LONDON — One of Britain's top military budget analysts is predicting that even in the most optimistic scenario, the Ministry of Defence heremight have to find aroundabout £35 billion in savings in the next ten10 years.
A report by Royal United Services Institute (RUSI) research director Malcolm Chalmers has painted a potentially grim picture of large defense spending reductions the other side of after the May general election as part of continuing austerity programs, regardless of which whichever political party wins.
The think tank report said the most pessimistic scenario could see the MoD have to find savings of £74 billion over ten 10 years — a savings figure similar to the total defense spending reductions implemented by the present Conservative-led coalition after it came to power in 2010.
In the pessimistic scenario, based on analysis of the overall spending plans of the three of the major political parties, the MoD would face a 10% percent real-terms cut over the next four years. In its optimistic scenario, defense is given the same level of funding protection as health and schools. The extra funds — around £4 billion per annum by 2019-20, compared with the pessimistic scenario — would probably have to be found from increased taxation and/or borrowing, the analyst said.
British Foreign Secretary Philip Hammond added to the fears over possible defense cuts when he repeatedly refused to rule out a possible reduction in spending when quizzed on a TV politics show on Sunday.
"I can't tell you what will be in the Conservative manifesto and I can't prejudge the outcome of the defense and security review that will take place after the next election," he said on the BBC's Andrew Marr show. "We will protect the integrity and strength of our armed forces."
The 2010 cuts undertaken as part of the strategic defense and security review resulted in vital military capabilities being cut, programs shredded, and military and civilian numbers in the MoD slashed as the G government sought to transform the department and its wayward finances .
Whichever of the two scenarios comes closer to the mark "the result will be a remarkably sharp reduction in the footprint of defense in UK society over a decade," Chalmers wrote in a paper titled "Mind the Gap: The MoD's Emerging Budgetary Challenge."
The exact details of departmental budgets will become clearer once a government-wide spending review is undertaken this year. That will be followed by a strategic defense and security review, which many here believe will stretch into 2016 before it sees the light of day.
The RUSI think tanker also laid out his analysis of how much it would cost the MoD to maintain the NATO commitment of spending 2 percent of gross domestic product (GDP) on defense.
"On the current MoD planning assumption of modest real growth, and with the removal of one-off 2015-16 allocations, spending for 2016-17 is due to fall to £36 billion, equivalent to 1.85 percent of GDP," he said.
Chalmers wrote that in order to meet the 2 percent commitment in 2016-17, the MoD would need an additional £3 billion.
"Further increases would be required in subsequent years in order to keep pace with GDP growth. By 2019-20, an extension of the commitment to the NATO target would require the MoD to be provided with an additional £5.9 billion in annual spending, compared with current plans," the analyst said.
The RUSI report is the latest in a stream of warnings from politicians, retired senior officers and analysts that plunging spending on defense could reduce Britain's armed forces to a shadow of theirits former strength just at a time when global security threats are multiplying.
Last week, US Army cChief of sStaff Gen. Ray Odierno told a London-based newspaper that Britain's diminished circumstances could result in the British Army having to relinquish its ability to operate alongside US forces and instead become part of American units.
Odierno joined President Barack Obama, former British Defence Secretary Liam Fox, ex-British Army Chief Gen. Peter Wall and others who have recently sought to flag up the implications of UK defense spending slipping below the NATO commitment of 2 percent of gross domestic product after next this year.
"In the past we would have a British Army division working alongside an American division. Now it might be a British brigade inside an American division, or even a British battalion inside an American brigade," Odierno said.
Neither of the two main political parties here— Labour or Conservatives — have committed to retain the NATO spending figure if they win the coming election, and both appear to have defense in their sights for potentially substantial cuts to help fix public finances.
The two parties are resisting attempts by the media, politicians and others to get defense and the spending cuts on the agenda during the run-up to the election.
Conservatives and Labour are running neck-and-neck in early polls on the outcome of the electio. With no party expected to win an outright majority, it's likely a coalition or even minority government might emerge.
One senior CEO here told Defense News he had been was presented by his political advisers with nine possible options for the make-up of a G government after the May election.
Chalmers said that while his math may be rough, he reckoned that even on the MoD's own planning assumptions of a 1 percent real annual growth in equipment procurement and flat lining non-equipment spending, the department "could face a substantial funding gap."
That could have a damaging impact on British efforts to implement a restructuring of its armed forces known as Future Force 2020 — or as some people here call it "Future Forcer 2020s."
Gen. Nick Houghton, the chief of the defense staff, warned late last year in a speech at RUSI that failure to boost spending would damage force structures here
"I am not so blunt as to boldly state that defense needs more resources, I would though remind the next government that the force structure which this government has done so much to preserve was predicted to need real terms growth in defense funding, if it was going to be realized," he told a audience of top politicians, industry leaders and senior military officers.