UIK defence cuts

[StrictlyAvg]

I think that the UK military has a serious problem with procurement lead times. If you take more than a couple of years on any project, you will find that technology has moved on so far that what you had originally planned has been superceded.

In my business (not military), you need two concurrent projects, upgrades and new. However the budgets required to do this effectively are now clearly beyond the capabilities of a country the size of the UK, especially with other spending priorities.

A combined European programme is probably the only scale that can create and maintain a superpower status military capability.

In my business (military planes) companies survive on upgrades and rarely get new. Sea Kings (an early 50s design) are still going in a few forms even now. Aeroplanes get renewed based on old aircraft again and again (Nimrod, Lynx) even if it's a near ground-up rebuild including new airframe (give or take a few % of original metal) and engines. Tornado was a pan-european project that went into service in 1975. It isn't due to be retired (in strike form at least) until 2025-2030.

New aeroplanes (or indeed missiles/bombs) are almost certainly beyond the capability of any one country in the EU as of the current generation. Gripen, Typhoon, Rafale, Merlin, even A400M were all conceived as ideas in the early 80s and only now are most of them starting to enter service. It isn't a unique problem - all countries that make military hardware of this complexity suffer this problem.

"Bugatti Veyron" projects like the Eurofighter are a near Europe-wide collaboration and the political infighting that dogged, delayed and hamstrung the project mean its original concept is now well behind the drag curve - though the original concept was sufficiently flexible to keep it both useful and modern for today's scenarios - albeit the tag "over specified" could probably be levelled at it when the race to bankruptcy with the Iron Curtain was abandoned. The unit costs for Typhoon's competitors that weren't multinational collaborations are less than Typhoon so what does that tell you?

Political whims and fast changing reality give you the situation we have with defence contracts. So what would you change? I'll agree there is plenty of scope to reduce profligacy though reducing numbers of very low volume high-value items push the unit costs through the roof as the R&D costs are still sky-high (no pun intended).

 

[Drifterwood]

So what would you change?

I would have European funded R&D. I can see a lot of sense in Government owning and controlling the IP in military products. Free market businesses can sell their IP at good profits to Government who can then sub licence to manufacturers.

 

[dandelion]

Well Dandelion, I didn't really have you down as a Maggie fan.

She was an excelllent leader and was precisely the 'man for the job' when she first came to power. Unfortunately she ran out of steam as time went along, as is usually the case. The conservatives persisted in thrusting forward right wing ideas beyond what was sensible. If they get a second term now, I expect there will be the same pressures to move to the right and this will bring them down again. Blair ironically also self-destructed on a right wing issue, war in Iraq. Maggie had a good war in the Falklands and another in the buildup to the first gulf war, which pointedly stopped short of invading Iraq. Which should not be taken as undivided praise. She chose to fight to get back the Falklands but had presided over a government whose diplomatic approach had encouraged the invasion. It was her government which attempted to scale back the UK armed forces, give her credit for that.

Cameron watchers need to be aware that this guy makes it up on the hoof

People say this. I find it extremely refreshing that government acts rather than having reports about acting.

to what extent can Lib Dems be brought onside to support true blue Tory policies?

You miss the point of the coalition. Cameron did not need more right wingers. He needed the support of an independant centre even left faction. If the libs formally merged with the conservatives there would be no benefit to the conservatives except that one of their rivals had been eliminated. It would naturally improve labours position as the only credible alternative. Cameron would lose this tension where there are clear public divisions between the coalition partners which gives a sense that someone in government is fighting the corner of the centre/left. Camerons problem in 5 years may be how to help the libs avoid anihilation. I'd agree that the conservatives would be much more electable long term if they manage to take onboard more centre/left views but this creates great tension within a party, especially if everyone is putting on a public united front and not permitted to speak out. The coalition has a majoroity public spokesman, minority spokesman and even left wing dissenters spokesman in the form of libs deputy leader.

