Cuts - Commander Bigglesworth Speaks Out

What a Fokker*

"I am a Harrier pilot and I have flown 140-odd missions in Afghanistan, and I am now potentially facing unemployment. How am I supposed to feel about that, please, sir?"

Well, that's what happens when Prime Ministers allow themselves to be addressed as Dave: any old public servant feels free to challenge their authority in public.

The thing is while we can all understand that Navy pilot's disappointment at losing his plane, those Harriers are half a century old, the money's run out, and difficult decisions simply have to be made.

As we can now see with horrible clarity, Labour left us with a total shambles on the defence front - vast budgetary overstretch, all tough decisions avoided, and multi-billion equipment orders placed almost entirely to buy Scottish and Welsh votes.

And what about those carrier orders? Contracts so loaded against taxpayers that it's now cheaper to carry on rather than cancel. Even though we do not want - and certainly cannot afford - two carriers.

And at long last we have a government with the good sense and guts to can the hopeless and appalling Nimrod programme. We've blogged it many times, including its dubious inception under Defence Secretary Portillo (see this blog).

The question now is how much have we lost? We know that the programme budget has ballooned to £3.5bn - a trebling in the per plane cost from the preposterously low initial budget - but how much of that has been spent? Our guess is all of it. £3.5bn straight down the toilet.

But though BAE has lost Nimrod, it seems to have kept plenty of other MOD work, and its shares barely moved (since the coalition came in they have roughly tracked the FTSE100). So whatever the screams, this has clearly not been a huge shock to industry insiders.

Going forward, the real issue is HTF are we going to get better procurement value? As we've blogged many times, defence procurement has been a huge money inferno ever since the government started buying bows and arrows.

Like Tyler, you may have been watching the BBC repeats of All Our Working Lives, a 1980s documentary about our traditional industries. And the one about the shipbuilding industry recounted exactly how our grotesquely inefficient shipbuilders were feather-bedded by overpriced defence contracts for decades. In the end reality had to intrude and the yards were closed, but not before taxpayers had been milked for billions.

And one other thing.

Tyler is starting to scream at the constant airtime being given to all the various special interest groups who feel they will lose from the cuts. The BBC is presenting it as a national disaster, with two hour specials and free disaster stickers (probably). But where are the winners? Where are the ordinary hardworking taxpayers (OHWTs) who will benefit from a government with the balls to take the action we must have?

Still, last night we were treated to a highly agitated Michael Crick rushing in to tell Paxo about a rumour that the BBC might be forced to pay for all those free pensioner TV licences itself. Which would effectively mean a £550m pa BBC budget cut. The poor chap looked so upset and uncomfortable we wondered if he'd perhaps wet himself. Does he think he'll be Newsnight's cut?

God, let's hope that particular cuts rumour is true.

*Footnote It may be within a life's span, but Biggles reads like another country. His very first 1932 adventure really was called The White Fokker.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: cuts, defence

Shrinking Shears

We thought we'd moved on from these

So let's see if we've got this right.

The defence budget - intitially slated for a 25% cut - is now apparently only going to lose 7-8%.

The schools budget - intitially slated to share in education's 25% cut - is now to be preserved at current spending levels in real terms.

The quango bonfire turned out to be a damp barbecue.

There's £7bn extra cash to fund early years help for poor kids. And in all likelihood further "good news" spending commitments to come out between now and Wednesday.

Plus of course, the huge NHS budget is ringfenced to keep all Labour's planned growth, as is the overseas aid budget.

All told, that's starting to sound like an awful lot of backsliding in the cuts department. Are these cuts actually going to come anywhere near what we need?

Let's remind ourselves of the big picture.

Back in his June Budget, George announced that total public spending (TME) would be brought down from this year's 47.3% of GDP to 39.8% by 2015-16. That's a cut of 7.5 percentage points of GDP, which is massive. It's a substantially bigger reduction than the 4 percentage points Thatcher/Howe achieved in the five years after the early 80's recession. And in fact the only time anything like that has ever been achieved in peacetime was during the Lawson boom in the late 80s - a repeat of which does not look altogether likely over the next 5 years.

But here's the really striking thing, despite the sharp projected fall in spending as a percentage of GDP, George's budget didn't incorporate any actual overall spending cut at all. In fact, total spending in 2015-16 was projected to be 9% higher than this year.

