Would an independent Scotland actually raise defence spending, so as to allow more options to be explored?
Anything is possible, in theory. But an article in the London Financial Times in early December pointed out that the budget situation of Scotland today is one of imbalance, and the probability of major deficits is high. As such, the idea of a major hike in defence spending looks unlikely.
And there is a further factor which would distort Scotland’s defence options if the SNP were to win an outright majority. Once again, let us take some comments from their defence policy statement:
● Scotland’s armed services should be well-remunerated, equipped and trained.
● Historic regiments will be protected and, if abolished, re- established as part of the SDS.
● Military facilities, including strategic air force stations should not be downsized at the present time.”
There is a common strand through all of these statements: they are manpower and property focussed, and thus expensive.
At face value, Defence Analysis has absolutely no complaint about paying soldiers well: in fact it is a surprise that there has not been more debate about this south of the border. But take it this way: you resurrect the amalgamated regiments (Note: what is the cut-off point for deciding whether a regiment is open for re-establishment? 2005? 1993? 1971?); this will incur an extra cost as regards administration duplicated across the regiments; you pay everyone much better, raising personnel costs as a proportion of the total defence spend, which has implications elsewhere (see below); and at the same time, rather than taking a rational view of what facilities are needed to support the new force, the SNP suggest that as much real estate should be kept in the hands of a Scottish MoD regardless of whether it is needed or not, and, one assumes, at any cost. With such a policy in place, one can doubt – seriously – the statement that Scottish armed forces should be well-equipped: there is unlikely to be the cash to afford this.
BASES – WHICH WILL BE LEFT?
“Military facilities, including strategic airforce stations should not be downsized at the present time.”
Sorry to say, but no-one in the SNP has worked out that they might not have much of a say about this! Think of it this way: a referendum, a unanimous vote for independence, and no small amount of crowing about the victory. Why will an English and Welsh Parliament decide to keep bases open in Scotland? They won’t, pure and simple.
On top of this, decisions affecting the next generation of bases will not go Scotland’s way. Look at the basing decisions open for Typhoon and JSF:
Typhoon (Decided)
RAF Coningsby
RAF Leuchars (Scotland)
JSF (Options Open)
RAF Cottesmore
RAF Leeming.
RAF Marham
RAF St. Mawgan
RAF Lossiemouth (Scotland)
RAF Leuchars might have been selected as one base for Typhoon: but a third base is yet to be chosen. If there is independence, it isn’t going to be in Scotland ....
No decisions have yet been taken for JSF basing, but – again – even if there are good candidate bases in Scotland – RAF Lossiemouth to the fore – why would an English and Welsh Parliament opt for it over facilities which could help the local economy? Strange to tell, but Cornwall in south west England is about as deprived an area as one can find in England, even with the tourist trade. Think what an impact as regards the local economy a major air base would make!
And while we are talking about this, there are the 11 Nimrod MRA4s which would be England’s share of the fleet. Will they stay at RAF Kinloss? There’d be no reason for that, so they could go to the base which had been the favoured option, RAF Waddington in Lincolnshire, allowing the RAF to have an ISTAR hub with Nimrod, AWACS, and ASTOR all-in-one.
Let Defence Analysis put it in simple, if brutal terms: an independent Scotland means that at least one, and probably two of the current RAF bases would, when judged on economic terms, have to close. And there would not be enough coming back into Scotland as part of the division of the spoils to justify, on economic grounds, opening up new facilities. For reference, below are some basic data for the running costs of some major Scottish bases over the past few years. It gives an idea of the level of impact of the local economies of base closures:
● £ Millions
Location Name 2001–02 2002–032003–04
RNAD Coulport & HMNB Faslane 229.14 291.56 207
RAF Kinloss 193.45 211.5 162.3
RAF Leuchars 124.62 162.72 217.87
RAF Lossiemouth 210.66 238.42 240.69
Rosyth HMS Caledonia 31.82 44.69 20.85
INDUSTRIAL BEEF
Perhaps the core of the debate about the impact of Scottish independence on defence is what it would do to defence industry in Scotland. There are two factors to consider here: first is the politics of defence spending as regards England/Scotland; and the other is the attractiveness of Scotland as a defence market.