If Cameron gets his dream on both of these then I think a referendum on the EU suddenly looks more possible. And Cameron would establish his position as the rightful heir of Maggie.

Maggies policies as mentioned? cuts to armed forces. dispose of any remaining foreign possessions. forceful response to actual territorial invasion but no invasion of foreign states. Firm stance with Eu to bend it to british purpose, but also a firm commitment to stay in.

 

[dandelion]

New aeroplanes (or indeed missiles/bombs) are almost certainly beyond the capability of any one country in the EU as of the current generation.

I would hazard this is because of a change of priorities not lack of money? Relatively speaking we are all a lot wealthier now, but also feel less and less need to buy military hardware. If there were guaranteed orders for thousands of planes it would make the one-off costs look much more reasonable. I don't know if anyone has spent time considering a defence plan for europe as a whole and who it might have to defend against?

 

[798686]

Unfortunately she (Mags) ran out of steam as time went along, as is usually the case. The Conservatives persisted in thrusting forward right wing ideas beyond what was sensible.

Cameron did not need more right wingers. He needed the support of an independant centre even left faction.

I'd agree that the Conservatives would be much more electable long term if they manage to take onboard more centre/left views

...forceful response to actual territorial invasion but no invasion of foreign states. Firm stance with EU to bend it to british purpose, but also a firm commitment to stay in.

I agree with all these. Great points.

I'm coming round to the (qualified) view that maybe the UK does need to stay in the EU for the time being - whilst being less belligerent but actually more assertive in protecting it's interests/viewpoints. I think there's traditionally been an argument between having a federal superstate subsuming the nations (which I'd hate), and having a collection of autonomous nation states (and also between the UK staying/leaving)...

...I'm now wondering if the sensible option is somewhere in between (ie: the UK having its cake and eating it). There's probably room (and a need) for both independant nation states, and a larger collective (EU) to respond to globalisation - which has limited collaborative functions, but strongly defended points over which it cannot cross. How to stop the current creep from the latter to the former is still a big problem tho.

Currently, I think Britain would be best-served by having a semi-detached relationship with both the EU and the US. Linked to both in terms of alliances, but with freedom of movement to suit our needs. As far as the EU goes, that would mean remaining a part of it, while putting our views forward strongly and moulding things the way we want them to go (or setting out our position towards Europe definitively - so things which tie-in with that stance we'd go along with, things which didn't would be non-negotiable).

The only problem would be that successive governments have already tried this approach (with limited success), so maybe it's time to tell the EU exactly where we stand?...we'll stay in, and cooperate with the things we believe are important, but block/stay out of the measures and directions we're definitely against. (And still no to the euro - it's strongly against our interests, and our long-held economic independance is vital. It would take a measure of equal magnitude to make it worth our while joining).

 

[Jason]

The solution is surely a two-speed Europe. Or a multi-speed Europe. Or variable geometry. Select the bit of Eurospeak that you are happiest with.

France and Germany are going for fiscal harmonisation and therefore much closer union. The periphery nations cannot possibly make this work. This is a clear divide withinthe Eurozone. The nations of the former Eastern Europe have different needs again - though there has been less to report here recently. The UK is in a different position again - outside the Euro and with Anglo-Saxon economics.

The solution is to reform the EU to reflect these varying needs. The idea of a monolithic one-size-fits-all EU isn't working and IMO cannot be made to work. The problem is that the whole administrative drive of the Eurocrats is towards ever-closer union - the European institutions are not geared up for the Europe we need to create. EU speak includes the idea of "beneficial crisis" as a way of creating more Europe. However I wonder if we are going to see a series of beneficial crises creating less Europe. The Euro problem is one. UK Euroscepticism is another - and maybe it does need to go as far as fisticuffs with Cameron. The likes of Sarkoy and Merkel are astute politicians who will be well aware of the problems within the EU model, and maybe there will be a spirit of making real the multi-speed EU.