In reality, all George was doing was to hold the growth of spending below the projected growth of GDP. Indeed, Tyler's fag packet says that had he frozen spending, then by 2015-16 projected growth in GDP would have reduced the spending percentage to a mere 36.6% of GDP, rather than the 39.8% he's actually planning.

OK it's true, a freeze in cash spending would almost certainly entail a cut in real spending, given the projected rise in prices. But as Tim Morgan shows in a useful new paper for the Centre for Policy Studies, even taking account of projected inflation, George's overall spending plans (the so-called "spending envelope") will still only deliver a minimal real-terms cut. In fact, Morgan calculates that even after five years of supposedly hard pounding, spending in real terms will still only have retreated back to last year's level:

Let's just pause to reflect on this.

What we're saying is that public spending - even in real inflation-adjusted terms - is not planned to fall by very much at all. In terms of reducing its share of national income, most of the heavy lifting is done by the projected growth in that income. Growth that is put at an average 2.7% pa over the next five years.

Hmmm.

Sound familiar?

It's almost like that Shadow Chancellor who used to go on about sharing the proceeds of growth. The one who kept on about it right up until the moment the economy fell over that cliff.

What we really need to understand is that if we don't get 2.7% pa growth over the next 5 years, things could get rather awkward. Not only would the current plan not deliver anything like the 7.5 percentage point drop in spending's GDP share, the lower growth would itself push spending higher via its effect on welfare payments.

Conclusion?

Despite all the screams and waving of bloody stumps we'll be subjected to this week, these cuts overall are pretty modest (and see this by George Trefgarne). The real trouble is that for transparently obvious political reasons, George and Cam have ringfenced a number of chunky areas like the NHS, thus making the pain in other areas that much greater.

From what we hear, a lot of that pain will now fall on welfare payments. Which is fine, inasmuch as it accounts for more than a quarter of all public spending, it has grown hugely under Labour, and working age benefits have to be cut to incentivise work.

But what worries us is that the detail of these welfare cuts does not seem to have been thought through. As we saw with the Child Benefit announcement, it's one thing to agree a change during a late-night sofa session with Dave and George, but it's quite another to force through implementation when the practical details haven't been sorted. There is a very real risk of backsliding.

Everybody knows cutting is difficult. Everybody knew it was going to be difficult this time.

But given that the overall cuts total is considerably less ambitious than the BBC and the rest of the left would have you believe, let's just hope that George has got some hard detail to announce on Wednesday.

PS The late volte face on defence spending sounds like another worrying example of sofa government. Mr Cam apparently intervened personally to over-rule the Treasury and soften the impending cuts. Not only was Cam nobbled by the Defence Chiefs - who naturally want no defence cuts - but it seems very likely he got a personal ear-bashing from Hillary. No doubt she would have told him that while she herself is a great Anglophile and defender of the Special Relationship, she's surrounded by people who have never forgiven  the War of 1812, and who are sick of propping us up militarily. Unless Cam rescinded part of the cuts, he could kiss goodbye to joint press conferences with St O on the red carpet, plus those shiny new nukes we've ordered. But let's recall that after the US, we are NATO's second highest defence spender (well, OK, Greece is higher, but we hardly want to go there). According to the official NATO stats, we currently spend 2.7% of GDP on defence (2009), double Germany's 1.4%. Even France - La Gloire herself - only spends 2.1%. So WTF? Why should we continue to shoulder a higher burden, when others are allowed to get away with much less? Tyler yields to nobody in his admiration for the dedication and courage of our services, but there's something seriously out of whack here. Over the entire 65 years since WW2, British taxpayers have shouldered a wholly disproportionate burden in defence of the West. As Ted Bromund's very helpful long-term chart shows (see this blog), for most of the post-War period we spent between 5% and 10% on defence - money the Germans, say, were able to invest in wealth producing infrastrucure and capital equipment:

Sofa spending decisions are no substitute for a fundamental reappraisal of why exactly we're doing all this.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: cuts, defence

Because He's A Tory

There are some of us, Mr Chairman, who have always known that Labour MPs are a bunch of unilateralist humbugs

I've seen the Major angry before, but never like this.

