Budget chaos that betrays our services: Strategy like 'selling the family car to pay for Christmas presents'  

Updated: 03:18 EST, 21 December 2009

The public must find it baffling that the Government is making short-term emergency defence cuts to pay for extra helicopters designed to operate in Afghanistan – but which will not be ready for service for another three years.

This is the only the latest example of chaos budgeting, which has prevailed for years at the Ministry of Defence.

We face three problems. First, the Government has refused for years to find the money necessary to fulfil existing commitments.

The Ministry of Defence has announced plans to buy 22 new Chinook helicopters to increase air support on the frontline in Afghanistan

When it comes to budget cuts, It has chosen instead to spread pain between the three services and fiddle the books.

Second, the MoD is institutionally incompetent at predicting what individual programmes will cost.

Finally, short-term savings, such as postponing the planned aircraft carrier construction timetable, will be wiped out when the Government has to pay hundreds of millions of pounds more at a later date because the contract price will inevitably have gone up.

The truth is that any private business that operated like the MoD would have gone broke long ago. But the Government persistently refuses to undertake the radical steps needed to put things right.

We should not be too alarmed by either the decision to close RAF Cottesmore or by other measures announced today.

It has been plain for years that the RAF has too many fast jets and not enough helicopters.

What matters though is the fashion in which these decisions get made. The current flawed strategy is similar to the head of a family suddenly selling the car to pay for the Christmas presents.

The cash problems admitted by Defence Secretary Bob Ainsworth are the tip of an iceberg. The National Audit Office this week predicted a £36billion ‘black hole’ in defence funding over the next decade.

If the Tories win next year’s election, the defence budget will be among their biggest headaches. Many bills due for payment (some priced at hundreds of millions of pounds) have been pushed back to 2010 to fudge current accounts.

It would be naïve to imagine that the Tories will have much freedom to manoeuvre because so many existing commitments will be hard to escape.

For instance, almost everyone agrees that it is absurd to continue buying lots of Typhoon Eurofighters which were designed for the Cold War.

But purchase deals for the Typhoon were drawn up with ‘lock-in’ clauses which make it vastly expensive to cancel orders. The outcome is likely to be that the planes get built, then mothballed.

Liam Fox (the Tories’ likely defence secretary if elected) is known to be eager to keep the Royal Navy’s two planned aircraft carriers. It would certainly be nice for Britain to maintain them. But, including the U.S. F-35 planes designed to fly off them, the whole programme will cost £25billion.

The Tories have already said they will not increase the overall size of the defence budget. On that basis, the carriers and F-35s are unaffordable. I believe the brutal, but realistic, option is to cancel the whole programme.

Up to three squadrons of RAF Harriers and Tornados, above, will be axed

In today’s world of terrorists and pirates, what the Royal Navy really needs is a larger force of cheap and cheerful small frigates.

But the Navy is passionately wedded to hugely expensive kit. The indications are that the Tories will opt for weak compromise – keeping the carriers but cutting the purchase of planes to fly off them.

Big savings would be made if we axed the £25billion replacement of the Trident nuclear deterrent. In our new shrunken economic circumstances, we should explore the possibilities of an alternative minimalist nuclear deterrent, based on cruise missiles.

But I doubt that the incoming Tory government will have the bottle to act so drastically. As a result, Britain will probably stick with the Trident replacement. If so, the current policy of defence budgeting by fudge and fumble will continue.

This is a tragedy for our armed forces. The right choice would probably be to refocus our defence priorities decisively in favour of a world-class army, slightly larger than its present size, with appropriate helicopter, drone and close air support.

It is shockingly irresponsible, above all toward our soldiers fighting in Afghanistan and those who will fight future wars which are sure to come, to go on trying to do a little of everything with shoestring budgets and equipment programmes patched with string and sticking plaster.

The measures announced yesterday highlight the mess we have got ourselves into. A responsible future government will face reality boldly and radically.

However, my fear is that the Tories will lack nous and courage to do this.