JigP asked,
Among all the froth about BAES and MoD and their respective responsibilities for the Nimrod cancellation, little has been said about the pervasive influence of the Treasury and what I once saw described as "its unconventional ways of accounting". Can anyone on Pprune say anything factual about this?
Possibly - let me have a go.
From my stand point, HMT are, believe it or not, more sinned against than sinning in defence spending. HMT's basic point is that MoD gets a fixed budget and has - like all the other Departments - to live within its means. MoD has spectacularly failed to do so at least since SDR 98 and wasn't doing terribly well even when the defence budget was 5% of GDP and 10-12% of public spending (mid-60s to mid-80s).
However, HMT gets blamed by the MoD because everyone (wrongly, in my experience) assumes that "Treasury" are long-screwdrivering every decision (they're not, not least because the Treasury defence team is surprisingly small - like the other Treasury spending teams), and that the answer to all of the MoD's problems is a bigger budget. If more cash were simply the answer - and I accept that there is a cash crunch - then the US forces wouldn't have anything to worry about, except that they do.
A large part of the MoD's consistent inability to live within its means centres on the MoD's unwillingness to scale back its objectives to meet anything approaching a likely budget level - senior officers and CS were breifing the Defence Select Committee 12 months ago that they were planning on a 1% real budget growth to 2015 and that anything else was so inconceivable that they wouldn't bother planning for it. This,
AFTER Alistair Darling (remember him?) had shown that all of Government was going to take spending cuts. With their heads so far into the sand, the MoD have only got themselves to blame when unpleasant surprises come and bite them in the arse.
There are things MoD cannot easily do. MoD cannot set the foreign policy goals, and they do not easily turn around and say "No, Prime Minister. It cannot be done, because we don't have the resources." MoD should more often.
MoD needs to sort out the Equipment Programme - if you get a programme launched, it very rarely ever gets binned, irrespective of delays and increased costs; FRES is an excellent current example. MoD is also an abysmal customer for industry, where every Planning Round fudge is akin to a contract renegotiation, and industry has the whip hand every time.
Hence it is no surprise to me that MoD never held BAES' feet to the fire over Nimrod MRA 4, which let's remember was cancelled when it was 10 years late and more than twice the budget for less than half the airframes. Manccowboy can try and defend the company, but the way the company has dealt with fixed price contracts is nothing short of shambolic. They should be ashamed; instead, they get a payoff and get off scot-free. Again.
So what is Treasury responsible for? One thing that didn't help was pushing Trident's successor back into the MoD budget. IMHO it was absolutely the right thing to do, as it forced MoD to decide whether it was more or less valuable than other capabilities - if it was essentially free, then of course you'd have it, but this should've started a sensible discussion over Trident which may have happened, but it wasn't public.
Paradoxically, the other thing Treasury could've done was to be
more intrusive in with MoD, not less. If they had been more intrusive, earlier, then perhaps they could've forced MoD to confront some of the problems in the budget before now, when it would've been less painful.
MoD need to get a grip of their finances. This is likely to mean more, more painful cuts because it has come to the party late.
So, Jig P, does this help?
S41