"How dare they? How dare they! Those lowlife communist scum... how dare they say the top brass are only complaining about the lack of kit because they're Tories! Where were those yellow-bellied vermin when we were standing up to the Ruskies and the IRA? I'll tell you where - supporting the Queen's enemies! CND, Troops Out... oh yes... while our boys were dying for us, that traitor Foot even worked for the KGB - a known fact. And our current Defence Secretary - that ridiculous little town councillor chappie - started out as a Marxist - A MARXIST! Scum - scum from the sewer."

"Well Major, they were young and foolish, and probably poorly educated... they can't be expected to understand concepts like patriotism and loyalty to Britain. They probably believed communism would help the working man, and the IRA was a force for good. I mean not everyone had the benefit of your upbringing..."

"Upbringing?! I'm beginning to wonder about you, Tyler. You shouldn't need upbringing to understand basic principles like loyalty and duty to Queen and country! If they can't understand that, WTF are they doing sitting in our Parliament ruling over us? Apart from sticking their snivelling little snouts into the swill bucket, that is."

****

As we blogged over the weekend, Labour's record on defence spending is shameful. I feel ashamed that we've sent our troops out to die without proper equipment, and I'm appalled at the way that gutter traders like Brown and Ainsworth dismissed the concerns of our professional soldiers.

Yes, it's true that defence spending has increased in real terms, BUT ONLY WHEN MEASURED AGAINST AVERAGE INFLATION - NOT WHEN MEASURED AGAINST DEFENCE INFLATION, WHICH IS MUCH HIGHER.

Today's outburst by Labour MPs at PMQs turned our stomachs. We know that Labour MPs have never been keen on defence. Over the years very many of them have been unilateralists and fellow travellers. But this is now, and our guys are still dying in Afghanistan because of Labour's failures. It is beyond contempt for their MPs to dismiss the genuine concerns of our generals on the grounds that they're Tories.

PS Defence prices rise faster than general inflation both because the earnings of personnel rise faster, and because the price of defence equipment rises much faster. The best estimate of the overall "relative price effect" is 3% pa - ie defence inflation runs about 3% higher than average inflation (GDP deflator). This figure was estimated by Prof David Kirkpatrick for the Royal United Services Institute (RUSI), based on ONS price indices and various other input. For future reference, here's his summary:

On the basis of this estimate, defence spending under Labour has declined by about 2% pa in real terms - despite the various wars they have engaged in. The ONS do not currently publish their own estimate, but they assure us they are working on it.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: defence

A Man Without Honour

Are the cameras rolling?

Even by his own shameful standards, Brown's performance yesterday at the Chilcot enquiry was a shocker:

“Every request that the military commanders made to us for equipment was answered. No request was ever turned down.

We had a rising defence budget... The spending review of 2004 was welcomed by the chiefs of our defence staff. They were satisfied at the end of the review that they had the resources they needed.”

Unsurprisingly, our retired military leaders beg to differ. Lord Guthrie, ex-chief of the defence staff, says:

“He cannot get away with saying I gave them everything they asked for, that is simply disingenuous... To say the outcome of that process was ‘welcome’ is frankly hyperbole.”

Former head of the Army General Sir Richard Dannatt says:

"It is astonishing and offensive to suggest that if officers had had a choice, they would have chosen the Snatch Land Rover...

Gordon Brown bears responsibility, claiming credit for increasing funding when actually there was a reduction in value."

Ah, responsibility - a concept entirely unknown to the Great Helmsman. From the first moment he became Chancellor we discovered his total inability to take responsibility. Whether it was his destruction of final salary pensions for all but public servants, or his gross mismanagement of the public finances, or his disastrous financial regulatory system, he has never ever accepted that he might have got something wrong. His disasters are always someone else's fault.

And he's turned the abuse of statistics into a high art, painting rosy idealised pictures that have nothing whatsoever to do with the real world. Which is what he did again yesterday.

So let's take a closer look at those defence spending claims.

