What can we learn from Liam Fox’s letter?

It’s time to shift focus from the Opposition to our coalition government. The Conservatives have their conference in Birmingham this week, and it’s likely that there’ll be much debate over spending cuts. The problems the government are having on this issue were put under the spotlight when a letter from Defence Secretary Liam Fox to the Prime Minister was leaked to the Daily Telegraph. Fox is lucky that the letter was leked on a “good day to bury bad news”, in Jo Moore’s infamous phrase, given that the British media was fixated on the Miliband saga. In the letter, Fox complains that:

Frankly this process is looking less and less defensible as a proper SDSR (Strategic Defence and Strategy Review) and more like a “super CSR” (Comprehensive Spending Review). If it continues on its current trajectory it is likely to have grave political consequences for us, destroying much of the reputation and capital you, and we, have built up in recent years.

Many have commented on the many leaks we’ve had under this government. However, I’m not convinced that this administration is a particuarly “leaky” one compared to others of recent times, and what I find most interesting is the amount of tension there is between the Treasury and other departments. See, for instance, the lengthy row between Ian Duncan-Smith at Work and Pensions and George Osborne. In this context it’s significant that Fox wrote the letter to the PM and not the Chief Secretary to the Treasury. Then again, there’s likely to be any unease between a government department and a mad axeman who wants to slash their budget by a quarter.

It’s understandable that Liam Fox is worried about the potential impact of MoD cuts. Defence was a department that did not benefit from the increase of public spending under New Labour. From 2002 to 2008, at a time when Britain was fighting two wars simultaneously, the MoD budget ‘only’ rose by £3.5bn in seven years (from £35.4bn to £39bn). [Fantasy Island, p171] This increase of 10% in seven years was a cut in real terms. As Larry Elliott and Dan Atkinson say in Fantasy Island, Labour was trying to run a wartime army on a peacetime budget. As British troops are in Afghanistan, there’s a limit to how much you can cut. Also, Tory members tend to be enthusiastic about spending money on defence, certainly more so than Labour supporters, and any significant cut to the defence budget will anger the Tory grassroots.

In Opposition, Fox claimed that 25% could be cut from the MoD budget, mainly from reducing the amount of civil servants (via Alex Massie). Now he’s finding that it’s much harder to actually find that scale of “efficiency savings” in practice, which is hardly surprising: it’s not as if the MoD is employing 20,000 civil servants to burn turnips, so any cuts that happen will impact on services.

The coalition has consistently attacked Labour for not specifying what cuts they would make themselves, but it is clear that this question still torments the government as well. Fox’s hope that there is a “credible narrative” for the Defence cuts seems to stem from the fact that the government can’t just cut willy nilly. The debate over what gets cut and which department suffers most will continue into the Conservative Party Conference until the results of the spending review are produced in October, and will doubtless carry on after that.

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One Response to What can we learn from Liam Fox’s letter?

  1. Pingback: The Libya fiasco: Continuity New Labour? « Paperback Rioter

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