WASHINGTON and LONDON ― The United Kingdom has announced a plan to add £800 million (U.S. $1.13 billion) to the Ministry of Defence’s budget for the upcoming financial year, as top defense officials acknowledge that the cost to keep Britain’s military in top shape will remain a challenge.
The vast majority of that funding, £600 million, will be withdrawn from the £10 billion contingency fund for the Dreadnought submarine program, announced in the 2015 Strategic Defence and Security Review. The contingency is held by the Treasury, which has agreed to release the funds in an effort to keep the £31 billion Trident missile-armed submarine program on track.
A further £200 million will be added to the budget next year in the “Supplementary Estimates“ released by the Treasury in February 2018. While the £200 million was assigned to the current financial year, the MoD said it had brought forward payments due next year, releasing extra cash for the 2018-19 budget.
“Today’s announcement will ensure that the work to rebuild the U.K.’s new, world-class nuclear submarines remains on schedule, and it’s another sign of the deep commitment this government has to keeping our country safe,” Prime Minister Theresa May said during a public appearance Wednesday.
The announcement comes as the U.K. and its NATO allies have accused Russia of organizing an attempted assassination using a nerve agent on British soil. The ongoing fallout from that issue has included the expulsion of Russian diplomats from 20 countries.
The issue of funding all of the U.K.’s defense priorities has been underlined since Britain voted to leave the European Union in 2016, which saw the pound’s value drop just as the MoD signed contracts for a series of major modernization programs. At the same time, the speed at which technology is developing means a constant stream of investment is needed to keep up with peer competitors.
Taken together, the reality is that defense is “an expensive thing to deliver if you’re in the premier league,” said Gen. Gordon Messenger, vice chief of the Defence Staff. “And we’re determined to remain in the premier league.”
“I don’t think that we should be too apologetic about the fact this is a tough gig to try and afford, and what we have to do is make sensible decisions within the budgetary envelope that we are afforded by our government,” Messenger added.
Messenger and Stephen Lovegrove, the permanent secretary of the MoD, laid out their views on the defense budget during an exclusive interview with Defense News on March 27 in Washington, D.C.
Fueling fears about affordability, an April 2017 report from a government watchdog warned that the U.K. modernization plan “is at greater risk of becoming unaffordable than at any time since its inception in 2012,” with a potential overrun of £20 billion over the next decade. But Lovegrove downplayed the risk there, noting that the figure assumes an absolute worst-case scenario, including that the pound will remain at extreme lows for the entire 10-year period.
In terms of the pound, Lovegrove said: “Obviously we would hope that it would come back up a bit more because it does represent, if it were to stay at that level forever, a bit more of an affordability challenge.”
But he asserted the next few years will be unaffected either way, thanks to government hedging on the value of the pound ― and while “at the it’s a pressure, [but] who knows what it will be like in three years’ time?”
And Lovegrove seems to have found the silver lining on this particular cloud, noting “a low pound is good for our exporters. We are the second-largest defense-exporting industry in the world. And if other parts of the U.K. defense establishment can benefit from a low pound briefly, then I hope that they will be able to do so.”
Aaron Mehta was deputy editor and senior Pentagon correspondent for Defense News, covering policy, strategy and acquisition at the highest levels of the Defense Department and its international partners.
Andrew Chuter is the United Kingdom correspondent for Defense News.