JCNSS INQUIRY – NATIONAL SECURITY CAPABILITY REVIEW  [EXTRACTS] – 18 December 2017

Q10 Dr Julian Lewis MP: If the threats are intensifying, as [former Defence Secretary, Sir] Michael Fallon stated and as you have just been outlining, why are cuts in Defence capability being so widely anticipated as a consequence of this Review?

Mr Mark Sedwill (National Security Adviser): You will be aware that there has been a great deal of public speculation about that, but the former Defence Secretary and now the new Defence Secretary have both been clear about the [2 per cent of GDP] floor, as Mr Tugendhat puts it, and the growth in the Defence budget. Very careful consideration is being given to the capabilities that can be developed. I have not had a chance to look at all the detail of the Report that you have just issued about the efficiency programme and so on, but I have seen the summary. The programme is designed to deliver Joint Force 2025, which is a very impressive set of military capabilities that will be available to this country in the mid-2020s, and that remains our target capability baseline.

Dr Lewis: Are you saying that there is no chance of significant cuts in existing Defence capabilities resulting from this Review?

Mr Sedwill: It is not for me to pre-empt decisions that Ministers will take —

Dr Lewis: I am not asking you to be specific; I am asking you to be general. Are you telling us that as a result of this Review we need not be concerned that there will be cuts in existing capabilities, given that the Review is supposed to be being held because the threats are getting worse?

Mr Sedwill: Ministers need to have options about making adjustments to capabilities and to the programme, and that may mean reducing some and increasing others. That is for Ministers to decide, and while this Review is in flight I probably cannot say much more than that.

Dr Lewis: Did not James Gray get to the heart of it when he asked you a question about this trade-off between an increasing threat on the one hand, leading to a cut in the capability to meet another threat on the other, unless you increase the overall Defence budget? Was not the game given away by your answer when you said that this is meant to be a fiscally neutral exercise? The threats that led to the capabilities being drawn up in 2015 may not have changed, but other threats may have got a lot worse and because you are not willing to recommend an increase in the Defence budget – indeed, you seem to be rather complacent about its size, from what you have just been saying – this means we have to make cuts in capabilities that we really need in order to meet other threats that have got worse. Is that not the logical consequence of everything you have been telling us?

Mr Sedwill: I do not agree. When I said that the 2015 Review was fiscally neutral, it was fiscally neutral within a growing envelope. The 2015 Review already has significant increases coming into a range of budgets. The Defence budget, as you know better than I do, has a fixed floor of 2% of national income and will grow by 0.5% per year in real terms, and there are other commitments within that. So the Defence budget is increasing. The budgets available to the Security and Intelligence Agencies are increasing. So even if you take just the hard-power end of this, we actually have an increasing envelope. In answer to the question from Mr Gray that I was trying to respond to, it is about how we balance off the decisions within that increasing envelope. Of course, there is a question about whether, overall, that is sufficient. But this exercise is looking at how we can make best use of the resources available to us now, against the threat picture, and we will reach the conclusions at the end of that exercise.

Dr Lewis: But do you or do you not have the ability to make a recommendation, if you believe that you cannot meet the new and intensified threats without making cuts in capabilities that we decided only two years ago were necessary and important? Do you have the ability to say to the Government, “We need to enlarge the financial envelope”, to use the jargon?

Mr Sedwill: If we concluded that the total set of capabilities, optimised across that £56 billion, was insufficient to meet the threats, of course we would say that to Ministers. That is not a conclusion I expect to reach, but of course I always have the freedom to give Ministers candid advice. As I have already said, the Government have just announced, even in the short term, a significant increase in funding for policing because of the intensification of that threat. So there are areas in which this is being considered.

Dr Lewis: With respect, you keep lumping together – I know that is your job, because you are the National Security Adviser and not the Defence Secretary – the budgets for all these things. There is no doubt that because of terrorist threats in particular there have been very substantial increases in budgets for the Intelligence Services, for example. But the budget for Defence is £36 billion and that is the budget that gives us our NATO comparator of 2% as a minimum. You say that one of the main reasons why the threat has intensified has been a newly assertive Russia. The last time we had an assertive Russia was in the 1980s, and we were spending not 2% on the Defence budget then but between 4.6% and 5.1%.

Tom Tugendhat (Foreign Affairs Committee chairman): Our allies were spending comparatively more as well.

Dr Lewis: Thank you, Tom. Even after the Cold War came to an end, between 1989 and 1991, and even after we took the peace dividend cuts, as late as the financial year 1995-96 we were not spending a bare 2% of GDP on Defence, but 3%. Given that we used to spend a much greater percentage of GDP on Defence and have Defence much higher on our scale of national priorities than we do now, in comparison with other high-spending departments, are you still saying to me that we should not be concerned that we are talking about deleting entire capabilities such as the Royal Marines’ amphibious capability, when in only January of this year I was being assured that HMS Albion and HMS Bulwark were due to leave service in 2033 and 2034? How can you tell me that we do not need an enlarged Defence budget if we cannot deal with intensifying threats without cutting other capabilities that, only two years ago, we decided we needed?

Mr Sedwill: With respect, the direct example you gave is of course speculative; no decisions of that kind have been taken. There is a lot of speculation in the press, some of it very well sourced, but no decisions have been taken. On your general point, the historical comparison is of course correct in the sense of our own expenditure, but let us not forget the nature of the threat we faced in the 1980s. I do not think that the way to measure this is just through budgets, because it is actually about the effect that you are seeking to achieve. But taking that as a proxy, as I mentioned if you put together the British, French and German Defence budgets, even now – even before Germany and France hit the 2% – it is about twice the Russian Defence budget. What they get for that and the way they deploy themselves are clearly different, and you will be the first to tell me that that is no direct comparison, but that is my point about budgets: we cannot just compare to our own historical experience. Areas in which we may decide to deal with the Russian threat because of the diversifying nature of that threat exist outside the Defence budget. I do not dispute the basic analysis that you are setting out, but it is right in my job to think about the whole set of capabilities, not just the biggest one.

Dr Lewis: I have to stop now, but may I just say that anyone who underestimates Russia’s military potential and the size of its GDP does so at their peril? I have many more questions that I would like to put, but I fear that they will have to wait for a different forum from this one.

Lord King of Bridgwater (former Defence Secretary): Are you the right person to whom Dr Lewis should be directing these questions? Quite simply, do you feel that it is in a sense your responsibility to work within the terms of reference that may have been implied to you? Perhaps you feel that you are not in a position to challenge the Treasury head on. Is that right or wrong?

Mark Sedwill: Perhaps there are two parts to the question and two parts to the answer. Dr Lewis and I have exchanged some correspondence, as has the Prime Minister. I genuinely think, and it is the government position, that questions of this detail should be addressed to the Defence Secretary and the Permanent Secretary at Defence, because they are responsible for this area of work. On the broader question of whether I can have frank conversations with the Prime Minister, the Chancellor and the Treasury about the overall allocation of resources, absolutely, and I would expect to do so, but, as always, in private.