 14 million people – something we can confidently predict because they are already alive.

Old and Broke, a major report on Britain’s economic future authored by the pro-market think-tank Reform, argues that this will have dire implications for the UK’s public finances.

Even if the government’s plans to reform public-sector pensions and increase the retirement age make it through the current conflict with the unions unscathed, spending on pensions is projected to increase from 5% of GDP in 2010 to 7.1% in 2041, a change equivalent to over £32 billion a year in today’s money.

Similarly, spending on the Department of Health will have to go up, as pensioners (particularly those nearing the end of their lives) consume the vast majority of health spending; half the NHS’s current budget already goes to the over-65s.

Therefore, it isn’t surprising that Old and Broke also estimates that health spending will have to increase by around 2.6% of GDP between 2011 and 2041, amounting to almost £40 billion in today’s money.

These projections mean the government would be required to find £72 billion a year of additional public spending in 30 years’ time. And as these figures are based on percentages of GDP, the government’s optimistic prediction of a return to typical pre-recession annual growth would have to be met just to keep the extra expenditure to this level.

As large-scale tax increases are likely to be just as unpopular with the electorate in 30 years’ time as they are at present, the government will likely have to start chipping away at other realms of public expenditure in order to find much of this extra money.

This is where Defence may find itself exposed – its budget of £35.7 billion is the largest of any department apart from Work and Pensions, Health and Education, making it a potential target for cuts.

It will be in a particularly weak position because funding for education is a highly sensitive political issue, as shown by the recent furore over university tuition fee increases. It can’t have escaped politicians’ notice that, while that part of the spending review was so controversial, the sale of the HMS Ark Royal and other cuts to the military haven’t brought the masses out onto the streets.

Leaving future generations unprepared

The problem with cutting back Britain’s military capabilities from an intergenerational point of view is that we could be leaving future generations in danger if they are less able to defend themselves.

The armed forces would be easy to cut back but hard to build up again. The people who make up the boots on the ground need months of training, followed by long tours of duty to gain experience – just training an Army officer at Sandhurst takes 48 weeks, for example.

However, these time-scales are nothing compared to how long it takes to produce military equipment. Britain’s two new carriers, HMS Queen Elizabeth and HMS Prince of Wales, were first ordered in 2007 and won’t be ready for use until 2020 and 2023 respectively, at higher than anticipated cost of £10 billion.

Delays and cost overruns for such projects could almost be considered the norm rather than the exception. A good example is the Eurofighter Typhoon aircraft; this was first proposed in 1971 as a way of counteracting Cold War-era Soviet jets, but didn’t make its maiden flight until 1994, and the first set of orders weren’t completed until 2008, by which time the original cost of each aircraft had risen by 75%, according to Parliament’s Committee of Public Accounts.

Military machinery in general is so complicated and expensive that it would be very difficult for downsized Armed Forces to suddenly re-equip themselves to counter the emergence of new threats.

Why should this matter? There are two reasons: the military is essential for preserving Britain’s place in the world, and we can’t be sure how the future is going to pan out.

The scale and power of Britain’s military is often underappreciated. Measured in dollars, only the US, China and France have larger declared military budgets, while the UK has the second-largest overall military in the EU and the second largest navy and airforce in NATO, after the US. It is one of only five recognized nuclear powers and, more importantly, one of only three countries with a ‘blue water’ navy – meaning it can operate more than 200 nautical from its shoreline.

This gives the UK disproportionate ability to project its power overseas; in 2006 The Henry Jackson Society, a geopolitical think-tank, argued that Britain has the second highest ‘power-projection’ capability in the world, after the US, thanks largely to its military. It acts as a powerful bargaining tool for Britain to bring to the table whenever world affairs are being discussed, especially among NATO, the EU and UN.

In terms of threats, while the global landscape may seem relatively benign at present, the future is inherently unknowable. Those in power during the early 1980s provide a cautionary tale, as the unpredicted invasion of the Falkland Islands by Argentina required an improvised and high-risk response that stretched British military capability to the limit.

With all the warnings that have been broadcast about the dangers of exploding populations in the developing world, climate change, the competition for resources, instability in the Middle East and intransigence from China and Russia, it would almost be surprising if these issues don’t create new threats to Britain as we move forward in the 21st century.

In many ways, defence spending has an inherently intergenerational dimension to it; both in the practical sense that military projects often take a long time to bear fruit, so one generation is often planning, long-term, for the security of another, and also to the extent that there is a contract between the generations that those in power should not do anything to undermine the ability of subsequent generations to defend themselves.

In the coming decades, this contract may well be stretched, but Britain should always remember it is only able to enjoy peace and prosperity today because previous generations made major sacrifices to defend them.