As usual, this turns out to be incredibly difficult. Under Brown, the government has deployed so many statistical smoke screens, it's very easy to lose track of what's going on. For example, in 2008-09 the official MOD website offers no fewer than three possible figures for defence spending. You can choose between:

• Defence spending "consistent with HM Treasury guidance", which comes in at £38.6bn; or
• Departmental Expenditure Limits (DEL), which comes in at £45.5bn; or
• Net cash requirement, which comes in at £36.4bn

And if you don't like any of those numbers, you can turn to HM Treasury which offers a further range of alternatives. For example, its supposedly definitive Public Expenditure Statistical Analyses 2009 (PESA) says defence spending in 2008-09 was £37.1bn. Well, that's what it says on page 74 anyway. But on page 29, it says it was £44.8bn. That figure purports to be the DEL basis, even though it's different to what MOD quotes for the same thing.

So after a couple of hours scratching your head, all you can really say is that defence spending in 2008-09 was somewhere between £36.4bn and £45.4bn, a 25% margin of obfuscation.

And when it comes to using official government numbers for comparisons over time, well, you can just forget that. The defence spending stats have had even more breaks and definitional changes that this government's notoriously rubbish crime stats.

Not for the first time, we need help from overseas. And fortunately for us, the statisticians at NATO publish data on defence spending across all their members on a broadly consistent basis. And even more fortunately, BOM's old friend Ted Bromund at the US Heritage Foundation has crunched all the numbers and reached some dependable conclusions. And Ted begins by making a crucial point:

"The best way to assess the level of national effort devoted to defense is to measure defense spending as a percentage of GDP. Comparisons of amounts of money over time are rendered meaningless by inflation, especially given that defense costs tend to increase more rapidly than costs in the civilian economy... Measuring defense spending as a percentage of GDP offers a stable and reliable yardstick."

This is a direct echo of the point being made by our defence chiefs today - what matters is not the money we put into defence, but its buying power. Defence costs have always risen more quickly than the general price level, reflecting the increasing sophistication of kit, and the fact that troops pay must be kept at least in line with average earnings, and they generally rise faster than prices. Looking at defence spending as a percentage of GDP is a much more realistic yardstick (albeit still not perfect).

So how has Labour done? Here's Ted's helpful chart (click on image to enlarge):

As we can see, although in strict technical weasel terms Brown is correct in saying that defence spending rose, that is only true when judged against the general price level in the economy - not the actual price of defence purchases. As a percentage of GDP, defence spending has fallen from 2.9% in 1996 to 2.2% in 2008. Ted says:

"What happened after 1997 was extraordinary. From 1999 onward, Britain's armed forces were regularly in action, first in the former Yugoslavia, then in Sierra Leone, then in Afghanistan and Iraq. Yet British defense spending as a share of GDP continued to decline...

The Labour governments have evaded the fundamental dilemma posed by their belief that... savings from increased efficiency were to allow the forces to do more with less. This ignored two factors. First, defense costs, especially for procuring advanced systems, are notoriously prone to rise faster than the rate of inflation. In Britain, one Royal United Services Institute expert estimates that defense costs increase 5-10 percent faster than inflation in the civilian economy. Second, while claiming that efficiency gains will materialize in the future is easy, actually achieving them is difficult, especially in government."

BOM readers will be familiar with Brown's repeated but entirely bogus claims to have saved billions through his so-called "efficiency programmes" - we've laughed hysterically about it many times.

But the difference here is that men have died as a result. Our woefully under-equipped troops have been put in harm's way because a loathsome self-righteous charlatan refused to pay for the kit they needed to do the job.

And today, this appalling man has gone to Afghanistan on a grandstanding photo op - a cynical ploy to counter the condemnation he's getting from our professional soldiers.

It makes you want to throw up.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: defence, Gordo

The Real Lessons Of Nimrod

More victims of government failure

"We are working hard to ensure we capture lessons from incidents and inquiries to improve our safety. As an organisation the MOD is changing its culture and approach to put safety first."

So says the lamentable Bob Ainsworth.

How many times have we heard that? How many times have we heard some government minister telling us that lessons have been learned and changes made? And how many times have we been let down?

And before we go any further, just take a moment to imagine it was your partner, your son, your brother, or your father who went down with the plane.

I haven't read the whole of the 587 page Haddon-Cave Review of the 2006 Nimrod crash, but what I have read tells a familiar story of bungling, complacency, and denial:

"If the Nimrod Safety Case had been drawn up with proper skill, care and attention, the catastrophic fire risks to the Nimrod fleet... would have been identified and dealt with, and the loss of XV230 in September 2006 would have been avoided...

