Merlin Weekly Macro: Starmer’s defence plan falls apart

“Events, dear boy, events”. Prime Minister Harold MacMillian’s famous alleged reply to a journalist asking what was most likely to blow a government off course.

The current edition of our weekly column has been overtaken by exactly that. It was originally going to debunk the accusation that the Bank of England handed a “£36 billion bill to the Treasury” as the cost of unwinding its bond purchasing programme. It is an important subject but it will keep for another day, not least because it is also related to what we’re about to discuss below.

A DIP derailed

Today was supposed to be Sir Keir Starmer’s great unveiling of the long-awaited and months overdue Defence Investment Plan (DIP). Instead, our hapless and hopeless Prime Minister finds himself taking heavy incoming flak having suffered the resignations of both John Healey, his Secretary of State for Defence, and Al Carnes, the Armed Forces Minister, on the very eve of his “Ta-da!” moment. In the face of the ephemeral leadership-challenge-that-will-not-speak-its-name (in which both Healey and Carnes have been touted as potential compromise candidates with long odds), it is another nail lined up to be hammered into the coffin of Starmer’s moribund premiership.

The DIP was supposed to be the flesh on the bones of last year’s also much-delayed Strategic Defence Review. The SDR authors prescribed a transformational rearmament programme to deliver a “ten-fold increase in lethality”. For the Army, 40% of the prospective kit purchases should be on “expendables” (i.e. ammunition, shells, kamikaze drones etc), 40% on “reusable weaponry” (guns, missile launchers, signalling equipment etc) and 20% on “crewed platforms” (tanks, vehicles etc). For the Royal Navy, the emphasis was on completing the existing modest and very delayed (there’s a theme here) frigate and destroyer replacement programmes, a big investment in unmanned craft and the upgrading of the nuclear strategic deterrent. In the air, the RAF would continue to see a numerical shrinkage in available fixed-wing airframes, especially combat jets, but the already pared-back airborne early warning programme would be completed and, unexpected but welcome, it was proposed to restore tactical nuclear capability to the RAF delivered by a handful of new F-35s.

Everything was predicated on Starmer’s reluctant but explicit commitment to NATO at the June summit in the Hague last year that the UK would match Trump’s demand that every member must spend 3.5% of GDP on “core defence” (essentially making things go bang while stopping the enemy’s ability to lob things at you which also go bang) plus 1.5% on supporting national security infrastructure (allegedly interpreted in Whitehall as money available to fill pot-holes and improve rural broadband). The 3.5+1.5=5.0 formula had a hard target date for full compliance by 2035. And from the moment Starmer made that commitment, he and his ministers have retreated behind a smokescreen of obfuscatory language, shifting timeframes and very imprecise and elastic numbers.

The Strategic Defence Review laid out the framework for reforming defence procurement. It was aimed at both speeding up delivery times and improving efficiency. Through the creation of a new Defence Growth Board co-chaired by the SoS for Defence and the Chancellor, it was designed to promote British defence contractors and light a fire under the sector as one of the principal engines of economic growth. In our critique of the SDR last year we pointed out the fundamental flaws in this structure. First, co-chairs are a bad idea: instead of doubling leadership capacity and resolve, more often it halves leadership efficiency and effectiveness; second, and much more importantly, as has proven to be the case, it creates a potentially destructive tension within the DGB between one co-chair who desperately needs much more money for his Defence department and the other whose job it is to allocate financial resources among a plethora of other competing spending departments and which may include constraining defence spending. That destructive potential has crystallised and detonated.

That the DIP is 8 months late has been partly a function of the MoD being at sixes and sevens about precisely what kit to prioritise in a warfare environment that is changing at lightning speed in Ukraine; technological advances are measured in weeks, not months or years. But much the predominant factor has been Rachel Reeves, who cares little for defence and understands even less, digging in resolutely against Healey to limit the scope of the defence budget while being unable to constrain burgeoning and ballooning welfare and health spending.

Reeves is under immense pressure from increasingly militant and myopic left-wing MPs, who are now in the majority in the Parliamentary Labour Party, to increase social spending. She has a juggling act to perform, as every Chancellor does, trying not to drop balls between tax revenues and departmental spending, while simultaneously performing the dance of the seven veils with the bond markets when the sums fail to add up. However, make no mistake, what we have witnessed this week is the financial consequence of political choices compounded by weak leadership.

A study in dysfunction and disintermediation

Healey’s resignation letter addressed to Starmer was blunt and excoriating. As a potential compromise candidate to succeed Starmer, there is also the inevitable self-justification and self-exculpation.

But one sentence sheds a glaring spotlight on the political process, on his personal standing as a minister and more importantly the complete disintermediation of his office of state: “Your Defence Investment Plan financial settlement—which I was first given in full on Monday afternoon this week (editor’s italics)—falls well short of what is required for defence and the country at this dangerous time”.

To be clear: ahead of planned publication of this foundational plan for his department and his budget, the Secretary of State for Defence had a mere four day sight of a seminal document from whose preparation he seems to have been excluded and yet for which he shares responsibility for its execution with the same co-chair who has knowingly and willingly undermined its funding. That tells you everything you need to know about the political dysfunction in Number 10 and how it manages its business.

Warning! Blind Summit Ahead!

NATO’s government leaders, defence ministers and military chiefs convene in Ankara in three weeks’ time for their annual summit. It is one of the most important conventions in the history of the Alliance. The backdrop is as daunting as the circumstances are inauspicious.

War rages in eastern Europe: after four years there is still no end in sight and it has been reduced to a virtually static slugging match.

For all its putative power, President Trump has exposed US military might as one-dimensional especially when the Commander-in-Chief thinks crash-bang-wallop and rambling soundbites are an adequate substitute for a strategic plan in his military “diversion” with Iran (as we go to press, yet another potential cease-fire deal is on the cards and at $86 the price of Brent crude has fallen to its lowest since early March—how many times have we written that about a solution? Maybe this one is the real thing).

Trump has expended much ordnance in the Gulf to little practical effect in bringing Tehran to heel. However, the blue-on-blue political broadside he cheerfully landed on his NATO allies at Davos in January has exploded with potentially devastating consequences. Europe and Canada, reduced in stature to “Middle Powers”, are struggling to cope with the fallout from Trump’s National Security Strategy of the United States of America and are not entirely sure any longer who the real enemy is.

Into the melting pot goes the UK’s defence dithering, dissembling and dysfunction. Our NATO allies despair of us. Our adversaries are quietly laughing: they have a pretty good idea that, come their assault against the West, in whatever form it takes, one country they don’t need to worry about too much is the UK: it’s doing a pretty good job defeating itself.

For the military establishment, Russia is the immediate physical threat. The intelligence services rate China as the greater but more insidious risk. Both are correct and neither conclusion is mutually exclusive. But the biggest threat to the UK’s national security and resilience is to be found not in eastern Europe or on the far side of the world: it is in Westminster on the government benches.

Holed below the waterline with a well-aimed Anglo Saxon torpedo

When former PM Gordon Brown was Chancellor in the 1990s, he and the then Chief of the Defence Staff, Sir Charles Guthrie, were having a heated debate about national security and the defence budget. As the temperature in No 11 rose, Brown sought to exert his authority: “General, I do know something about defence, you know”. To which Guthrie immediately and fearlessly shot back, ““Chancellor, you know [firewall alert] all about defence”. Not much has changed. Sir Rich Knighton, the current CDS, is far too polite to say that to either Reeves or Starmer. But at this stage in the proceedings when sensibilities and blushes need to be cast aside, a few blunt Anglo Saxon home truths are quite in order.

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