Weekly Defence Insights by Ollie Welch | EEF

Weekly Defence Insights by Ollie Welch

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Westminster News:


Election watch…


Ahead of the publication of manifestos, debate around defence this week remained focused on Labour’s position regarding the renewal of the nuclear deterrent. Asked on Sunday if Labour would commit to Trident replacement, Jeremy Corbyn seemingly reopened the possibility of his party backing unilateral disarmament, stating in answer to a direct question that ‘work on the manifesto was not yet complete’. He also refused to be drawn on whether there were any circumstances in which he would, as Prime Minister, authorise the use of nuclear weapons. The following day, and in response to Mr Corbyn’s interview, Andrew Gwynne (Labour’s campaign coordinator) stated that renewing Trident would ‘absolutely be in the manifesto’ and the party was committed to a credible nuclear deterrent. Labour was accused of being in ‘chaos on defence policy’ by Defence Secretary, Sir Michael Fallon, though his comments that the Prime minister would, if necessary, authorise the use of nuclear weapons as a first strike in the most extreme circumstances, even if the UK was not itself under nuclear attack, drew its own criticism.


Public Accounts Committee reports on MOD’s equipment plan


On 24 April the Public Accounts Committee (PAC) released its annual report on the MOD’s £178 billion Equipment Plan. The report, which corroborates the National Audit Office’s own critical scrutiny of the defence procurement programme published in January, warns that the Equipment Plan is at greater risk of becoming unaffordable than at any time since its inception in 2012. Maintaining affordability is ‘heavily reliant on a highly ambitious, but still under-developed, program of efficiency savings from within the plan and the wider defence budget’  siting the significant fall in the value of the pound against the dollar, ongoing uncertainties surrounding the cost of new projects and continued cost control problems on some long-standing projects. 


Although the report welcomes the transformation in MOD’s financial management of large projects over the last five years, an increase in commitments of over £24 billion generated by the 2015 Strategic Defence and Security Review had not been matched by an increase in funding. Thus the £10.7 billion set aside to provide headroom to meet emerging threats over the next 10 years has already been swallowed up to meet these new requirements. 


SIPRI reports on trends in world military expenditure 2016


On 24 April the Stockholm International Peace Research Institute (SIPRI) published its annual report on international military expenditure, reporting global spending of $1686 billion in 2016, a 0.4% increase on the year previous. Spending in North America saw its first annual increase since 2010, while spending in Western Europe grew for the second consecutive year, attributed to increased threat perception. By contrast, spending notably fell in the Middle East where the fall in global oil prices impacted on budgets. 


SIPRI is a globally influential think-tank dedicated to research into conflict, armaments, arms control and disarmament. It’s annual reports on global defence expenditure are seen as some of the most credible, comprehensive and reliable statistics available on this topic and are frequently cited by governments, international organisations, media and other bodies.


Parliamentary Questions of interest:


With the prorogation of Parliament on 27 April ahead of the general election, this week saw the last opportunity for parliamentarians to have their questions answered by ministers until the new Government is formed. Outstanding questions of departments will not be answered. The final batch of answers included:


  • Asked about the value of forward purchase contracts with the Bank of England out to 2018, and what proportion of expenditure this represents, MOD referred to its 2015-16 Annual Report and Accounts, which state that forward contracts are placed to cover a proportion of forecast expenditure in US Dollars and Euros though details cannot be released as disclosure would prejudice commercial interests. 


  • Asked a number of questions requesting details of each Royal Navy ship and submarine planned or on order, the contracts in place to manage these, and the anticipated outturn costs, MOD provided a lengthy answer:


  • HMS Queen Elizabeth was floated out of dry dock in July 2014, is expected to start sea trials this summer and will be accepted into the Royal Navy later in the year. HMS Prince of Wales is expected to be floated out in 2017 and commence sea trials in 2019. The final cost of both Queen Elizabeth Class aircraft carriers will be subject to commercial negotiations with the Aircraft Carrier Alliance towards the end of the contract in 2019. An outturn cost estimate was withheld as release would prejudice the commercial interests of the Department.


  • MOD has ordered five Offshore Patrol Vessels. The first ship, HMS Forth, was floated out in August 2016 and is currently completing final preparations for Contractor Sea Trials (CSTs). The second ship, HMS Medway will be floated out this summer. Construction of the remaining three ships is underway. All five ships will enter service by 2021 at a total cost of £635 million which includes the cost of support.


  • The first of the four Military Afloat Reach and Sustainability (MARS) Tankers, RFA Tidespring, launched in April 2015 and is currently undertaking UK customisation work ahead of Capability Assessment trials later this year. On current plans, RFA Tidespring will enter service with the Royal Fleet Auxiliary by the end of 2017. The remaining ships have all been launched. RFA Tiderace will complete CSTs by mid-2017. The remaining two ships are expected to undertake their CSTs later this year. The MOD’s current planning assumption is that all four tankers will enter service by the end of 2018. The programme is correctly forecast to deliver approximately £45 million under the approved budget of £595 million.


  • Four Astute class and the first Dreadnought class submarines are currently in production. However, information on their respective planned launch dates, details of sea trials and commissioning activity as disclosure would, or would be likely to prejudice the capability, effectiveness or security of the Armed Forces.


  • In December 2016 the Ministry of Defence ordered the two additional Offshore Patrol Vessels announced in the 2015 Strategic Defence and Security Review. 


  • The contract for the first batch of the eight planned Type 26 Global Combat Ships is expected to be agreed by mid-2017 and for manufacture to start this summer. The dates of future orders have yet to be agreed.


  • The programme to deliver the Fleet Solid Support ships entered the Assessment Phase in April 2016. Current activity is focused on developing the technical specification for the ships and confirmation of the vessels' capability requirements. A Ministry of Defence Project Team industry day was held in July 2016 to advertise the requirement and engage potential suppliers. It is intended to continue to engage with industry as the programme progresses.

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