Unfortunately, the Nimrod Safety Case was a lamentable job from start to finish. It was riddled with errors. It missed the key dangers. Its production is a story of incompetence, complacency, and cynicism."

It is a shameful tale, and nobody emerges with credit. Unusually for such an enquiry, the Review names names, in the MOD, the RAF, and the private contractors involved - BAE and Qinetiq. They should all hang their heads - as well as getting sacked.

But the real lessons go much deeper. The real lessons relate to those fundamental flaws in government we blog so often.

To start with, the only reason fourteen of our servicemen were flying in that ancient clapped out plane at all, was because our politicians decided to overrule the advice of their frontline professionals.

As BOM readers will recall, back in 1996 the RAF and MOD procurement team wanted to replace the ancient Nimrod MR2 fleet with the Lockheed Orion, the world's most successful maritime reconnaisance aircraft. But the politicians effectively overruled them, opting instead for an updated version of the Nimrod.

Why? Well, we'll never know exactly, but we may presume it was to shore up BAE which depends critically on MOD orders. In other words, it was a decision made on industrial policy grounds rather than military needs (the Defence Secretary at the time was BBC TV pundit Michael Portillo, who subsequently became - yes, you guessed it - a non-executive director of BAE).

Second, the reason the Nimrod MR2 is still flying, rather than its replacement MR4, is that BAE has still not finished the new version. The MR4 was originally supposed to go into service in 2003, but the latest official estimate is 2011 - eight years late. Eight years in which our servicemen have been expected to go on flying in dangerous planes that are older than they are themselves (indeed, when you consider the Nimrod is basically a converted Comet airliner, these planes are actually even older than Tyler).

And of course, the delay is on top of a truly wild cost escalation. The project was originally supposed to cost £2bn for 21 planes- £95m each. But we're now paying £3.6bn for 12 aircraft- £300m each. That's a price increase of 216%.

Should we blame BAE for the overruns? Well, yes, of course. But it fits into a much broader pattern of government being incapable of managing its contractors effectively. We've blogged this issue many times, and it includes the inability to spec the job properly, the inability to draw up workable contracts, the inability to price jobs realistically, and a chronic inability to stick to the original spec. The all too predicatable result is delay and cost overruns, just as we see with Nimrod.

Third, the reason the MR2's known safety issues were not tackled - or better still, the plane grounded - was that the 2001-2005 safety review (the "Safety Case") was little more than a gigantic box-ticking exercise. Haddon-Cave says:

"... the task of drawing up the Safety Case became essentially a paperwork and ‘tickbox’ exercise...

... The Nimrod IPT [the MOD's own project team] inappropriately delegated project management... to a relatively junior person without adequate oversight or supervision; failed to ensure adequate operator involvement in BAE's work; failed to project manage properly, or to act as an ‘intelligent customer’ at any stage; failed to read the BAE System Reports carefully or otherwise check BAE Systems’ work; failed to follow its own Safety Management Plan; failed properly to appoint an Independent Safety Advisor to audit the Nimrod Safety Case; and signed-off BAE Systems’ work in circumstances where it was manifestly inappropriate to do so. Subsequently, the Nimrod IPT sentenced the outstanding risks on a manifestly inadequate, flawed and unrealistic basis, and in doing so mis-categorised the catastrophic fire risk... as ‘Tolerable’ when it plainly was not. The Nimrod IPT was sloppy and complacent and outsourced its thinking."

We encounter this kind of sloppiness in government all the time. Senior managers who delegate critical functions to juniors without proper supervision. Non-existent project management. Failure to act as "an intelligent customer". Failure to check contractors' work. Failure to follow their own procedures. Failure to audit results.

Government is very good at compiling massive codes of practice and rules both for itself and other people. But when it comes to practical execution in the real world, it is terminally hopeless. It simply isn't up to the job.

Fourth, the Nimrod disaster reflects the unintended consequences of this government's much-hyped "efficiency" programmes. Haddon-Cave describes how the cuts demanded by the 1998 Defence Review sent the MOD into "organisational trauma":

"Financial pressures and cuts drove a cascade of multifarious organisational changes, which led to a dilution of the airworthiness regime and culture within the MOD, and distraction from safety and airworthiness issues as the top priority. There was a shift in culture and priorities in the MOD towards ‘business’ and financial targets, at the expense of functional values such as safety and airworthiness."