To take the second point first, would an independent Scotland be a market that people would be racing to enter? Well, in so far as any new market would have some attraction, sure. But how “must have” would Scotland be? To return to the discussion of budget earlier in this piece, Scotland’s budget, basing the calculations on the current UK defence spend, ranges from £1.75–2.5-billion. The UK today manages to spend about 40% of its total budget on procurement, one of the higher figures in NATO, let alone the world. This would give a range of figures for Scotland of;
● High Procurement Spend £1-billion
● Low Procurement Spend £700-million
Now, the high figure doesn’t look bad, does it? Especially when you consider that the “baseline” Italian procurement figure is only some e1.4–1.6-billion (£950–1,100-million). But the basis of this calculation includes in “procurement” consumables, fuel, commercial equipment and services, which might not equate in any respect to war fighting procurement. Trying to pull out from the whole what might be relevant to an understanding of what is, and what isn’t “Equipment Procurement” is – as ever – difficult. But one can cut the headline figures by at least 50%, and possibly even by 65% to arrive at the following figures for the procurement spend of Scotland:
● Equipment Procurement (High) £500-million
● Equipment Procurement (Low) £250-million
There is a further effect to consider: the points made previously about the spending priorities of the SNP being expensive on the part of personnel and facilities, and the fact that this militates against spending on equipment, unless there is a major rise in expenditure as a proportion of GDP. If this has the effect that Defence Analysis believes that it would have, to lower the proportion spent on equipment, then one might look towards the lower of the two figures as the realistic future Scottish defence equipment spend.
So, how attractive would that budget figure be for many players? Is that enough to want to invest in Scotland so as to grab the action? Well, you don’t tend to hear of too many multi-million euro investments in places such as, say, Belgium or Portugal to win business. The smaller the market, the less the foreign direct investment, and the fewer the chances for meaningful offset. Further, the smaller the budget, the smaller the buy, and the less opportunity for good pricing. Just bear in mind the following calculation:
● UK defence procurement spend £7-billion
● Scottish defence procurement spend £500-million
Which budget would be most business managers’ priority to capture? And if you had an industrial facility in Scotland, and knew that there could be some quite acrimonious relations between London and Edinburgh, where would you want your main effort to be, industrially, at least?
To put this into open terms: do you think that the English and Welsh Parliament would want future warships to be built on the Clyde and Firth of Forth, or would Parliament prefer to see them built in Devonport, Portsmouth, Southampton, and Swansea? Would an English and Welsh Parliament want to see major avionics systems to upgrade Tornado GR4s come from Edinburgh, or – say – from Chelmsford or Rochester? Is there anyone who thinks that English and Welsh taxpayers wouldn’t prefer to see their tax pounds being spent in England and Wales, and not Scotland?
In which case, how quickly would one see, say, Type 45 work transferred from BAES Govan and Scotstoun to the south? OK, it couldn’t be done overnight, but there is little doubt that such a move would be demanded as soon as Scottish independence had been voted on. How many ships would this affect? Well, if one assumes that a referendum could take place as early as 2008, then assembly of Type 45s 4–8; and a new assembly facility for the CV(F)s would have to be found, so Rosyth would look a little bit bare! And one could rule out any MARS auxiliary support work ending up in Scotland, too.
One industrialist who spoke to Defence Analysis with an oath of secrecy about his company’s name, said, “As soon as there is any sign of a referendum, then we will stop any investment into Scotland until we can see which way the wind is blowing. Until then, it would simply be too risky.”
This view was backed up by several others – strange to tell, but all ere nervous of getting anywhere near being quoted openly ...! – who said that they believed that any move towards independence would see facilities moved south, and investment going elsewhere than Scotland. “It’s simply business sense”, said one. “A Scottish Government would have to come up with some pretty attractive figures to make us want to keep the same size of facility post-independence”, said another.
To put it mildly, there does not seem to be that much enthusiasm that a post-independence Scotland is going to be as attractive a place to do business for defence companies, as a Scotland as part of the UK is for some at the moment.
OPTIONS OPEN ...?
OK, there might well be a little bit too much doom and gloom here: but might there not be a few silver linings if Scottish independence comes to pass? Well, if one assumes – and Defence Analysis believes that it is a defensible starting point – that there is going to have to be a re-shaping of Scotland’s armed forces, then two things come to pass: firstly a need to build and enhance many facilities; secondly, options for new equipment.
For the first point, it is unlikely that this would be open to many overseas tenders, even if EU rules dictate otherwise. It is likely that any construction opportunities would be used to provide local employment, and good luck to them! But as for the second point, then if earlier comments about what happens to defence industry do come to pass, then there should be much more option for outside players to come into win business. A “gendarmerie-isation” of Scottish land forces would require a new fleet of LAVs, so General Dynamics, Patria, and even Giat Nexter (the Auld Alliance anyone?) would all be interested in supplying such vehicles. More support helicopters would see the normal suspects queuing up.