There is lots of debate as to the economic gain/loss to the UK of a departure from the EU - but less on the gain/loss to the EU. I know there is a view that the City of London would desert London for Frankfurt and the industry of SE England flee to Calais and Flanders. I don't believe it - I think a UK outside the EU would give massive tax concessions to the City and the move could actually be from Frankfurt to London, while less restrictive labour costs would keep industry in England. But leaving this aside I think the big loss to the EU project would be confidence. It would be perceived as a backward step, with one of the big economies and a net contributor leaving.

The UK needs a balancing act between the US and the EU. We are a mid-Atlantic nation. We need closer ties with the US and loser ties with the EU - and we need an identity which is neither a part of the US or a part of the (core) EU. I think Cameron can make this work.

 

[798686]

The problem is that the whole administrative drive of the Eurocrats is towards ever-closer union - the European institutions are not geared up for the Europe we need to create.

True.

EU speak includes the idea of "beneficial crisis" as a way of creating more Europe. However I wonder if we are going to see a series of beneficial crises creating less Europe.

Lol! Not a chance. :redface:

But leaving this aside I think the big loss to the EU project would be confidence. It would be perceived as a backward step, with one of the big economies and a net contributor leaving.

The UK needs a balancing act between the US and the EU. We are a mid-Atlantic nation...and we need an identity which is neither a part of the US or a part of the (core) EU. I think Cameron can make this work.

Yep.

 

[B_nyvin]

The primary reason London is a financial capital is hedge funds, particularly because london (uk) lacks the regulation to make hedge funds more transparent. All removing the UK from the EU would do to the financial field in London is make the UK even more reliant on hedge funds which are known to be wacky and cause unreliable results in the economy. Without the UK it'd be much easier for France/Germany to enact tougher regulation on hedge funds so the EU would become less favorable to them and most would probably move to the UK.

The next time some global crisis happens and the UK is even MORE loaded up with shaky hedge funds the result will be 2008x5....cause we all know the UK without the financial field is pretty much crap.

 

[StrictlyAvg]

I would hazard this is because of a change of priorities not lack of money? Relatively speaking we are all a lot wealthier now, but also feel less and less need to buy military hardware. If there were guaranteed orders for thousands of planes it would make the one-off costs look much more reasonable. I don't know if anyone has spent time considering a defence plan for europe as a whole and who it might have to defend against?

I think it's more about offsetting. It's much easier to to get a decent offset agreement if the major customers' native industries are collaborating to produce parts and/or subsystems and no country (politically) wants to spend that amount of money without some tangible benefit to their own industry. That allows relatively small but (per capita) wealthy countries like the netherlands and belgium to join projects with offsets based on the number of orders.

What I was saying about the bling fast jets currently entering service is that this generation will surely be the last that need a pilot in the seat. Transport and support aircraft/helicopters are almost certainly going to need pilots for a long time given that they carry people anyway, but close air support aircraft? Nah - go look up Sniper and Litening pods and see some videos of what they do. They have everything on board they need for a remotely piloted plane to send unbelievable quality images back to the controller and lock onto/engage whatever target the ground forces need them for.

But I think you're right about feeling less need to buy the hardware.

 

[Jason]

The primary reason London is a financial capital is hedge funds, particularly because london (uk) lacks the regulation to make hedge funds more transparent. All removing the UK from the EU would do to the financial field in London is make the UK even more reliant on hedge funds which are known to be wacky and cause unreliable results in the economy. Without the UK it'd be much easier for France/Germany to enact tougher regulation on hedge funds so the EU would become less favorable to them and most would probably move to the UK.

The next time some global crisis happens and the UK is even MORE loaded up with shaky hedge funds the result will be 2008x5....cause we all know the UK without the financial field is pretty much crap.