As we've blogged many times, these so-called efficiency programmes may sound good on paper, but they almost always degenerate into farce (Gershon) or tragedy, as here. Government just doesn't do efficiency. To get better value we have to dismantle it.

But defence is a rather special case. Government has to do defence. And that being so, our first and overriding priority must be to support our servicemen and women, especially in the line of fire. It is completely unacceptable to put their lives at risk in an attempt to shave 20% off the logistics budget, as apparently happened here.

Yes, we should switch to buying off-the-shelf kit (like the Orion). But beyond that we should recognise that we will always end up paying over the odds - that's just the way government is (eg see this blog).

So to summarise, the real lessons of the Nimrod killings are:

1. Politicians should not override the operational judgements of frontline staff
2. Government is hopeless at managing outside suppliers - and the end-customers become the victims
3. Government is hopeless at project management - and indeed, at management more generally
4. Government is hopeless at efficiency programmes - cuts are never the same as efficiency savings

But of course, we knew all that long ago. It really should not have taken 14 more service deaths to remind us.

PS BAE comes out of this even worse than the MOD. The Review says: "BAE Systems bears substantial responsibility for the failure of the Nimrod Safety Case. Phases 1and 2 were poorly planned, poorly managed and poorly executed, work was rushed and corners were cut. The end product was seriously defective... The work was riddled with errors of fact, analysis and risk categorisation... These matters raised question marks about the prevailing ethical culture at BAE Systems." BAE may claim that the cause of the crash “will never finally be determined”, but if I were a relative I'd be suing.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: defence, mod, simple shopper

Tough On Big Ticket Items. Not.

Since Mad King Gordo reeled off his latest shopping list of new public spending commitments, we've been treated to a succession of Labour politicos thrashing around trying to explain how it will all be paid for.

The much-hyped Millipede (Ed) was particularly ludicrous on Newsnight, coming across as an earnest 16 year old Young Socialist who doesn't have the faintest idea how the real world works. Most ludicrously of all, he's the one in charge of Labour's election manifesto.

All we've been given is the tedious mantra that Labour will not shy away from "tough decisions".

But what decisions?

The only specific we got yesterday was that ID cards will not be compulsory. But we already knew that, and anyway it will save virtually nothing (we estimated £55m in 2010-11 - see this blog).

Tinkering around with ID cards and the like simply won't do it. If you're going to make real tough decisions, they have to involve Big Ticket Items.

And as it happens, we've recently had useful reports on three of the very items we have in mind - public sector pensions, the Trident replacement, and our planned new aircraft carriers.

On public sector pensions, Corin Taylor of the Institute of Directors has written a note (see here) responding to the TUC's entirely spurious claim that the pensions ticket isn't really all that big at all. And while the TUC claims they only cost taxpayers £4bn pa, in reality:

"... the cost of public sector pensions to taxpayers in 2009-10 is the sum of the employer contributions to the unfunded schemes (£12.961 billion), the Treasury top-up to the unfunded schemes (£4.118 billion), and the employer contributions to the funded Local Government Pension Scheme (£4.506 billion), which gives a total of £21.585 billion."

Now, £22bn pa is big ticket by any standard - getting on for £1000 pa for every single household. And it is an obvious area for tough decisions because, as we've blogged many times, the final salary pensions provided in the public sector are now way more generous than those available to the bulk of private sector employees.

True, we couldn't save the whole £22bn pa anytime soon, because most of it is going to pay pensions accrued long ago. But there's nothing to stop a tough decision-maker cutting the employers' contributions by several bill and increasing the employees' contributions by the same amount right away.

Except that's a tough decision we know Labour will never take: their reliance on public sector union funding rules it out entirely.

Turning to Trident, we've been reading the paper published earlier this month by Greenpeace. Yes, we know - Greenpeace. But setting aside the propaganda, the paper is actually a rather good overview of just how big Trident's ticket is likely to be:

"The government gives two figures for replacing Trident. The first is the cost of designing and building new submarines, warheads and ‘infrastructure’. This was said in 2006 to be £15–20bn and to take up 3% of the defence budget every year between 2012–27.

