UK to boost defense budget by $21.9 billion. Here’s who benefits — and loses out.

By: Andrew Chuter

LONDON — The British government has approved the largest rise in its defense budget since the end of the Cold War, with £16.5 billion (U.S. $21.9 billion) in additional funding made available for spending on shipbuilding, space, cyber, research and other sectors over a four-year period.

Prime Minister Boris Johnson said the increase could transform the military and bring to an end an era of retreat in the armed forces.

“For decades, U.K. government has pared and trimmed our defense budget. If we go on like this, we risk waking up to discover our armed forces have fallen below the minimum threshold of viability. I have refused to pick up the scalpel yet again. I've decided the era of cutting must end, and end now,” the prime minister told Parliament in a statement.

The retreat to which Johnson referred is made up of capability cuts, program delays and cancellations, reductions in research and development, and slashed personnel numbers amid defense budgets that have regularly failed to match ambitions.

Winners and losers

Among the efforts likely to benefit from the commitment of new money are the Tempest future combat air program; a number of shipbuilding projects, including a fleet of logistics ships; and various space and cyberspace assets. Specifically, the spending commitment will finance the country's order of eight Type 26 and five Type 31 frigates, which are under construction in Scotland, where the U.K. government faces renewed calls for independence.

Johnson said he is also committed to the embryonic Type 32 next-generation frigate and the building of a multipurpose research ship.

Also included in Britain's transformation plans are the creation of a Space Command capable of launching a rocket from a site in Scotland by 2022 as well as a new agency focused on artificial intelligence.

But Johnson also warned some programs would not receive equal attention.

“We will need to act speedily to remove or reduce less relevant capabilities — and this will allow our new investment to be focused on the technologies that will revolutionize warfare,” he said.

Johnson gave no clues to where the ax might fall, but new armored vehicle programs, of which the British Army have several currently running, are often cited by analysts as a potential target for cuts.

“Now is the right time to press ahead because emerging technology on the horizon will make the returns from defense investment infinitely greater,” he told Parliament. “We have a chance to break free from the vicious circle where we ordered ever deceasing numbers of evermore expensive pieces of military hardware, squandering billions of pounds along the way.”

The government said military modernization will be underpinned by a record investment of at least £1.5 billion extra and £5.8 billion in total on military research and development, including a commitment to further invest in the future combat air system.

“This reverses the systematic decline in this crucial area in the last 30 years,” according to the Prime Minister's Office.

What's been the reaction?

Commitment to the major hike in extra spending came after the Treasury gave in to pressure from Johnson to provide extra funding for the armed forces over a four-year period rather than accept the chancellor's preference for a one-year funding settlement.

The announcement is being termed as the first phase of an integrated defense review being conducted to coordinate defense, security, foreign and development policies. The review was expected to already be published, but with plans in flux and the new factor of additional cash, a more detailed review will not likely be public until next year.

The Royal United Services Institute think tank in London said that over the next four years, the “additional cash represents a real-term increase of between 10 percent and 15 percent in the defense budget: equivalent to some £4 billion more annually than had been promised.”

RUSI also noted the announcement, “provided little clarity on the foreign policy ambition, and it appears likely that we will have to wait until the new year for the full integrated review to be revealed. In the meantime, the [Ministry of Defence] will be under considerable pressure to ensure that its ambitions do not again outrun its (now significantly enhanced) means.”

Analysts here say that despite the new spending commitment, the MoD will still have to cut a number of programs to balance it's books.

The National Audit Office, the government's financial watchdog, has repeatedly warned the 10-year equipment plan is unaffordable, saying it could be too costly by as much as £13 billion. The current annual defense budget is about £40 billion. The new spending pledge will see the defense budget account for 2.2 percent of gross domestic product, meeting NATO guidelines.

Johnson, who is currently self-isolating, having recently come into contact with a lawmaker who has subsequently tested positive for COVID-19, said he had taken the decision to raise spending in the teeth of the pandemic because the “defense of the realm must come first.”

“The international situation is more perilous and more intensely competitive than at any time since the Cold War, and Britain must be true to our history and stand alongside our allies,” he said.

A statement from the Prime Minister's Office said the increase will cement the U.K.'s position as the largest defense spender in Europe and the second largest in NATO, after the U.S. The announcement drew an immediate and welcoming response from acting U.S. Defense Secretary Christopher Miller.

“The [Department of Defense] applauds the announcement by the U.K. to significantly increase defense spending. The U.K. is our most stalwart and capable ally, and this increase in spending is indicative of their commitment to NATO and our shared security,” he said. “With this increase, the U.K. military will continue to be one of the finest fighting forces in the world. Their commitment to increased defense funding should be a message to all free nations that the most capable among us can — and must — do more to counter emerging threats to our shared freedoms and security.”

The move was also welcomed locally by ADS, a major industry lobby group. “This investment will boost our national security, help the U.K. address new and rapidly evolving threats by developing innovative world-class equipment, and support our economic recovery. The commitment to key projects will embed high-value design and manufacturing skills in all regions and nations of the U.K. for decades to come,” said Paul Everitt, the ADS chief executive.

But Everitt also said the money must be quickly spent with the U.K.'s prosperity a priority.

“It is important that the procurement regime delivers quickly and in a manner that prioritizes U.K. industrial impact, aiding planning and clarity and helping to build back better,” he said.

The £16.5 billion in extra spending is over and above the government's pledge to increase defense spending by 0.5 percent above inflation for every year of the four years remaining of the existing Parliament. The government said that on existing forecasts, this is an overall cash increase of £24.1 billion over four years. Johnson told Parliament that would represent spending of £190 billion over the next four years.

But how will the government's massive spending in the fight against COVID-19 impact these spending plans? Media and analysts here reckon Britain's huge overseas development budget is likely to take a hit to make these new efforts a reality.

https://www.defensenews.com/global/europe/2020/11/19/uk-to-boost-defense-budget-by-219-billion-heres-who-benefits-and-loses-out/