A potential £36 billion shortfall of spending against funding over the next decade would be impossible in any commercial enterprise but for Britain's Ministry of Defence (MoD) it seems de rigueur. In Parliament's 10th Public Accounts Committee (PAC) 2010-2011 report the Committee's chair person, Margaret Hodge, MP, complains: "It is astonishing that the MoD has hitherto failed to develop a proper, long-term financial strategy linking its funding to its core priorities and providing a clear basis for making cuts. Instead, it has managed to stay in budget each year by making short-term and ad hoc, in-year decisions to cut programmes and defer the acquisition of kit. These have led to inefficiency and even greater costs in the longer term." In the case of the two delayed aircraft carriers such delay has cost over £1 billion.
Mrs Hodge should not have been so entirely astonished as the MoD has been out of financial control for many years, while its logistics record is lamentable. As mentioned on this blog site last April, the Defence Select Committee excoriated the MoD for its "Failures in the administration of service personnel and sensitive equipment." This led the National Audit Office to qualify the department's resource accounts for the third consecutive year.
The MoD's financial debacle could become even more onerous on long-suffering taxpayers. The size of the budget shortfall, admittedly, is highly susceptible to assumptions regarding future spending review settlements but further cuts in funding without cuts in outputs will cause the deficit to rise.
The PAC calls for an immediate change to the situation and welcomes the MoD's appointment of a professionally qualified financial director, the erstwhile absence of which beggars belief in an organization spending over £42 billion a year. But without much help from a cadre of similarly qualified staff he is unlikely to restore sanity to the MoD's finances any time soon. He will also be stymied by a civil service mentality that breeds a culture of timidity. Senior officials, for example, failed to challenge unaffordable decisions about equipment procurement by referring matters to ministers.
Finance is only one lamentable issue with the MoD. The department would also profit from highly experienced logisticians. This would reduce the likelihood of repeating past embarrassments, like the Army's relatively new £1.3 billion BOWMAN project. This tactical communications system which provides integrated, secure radio, intercom and internet services left a black hole of another kind which could even compromise national security, namely the apparent disappearance of £155 million of battlefield radios. "Having an effective audit trail is the only way to ensure that all equipment is accounted for," remarked the defence committee chairman, James Arbuthnot, MP, earlier this year.
It would also be helpful if cabinet politicians took a few lessons in logistics, for when war beckons sound logistics advice will be drowned by jingoistic politics. The war in Afghanistan is a good example. This country not only poses nightmarish logistical problems, it also has an ideal guerrilla warfare terrain favouring the Taleban, whose logistics costs per capita are less than one tenth of the coalition's forces.
Britain is not only bleeding on the human front but is moving closer to financial ruin as the war in Afghanistan reportedly hits $2 billion a week. The war is also of a nature that cannot endear local people to the occupying forces. During World War 1, 10% of all casualties were civilian. In World War 2 that percentage rate soared to 50%. By the time of the Iraq and Afghanistan wars a tragic 90% of all casualties were civilian, reportedly leaving 750,000 women widowed, hardly a strategy designed to win over the hearts and minds of local populations, without which there can be no durable peace in that much vexed land. Rather, it will bequeath a long, festering hatred of the West translated into tragic, violent outbursts on Western soils, the cost of which will not be cheap.