On top of that are the running costs, which will take up around 5–6% of the defence budget (approximately £1.9–2.3bn) every year.

This gives a total of £72.9–89.5bn for building and operating a replacement for Trident."

So that's a range up to £90bn. But we all know about MOD budgets, so that will certainly be an underestimate.

Greenpeace reckons the true costs are closer to £100bn, once you take account of hidden items like the cost of upgrading the Atomic Weapons Establishment, and securing the nukes from terrorists and other wellwishers. And the MOD's dire record on cost overruns might suggest an even higher figure.

And then there are the carriers:

"The lifetime costs of the two supercarriers and their aircraft were estimated by government in 2005 to be £31bn, broken down as a £12bn procurement cost and £19bn running costs. Separate estimates of £10bn and £18bn have been given for buying and running the F35 planes."

So as per, confusion over what's actually included in the £31bn. But in any event, Greenpeace says the official numbers are serious underestimates, given that the cost of both ships and planes are known have spiralled since these numbers were published earlier in the decade.

So two more Very Big Ticket Items here.

And these at least are items you'd think Labour might be much happier to cut.

Except of course, these big naval construction jobs pay the wages for thousands of Labour voters up north.

In truth, Labour is pretty certain to announce defence cuts. But they won't be anything like the kind of clean cuts suggested by the term "tough decisions".

Instead, they will be a grubby compromise that keeps the maximum number of constituency jobs, but only at the cost of downsizing and despeccing both Trident and the carriers to the point of uselessness and probable danger (see comments here for the way that the new Type-45 destroyers are being fitted with decades old salvaged kit to save cash). Which will be the worst of both worlds.

So there we have it - three major spending areas where "tough decisions" won't even get a look in.

Hopeless and helpless.

Surely, Mr Cam must do better than that.



PS If you haven't read today's Sun editorial explaining why they've dumped Labour, you should. It's an excellent pocket catalogue of Labour failure: failed on law and order, failed on schools, failed on health, failed on immigration, failed our children, and failed our troops. No wonder poor Lord Kinnockio got so emotional on the wireless this morning.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: defence, mod, pensions

350 Years Of Defence Waste

HMS Royal James* - serious cost issues

Dateline Woolwich Dockyard - 21 July 1662 -

"While the Royal James was bringing towards the dock, we went out and saw the manner and trouble of docking such a ship, which yet they could not do, but only brought her head into the Dock, and so shored her up till next tide.

But, good God! what a deal of company was there from both yards to help to do it, when half the company would have done it as well.

I see it is impossible for the King to have things done as cheap as other men." (Samuel Pepys - Clerk of the Acts to the Navy Board)

When it comes to defence spending, nothing changes. What Pepys witnessed at Woolwich 350 years ago - overmanning, incompetence, delay - applies equally well today. And last week's leak of a secret MoD report on defence procurement once again puts the problem up in lights.

The report apparently says that MoD wastes up to £2.5bn pa because of shockingly bad procurement practices, including (see leaked presentation slides here):

• MoD "does not really know the price of any kit"


• "Project management does not really exist in the Department"


• "New requirements set by MoD during the procurement process are not unusual and cause delay, cost and time overruns"


• Over-optimism in commissioning projects is endemic


• MoD is "in denial" and "always late in admitting there's a problem"


• The overrun on major projects averages 40% in terms of cost and 80% in terms of time


• The so-called "Smart Acquisition" programme introduced in 1999 has flopped - if anything the delays are worse


• Current procurement programme far exceeds the funding available - even if nothing further is ordered, the accounts will not balance until 2028


• This chronic funding imbalance necessitates constant "reprofiling" of projects and further delay, all of which costs money (delaying the Navy's new aircraft carriers cost us between £500m and £1bn)


• There are far too many bureaucrats involved in the process, and they are generally of low quality
  

Of course, none of this will come as a shock to BOM readers. Neither will the fact that Brown tried to suppress the report.

But it does underline just how expensive MoD failure is.

Let's remind ourselves how much of our cash MoD spends. This year it will be £48bn - about 13 pence on the standard rate of income tax - of which £9bn will be spent on capital procurement.

