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The Times today leads on the fact that the Civil Service are preparing ‘doomsday cuts’ of up to 20% in public spending in order to get government finances back in order after the next election. Prime Minister’s Questions of course has focussed on little else in recent weeks but the increasingly desperate struggle on both sides to open up clear blue water between investment or cuts on the Labour side, or parsimony versus profligacy on the opposition benches.

Whatever your position on the political spectrum, the size of the budget deficit is truly worrying. This year alone, public spending will constitute 48% of GDP yet only 38% of GDP will be raised in tax receipts. That gap, an eye-watering 10% of GDP, has to be met by borrowing, something that is contingent on people wanting to continue lending money to us. The signs here are looking less than favourable.

In the first instance let me be clear that I think that the counter-cyclical spending is necessary; the aggressive actions of the Government have undoubtedly lessened the impact of the contraction. To paraphrase the Nobel laureate economist Paul Krugman, ‘public debt bad, economic depression worse.’ So, in this instance, the Tories incessant bleating about the size of the national debt misses the point*. However, politics cannot exist independent of economics, nor can economics ignore politics; confidence in the political system reinforces confidence in markets and vice versa. In short, it’s the deficit stupid. In setting up a false argument, and seeking clear ground between ourselves and the Conservatives we are not only abandoning the centre-ground; we risk playing fast and loose with Britain’s solvency.

And I don’t make this claim lightly. The first duty of any government is to be an effective steward of the nation’s finances. Labour must start to face up to the facts now that we are going to have to pare back spending; pet projects will have to be put to sleep, the credits cards will have to put cut up, and we will have to face an era of living within our means.

Whilst all this is happening, let’s not talk about another bankers ramp, or treat commiting ever larger slabs of money to public spending as a test of virility. And let’s not go for easy or politically palatable targets; Trident for example is actually surprisingly good value for money constituting only 3% of the defence procurement budget. Besides, defence spending only makes up 5% of public spending so talk of defence cuts all you like but even spending nothing on defence would still leave a massive hole in public finances.

We need to grit our teeth and look at the three biggest areas of spending; welfare, health and education. These are areas of great achievement for the government but we shouldn’t be blinded into thinking that things couldn’t be run more economically or that every penny spent has achieved value for money. And in the coming age of austerity, value for money is what will count.

In short, the till is nearly empty; let’s face up to cuts now rather than offer a false prospectus of ever-increasing spending. The public don’t buy it and neither should we.

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*Besides, much of the debt was accrued taking stakes in banks that will eventually be resold, hopefully at a net profit to the taxpayer.

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There’s been a lot of coverage of the call by retired generals to scrap the planned replacement for Trident. This will undoubtedly be grasped by many people (especially our friends on the left) as a further sign that replacing Trident will be a massive waste of money/militarily useless. However, there are several health warnings about the advice of the generals.

Firstly, generals will always (understandably) be a partisans for their service: Trident is a piece of naval equipment and therefore only serves to give prestige to the Navy. Ergo, the army don’t like it.

Secondly, the time frame required to replace Trident is exceptionally long: no security/defence analyst now can honestly predict the strategic environment that we’ll be faced with in 20-30 years. Replacing it is therefore a very good insurance policy: the recent resurgence of Russia is a case in point and would have taken an extremely high level of prescience to predict during the mid-nineties. Furthermore, other countries are likely to retain nuclear weapons for the time being: putting it simply, having nukes means that people listen to us. Putting it crudely, we want to retain our relative power position in the world in order to pursue a robust foreign policy where necessary.

Thirdly, deterrence is a necessary option for a country of our size: during the Cold War it was often repeated that all the Red Army needed to invade Britain was enough boots. We are a small nation in terms of population/forces we can put in the field: given that it is not inconceivable that another state power may wish to coerce us by force in the future, it’s absolutely necessary the UK possesses something that could make them think twice.

Lastly, whilst I sympathise with the plight of the army (I would like to see funding for the military increased to address pay/conditions/kit issues that the Generals rightly bring to the fore), it is frankly a bit rich for the army to talk about obsolescence when the army order of battle has changed itself so little from the Cold War period. If we want to talk about ineffective weapons systems lets look at tanks. Impossible to deploy quickly (so much for rapid reaction), only useful against other tanks (and there are much better means of killing tanks), the number of cavalry regiments remains artificially high simply for the reason that they have a greater social cachet (and therefore more friends in high places) than infantry regiments. The same goes for 90% of the artillery.

Massive resources are tied up in army equipment that has a role that can be better performed by something else. Yet, when the army last restructured the number of infantry regiments was cut whilst cavalry remained the same: to reiterate this point, the continued requirement for cavalry/artillery regiments to do ‘dismounted’ tours (i.e. as infantry) acts as a pretty stinging indictment of the current order of battle. In this regard then, the army needs to have a long look at itself before criticising other services (and there are undoubted criticism of the navy and air-force that can be made that move well beyond Trident).

So, whilst I welcome the chance for a healthy debate about the future of defence spending, I think it’s necessary for people to be aware of the problems surrounding the general’s advice. Trident is a vital part of our defence posture and needs to be replaced.

Today the MoD stepped closer to signing a deal with BAe to build two new aircraft carriers for the Navy, to be delivered in 2014 and 2016 respectively. With the usual caveat that defence projects always seem to over-run in terms of both cost and delivery date, I nevertheless applaud the government for showing the resolve and commitment in investing in and modernising the capabilities of the armed forces over the past 11 years. Beside the obvious increase in options that the new platforms will give to commanders in the field, a floating airfield is a massive asset in assisting in humanitarian crises.

Some people question the need for a robust defence stance given that we live in a world where direct military threats against the UK or its dependencies have evaporated. To that I make two points: firstly, things change. To dig up a Franklin line, “the price of liberty is eternal vigilance.” Secondly, the diminution of threats from state actors has corresponded with a rise in the threats from non-state actors: the phenomenon of asymmetric warfare. Although Iraq has coloured many peoples perceptions on the use of force, the fact remans that force can be a legitimate extension of policy. Given that the need to act preemptively in failed states is unlikely to go away, the capability as represented by two 65000 tonne aircraft carriers is a welcome addition to the weapons locker.