London is THE financial capital. The 2010 Global Finance Centres Index gives the top 10 in order as:

London
New York
Hong Kong
Singapore
Tokyo
Shanghai
Chicago
Zurich
Geneva
Sydney

While hedge funds are undoubtedly important to London you don't get to number one on hedge funds alone.

Note that Frankfurt doesn't make the top ten - indeed the other two of the top 10 in Europe are in Switzerland.

The City of London is essential to the prosperity of the UK. It generates about 12% of our wealth and has the potential to do much more. Today I imagine the UK government are excited about growth data which is much better than expected (which Reuters and Newsnight both think substantially reduces the threat of a double dip recession). It makes it possible to see a way for the UK's economy to power forward - and a big part of progress will be from the City.

Yes the UK is vulnerable to financial crises, as is the USA and anywhere else with a lot of finance. But that doesn't mean we shouldn't play to our strengths.

 

[StrictlyAvg]

I would have European funded R&D. I can see a lot of sense in Government owning and controlling the IP in military products. Free market businesses can sell their IP at good profits to Government who can then sub licence to manufacturers.

The US government do this very well. Having committed to buying JSFs in some form or other they now have us over a barrel with maintenance and upgrades - so the wisdom of buying US on unit costs is rather negated by the through-life costs - or swift obsolescence if we throw our toys in the air and don't play their game.

They let bugger all out - think Chinook (8 useless helicopters until we downgraded them with software and instruments the UK had IPR on and could therefore certify as safe to fly) or Apache - we didn't have (or rather specify in the contract) sufficient access to the software to solve problems caused by wanting our own engines and weapons systems. Also, ownership of MacDonnell Douglas changed to Boeing partway through the procurement which put the onus on the UK to renegotiate information access rights with the new owner/US gov. Then completed Apaches sat mothballed for ages because we didn't have sufficient access to software to create the simulator to train our pilots.

Yippee for buying american hardware eh?

 

[B_nyvin]

London is THE financial capital. The 2010 Global Finance Centres Index gives the top 10 in order as:

London
New York
Hong Kong
Singapore
Tokyo
Shanghai
Chicago
Zurich
Geneva
Sydney

While hedge funds are undoubtedly important to London you don't get to number one on hedge funds alone.

Note that Frankfurt doesn't make the top ten - indeed the other two of the top 10 in Europe are in Switzerland.
.

The Global Finance Centres Index is published BY LONDON...who else do you think is going to be at the top?!? Just a bit bias maybe?

And finance is more then 12%....it's more like 60% or argueably more.

 

[dandelion]

The City of London is essential to the prosperity of the UK.

You mean, it represents a critical weakness in the UK economy because of overreliance on this one area. urgent steps needed to address this threat to our security. Im innately suspiscious of government snooping but the uk just cut military spending while adding another half billion to the budget of the internet spies. Banking is nowadays an inherently cumputerised system, where money is just electrical impulses. It is a financial risk but also an attack vulnerability.

 

[798686]

The US government do this very well. Having committed to buying JSFs in some form or other they now have us over a barrel with maintenance and upgrades - so the wisdom of buying US on unit costs is rather negated by the through-life costs - or swift obsolescence if we throw our toys in the air and don't play their game.

They let bugger all out - think Chinook (8 useless helicopters until we downgraded them with software and instruments the UK had IPR on and could therefore certify as safe to fly) or Apache - we didn't have (or rather specify in the contract) sufficient access to the software to solve problems caused by wanting our own engines and weapons systems. Also, ownership of MacDonnell Douglas changed to Boeing partway through the procurement which put the onus on the UK to renegotiate information access rights with the new owner/US gov. Then completed Apaches sat mothballed for ages because we didn't have sufficient access to software to create the simulator to train our pilots.

Yippee for buying american hardware eh?

They couldn't push us into the arms of the Europeans more if they tried. :redface: I was hoping there'd be an end to the costly EU-centric procurement policy followed in the early 2000s.