Only in shipbuilding could one see an obvious area where there is local capability. Although, to be fair, one Scottish observer who spoke to Defence Analysis did observe that it as highly unlikely that there would be a massive drive to build the type of ships on the Clyde that are under construction at the moment: the SNP’s defence policy document, talking as it does of, “The priority of the Scottish Defence Services (SDS), in partnership with Scotland’s neighbours and allies, will be to safeguard our land, sea and air space.”This doesn’t sound like a “Blue Water” naval strategy, does it? Sounds more like the need for some OPVs. And the problem is that these tend to cost rather less than an AAW cruiser.
OUT OF ADVERSITY ...
Initially, the need to move facilities and bases south from Scotland to new locations in the UK, as well as the equivalent movement of industrial facilities, is going to cost money. But would it cost vast amounts? The only vital thing at HMNB Faslane is the ship lift, and as this is a floating dock, it could be towed to a new resting place in England. As there are still air bases up for consideration for use for Typhoon and JSF, the costs of selecting one in England or Wales would be equivalent to choosing one in Scotland, so that is cost neutral too. About the only facility that would have a major impact on budgets would be the nuclear warhead storage facility at Coulport, opposite Faslane. There is no equivalent base in England, and so one would have to be constructed, either in the south west, or close to Barrow. How much would this cost? Difficult to say, but £350–500-million seems to be a good headline cost, possibly excluding the costs of extra roads and infrastructure. A financial hit, but not an appalling one.
But there is one area where Scottish independence might be a boon, rather than a burden: the Maritime Industrial Strategy (MIS). The issue at the heart of MIS is that the UK has over-capacity in some areas of shipbuilding, but especially maintenance and overhaul. Well, ditch the Clyde yards, and then Rosyth and Faslane, and – hey Presto! – you lose the maintenance and overhaul overcapacity! OK, there is going to be a slight dislocation while relevant space is found in to ramp up surface ship production “Down South”.
And it doesn’t have to be that expensive: the incremental costs of expanding VT Group’s Portsmouth dockyard facilities to cope with Type 45 production was of the order of £15–20-million. Assume that you have to expand Portsmouth – again – Barrow, create new facilities at Devonport, and then expand the Southampton berth that is to be the CV(F) home to become the building yard, and one might be “unlucky” to have to find £100–150-million.
The one area of concern for the impact of Scottish independence is, as ever, a financial one. There has been a drive to get MoD facilities and bases out of south and east England into the cheaper areas of the UK. This has seen Scotland “favoured” as regards bases, with three major airbases kept there. There is still a drive to cut costs, and asset and estate sales seem to be likely ways of finding more money in the short-to-medium term. But if there can no longer be a movement of facilities into Scotland, then some asset sales of land in England will have to be pulled, with the consequent loss of revenue. Is this a deal breaker? Not really, as most of the land that is best suited for sale is not the type of land that would be affected by Scottish independence. About the only areas which might be affected would be Portsmouth and Devonport, where the full range of land sales probably couldn’t proceed as planned.
THERE’LL BE A WELCOME IN THE VALLEYS ...?
But Scottish independence would have a ray of hope for another part of the UK: Wales. OK, sure, there is a Welsh Nationalist Party, but it doesn’t have the same influence that the SNP have in Scotland. And it might be a factor to stay close to England if there is more investment to come out of Scottish independence. Think of it this way: there will be need for some extra training areas, as well as firing ranges. Wales has both of these, and, indeed, some have been slated to be closed. But if the need is there, then they could be kept open. Closure of Scottish garrisons could see the need for an extra brigade’s worth of troop being found a home, which could easily be in Wales. St Athan’s air base could find itself saved by being used as either a barracks or a new RAF support facility. And all of this would mean that there would be accompanying work to improve the infrastructure of Wales, especially south and west Wales.
Dare one also suggest that some work that might leave Scotland could well end up in south Wales: a skilled workforce, but with wage rates lower than south east England .... Those defence companies with a Welsh presence might be in line for more contracts ....
The objective of this analysis is merely to look in a depth yet to be seen elsewhere at the implications of Scottish independence. Originally, Defence Analysis felt that there might be enough for an interesting two page article, nothing more. But as the delving went on, so the options and implications increased apace. To return to the two fundamental conclusions, Scottish independence looks unlikely, on the basis of SNP policy published to date, to have many positives for Scottish defence, or for the Scotland- based defence industry. And although it might look like a nightmare to deal with from an English/Welsh point of view, there are some significant plus points arising from the exercise. What will happen now? Nothing until the results of the Scottish elections come along in May 2007. Then we will see whether a race has been started, leading to some quite profound changes.
To the great annoyance of Mr Salmond!
I am not Francis Tusa, as should be apparent from our respective command of written English - his being superb, mine being
less so.
But I am his biggest fan!