And let's also remind ourself of how they spend that money. In particular, let's recall how few actual fighting men they employ.

According to the latest official stats, total MoD employment is 283,000 (Sept 2008, full-time equivalents). But of that total, the number of people available to fight our wars - the real ones we actually face, like Afghanistan - is no more than about 30,000 (see this blog). Which leaves about 250,000 people who are doing something else. Like running the dysfunctional procurement system.

But can anything be done?

Because whereas we can see how to make education, health, law and order, and various other public services work better - by removing central government right away from the action - with defence it's difficult to see what we can do. We can't privatise it, and while the idea of directly elected generals has some appeal, we're not entirely convinced.

Government has to run defence, and somehow we have to find some way of making them do it more efficiently.

Yes, we should slash the number of desk jocks, and yes, we should insist they buy more off-the-shelf kit from the yanks, and yes, we should scrap all the Cold War kit we're still buying (including the full Trident replacement). But beyond that, it's tricky. Very tricky.

The simple fact is, the King really can't get things done as cheap as other men.

Which is precisely why the King should not be involved in anything beyond law and war.

PS A few weeks ago we blogged an interesting paper by Ted Bromund of the US Heritage Foundation on MoD's misuse of PFI. Ted subsequently sent another useful defence paper which we are going to blog in due course. He also sent some long-term defence spending charts which he has painstakingly assembled. Just for the record, here they are (click on them to enlarge):

A couple of points jump out that we've blogged before. First, how extraordinarily low spending was during the nineteenth century, even though Britain was ruling half the globe (I've recently heard it said that's because we made extensive use of Empire troops who were very cheap - in every sense). And second, how Labour have gone on cutting spending despite all the various wars they've taken us into.

*Footnote HMS Royal James was launched in 1658 as the Richard - named after Richard Cromwell in honour of his appointment as Lord Protector in North Korean-style succession to his dad. After the Restoration in 1660 the ship was renamed, and expensively respecced. It had just three encounters with the Dutch, before being sunk and burned. Contemporary taxpayers cannot have been best pleased.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: defence

An Expensive Shot In The Foot

"I am pleased the Court has recognized the work of the Commission" - John Wadham, Group Legal Director at the Equality and Human Rights Commission

In case you missed it, a tax-funded quango has just succeeded in further undermining the fighting capacity of our armed forces.

The Equality and Human Rights Commission has spent an undisclosed, but doubtless considerable, sum of our money pursuing the sad case of Pte Jason Smith, who died of heatstroke while serving with the Territorial Army in Iraq in 2003. Largely as a result of the Commission's efforts, the Court of Appeal has ruled that the Human Rights Act, and in particular, the "right to life", applies to British soldiers on active service.

So how's that going to work exactly? How are our army commanders going to discharge that obligation while still beating our enemies?

As we've blogged many times, it is absolutely right that our frontline troops should have the very best kit and support we can buy for them. And it is disgraceful that they are still forced to cope with death-trap kit like the so-called snatch Land Rovers* and those decrepit Nimrods.

But that is a political issue - we should make our politicos do much better than they have over the last decade.

It is not a matter for the crackpot Human Rights Law: the very last thing we want is to place yet another burden on our frontline commanders.

We blogged the superquango Equality and Human Rights Commission several times while it was being set up in 2007 (eg here and here). It costs us £70m pa, and it's headed by long-time Labour insider Trevor Phillips (on £110 grand pa). And its finances are so questionable the National Audit Office has reportedly refused to sign off its first annual accounts.

Another £70m contribution to George's spending cuts?

You bet.


Meanwhile... mid-life Mr Phillips himself is mainly focused on his new life with his new partner:

*Footnote - Tyler recently dined with another patriotic Major of his acquaintance. This one is very familiar with Land Rovers, having used them both on operations (if I told you I'd have to kill you), and to scout his considerable acreage in East Anglia. But he recently drove a Toyota Land Cruiser, and was absolutely amazed at how much better it is. Now he's switched, and even though he knows his military-family-back-to-Waterloo father will be spinning in his grave, he will never go back. Another fine old British tradition bites the dust... until, that is, you remember that the original Land Rover was actually no more than a Jeep rip-off.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: defence, humbugs, quangos