I think we were considering cancelling JSFs at one point because of US refusal to commit to sharing future upgrades with us (they didn't like EU closeness to China, especially over Galileo, and thought their technology could find its way into their hands, apparently).

Richard North's normally fairly good at UK defence analysis (altho he falls down in other areas - namely climate change denial and conspiracy-theory level euroscepticism). He did a good paper on the realignment of UK defence policy about 5 yrs back.

 

[Jason]

You mean, it represents a critical weakness in the UK economy because of overreliance on this one area. urgent steps needed to address this threat to our security. Im innately suspiscious of government snooping but the uk just cut military spending while adding another half billion to the budget of the internet spies. Banking is nowadays an inherently cumputerised system, where money is just electrical impulses. It is a financial risk but also an attack vulnerability.

It is a strength and a weakness - as is any industry to any economy. When you add on the wealth created by industries supported by proximity to the City its value will be way bigger than 12% of the UK economy. I don't know where Nyvin's 60% comes from but the figure will certainly be huge. The over-reliance is a fact of life - it isn't going to change in the short term. There is no comparable wealth generator that we could put our energies into.

The point about the shift to internet security is well made - yes I think a risk to the UK must be electronic attack on our finance.

The "bash the bankers" mantra from the left is economic illiteracy. We have to accept that UK prosperity is firmly based on finance. We need proper finance and proper taxation, but the idea that bankers can be "made to pay" is absurd. Rather the challenge is to make the UK so attractive as a financial environment that more business comes to us.

 

[dandelion]

I keep thinking of the camen islands which have a stunning compliment of industry....and are bankrupt because they tax none of it.

 

[Jason]

I'm not aware of a book/article/webpage which gives a tidy view of the ways in which the wealth of the British Overseas Territories flows into the UK. The Cayman Islands are a very major financial centre but themselves receive very little benefit from this because they don't tax it, but there is still benefit. The benefit is primarily to the UK economy because UK companies make such heavy use of the Cayman Islands, though this benefit doesn't get captured by the figures for UK GDP (because it isn't UK GDP). Yes the Cayman Islands are technically bankrupt but the concept is almost meaningless. In the end they are a remnant of the British Empire and no-one is going to call in the debt.

If you are into conspiracy theories it is curious that our politicians so rarely mention the BOTs. Maybe it suits everyone to keep quiet. The Cayman Islands are increasingly providing services to the USA also, part of the close alliance between the UK and the USA.

 

[dandelion]

wouldnt those services be the sort the US revenue people are trying to close down? The sort which short - circuit taxes back into the pockets of someone other than a national government?

 

[798686]

EU budget demands are mentioned in today's Times (leading article). They're asking for a 5.6% increase (altho they agreed to 2.9% earlier this year), which amounts to approx £142billion extra.

Cameron's trying to freeze it, or at least keep it to the promised 2.9%. He also wants a budget freeze for the next 9 years or so (the next financial perspective plus 2 years).

 

[Jason]

No doubt Cameron will apply the art of the possible.

As I understand it he needs agreement with other EU states on the budget. The chattering classes feel that the agreement will come at around 2.9%. Thus the EU has used a higher demand as a bluff - and they will get what they originally wanted. Of course a freeze this year (and subsequently) would be super but I don't know whether it is possible. I don't think Cameron can simply refuse to pay up.

There's also speculation on the impact of the UK's Sovereignty Bill on subsequent EU budget negotiations. I don't really understand this. The idea seems to be that the Sovereignty Bill will give the UK a veto on the budget. At the moment if the UK tried to impose a veto it would be overturned by the UK courts. I don't think the text of the Sovereignty Bill is public domain yet, so we don't know just what is in it. But if it really does give the UK absolute control of EU budget payments that is significant.

It may be that Cameron will have to compromise this year - but next year perhaps it is all different. Maybe he could be forced to agree to 2.9% increase this year but demand 2.9% reduction next.