19 February 2004
Speech by the Chief Secretary to the Treasury, Paul Boateng MP, at the Royal United Services Institute
Facing the security challenges of the 21st century
Part 1: Setting the context
Introduction
Thank you for inviting me to speak here at the Royal United Services Institute. This Institute has a deservedly world-class reputation for its work on national and international defence. I feel privileged to have this chance to address what is, I am well aware, an extremely knowledgeable and expert audience.
You mentioned, Sir Paul Lever, in your introduction, the debate that occurs around the subject of defence. A lively debate it may be, but it is seldom as lively as is shown to be in print. A long and intimate relationship exists between the Treasury and the Ministry of Defence. As two of the oldest state institutions we have, for centuries, and amidst this lively conversation, shared the aim of ensuring the security and prosperity of the kingdom.
Here in the UK, the Treasury is both a Finance Ministry and a Ministry that is closely involved in the economic and social well being of this nation. We have the traditional and important Treasury role of helping the Government to balance its public spending priorities. But our overriding priority is to create the conditions for increased long-term economic prosperity in the United Kingdom, and to do so effectively in light of the changes and challenges facing us and the wider international community.
Conflicts and international response
We have, in the UK, an open economy and our economic success depends very much on trading with the rest of the world. The history of defence is intimately tied up with this trade. Just a brief look around this particular building – at the artwork and the books in the library – highlights the wider responsibility of defence. On both the national and the international level, peace and security are essential if commerce is to flourish. And so the successful delivery of the Government’s foreign and security policy becomes an essential foundation stone for much of which the Treasury is striving.
In the changed world in which we now live in, traditional territorial threats of nation states are no longer the main cause of threat to our security. Indeed, since the Cold War, conflicts around the world have been increasingly likely to take place within states rather than between them.
Weak and failing states are an ever-growing problem for the stability of several regions, especially on the borders of Europe and in Africa. Such states not only provide potential havens for terrorists groups and criminal networks, but their internal conflicts often overspill into neighbouring states – thus spreading that instability.
A prime example of this is Africa – a continent which I know well and with which this nation has close ties. In recent years, African conflicts have caused more death and displacement than natural disasters such as famine or flood.
arise, to work to resolve them effectively. As you all know, the brutal civil war that raged in Sierra Leone throughout the 1990s caused widespread devastation. In over ten years of fighting, more than 50 per cent of the population had been displaced and 50,000 people lost their lives.
It was impossible for the UK to look on while the people of Sierra Leone were deprived of a future and the security of the entire region was threatened. UK military intervention in May 2000 helped bring stability to the country and allow the establishment of the UNAMSIL peacekeeping mission. Our troops were also responsible for evacuating foreign nationals and driving the rebels from Freetown.
Following the cessation of violence in such situations, it is absolutely essential to provide peace building assistance. By doing so we help create the permanent and secure solutions to any remaining internal vulnerabilities. In Sierra Leone, the UK has been working hard to cement the progress that has been made. In partnership with international bodies such as the UN, the EC, IMF and World Bank, we are helping the Government of Sierra Leone rebuild their country. It is a tribute to our armed forces and to our nation’s determination in its foreign policy to play a role in maintaining peace and stability in this part of the world.
Sierra Leone does not exist in isolation. West Africa is still beset by problems resulting from years of corrupt governance and plummeting standards of living. But with our allies – for example the United States in Liberia and France in Cote d’Ivoire – we are witnessing a new approach to internal conflicts in Africa that can be mirrored throughout the world.
Tackling underlying poverty
Key to this new approach is the belief that, where states can be seen to be failing because of poverty and social breakdown, preventative action should be taken before tensions spill over into violence. Well-managed and stable development in the world's poorest countries has the power to not only improve standards of living, but also to reduce the likelihood of future man-made crises.
Countries where the population has enough food to eat, basic education and clean water to drink are less likely to be plunged into instability. People who have opportunities to improve their lot in life are far less likely to get swept into conflict or terrorist activities themselves.
And so the free countries of the world need to work together. We have a responsibility to tackle the poverty and destitution that is at the root of so much of the world’s instability, and this reconstruction must go beyond temporary relief to wholesale economic and social development.
Our aims now have to mirror George Marshall’s, half a century ago, when he articulated the Marshall plan as a vision for a global fight, not against one country or one ideology but, as he put it, against “hunger, poverty, desperation and chaos.” And I’m sure you’ll agree that he was well placed with his professional experience and record to identify what needed to be done.
That is why the Government is committed to effective conflict prevention and poverty reduction. And why, from 2005 onwards, a billion pounds (£s) of bilateral aid is guaranteed to go to Africa – a commitment we have been able to make because of our hard won economic stability and the tough decisions we took at the start of the last Parliament- and a commitment which the PM has said will be at the heart of our EU and G8 presidencies
And it is why the Chancellor made it clear, earlier this week, that we must work harder to achieve the Millennium Development Goals to halve world poverty, to cut child mortality by two thirds, and to guarantee every child primary education by 2015. On current forecasts we will miss these targets, which is simply not good enough. The entire international community is challenged to redouble its efforts to meet these goals.
Part II: The changing security environment
So far, I have been speaking about the challenges we face largely in terms of the drive for global and individual prosperity. This is at the heart of the Treasury’s agenda. However the Treasury also has an important part to play in ensuring that Britain remains able to meet the wider security challenges of the 21st Century.
The defeat of Communism was a victory: for liberty, for democracy and by lifting the terrible threat of a global nuclear confrontation. When the cold war ended the world became, by virtue of that fact, a better place.
But after September 11th, we have had to grasp the fact that we have entered a new era. We now know that international terrorism has the potential to deliver destruction on a massive scale; power that we had previously thought the exclusive province of nation states. International terrorism and the proliferation of biological, chemical and nuclear weapons are potentially the most catastrophic threats to our national security in these early years of the 21st century. We need to understand this and we must act to neutralise those threats.
A world safer from global terrorism and weapons of mass destruction,” is one of the Foreign and Commonwealth Offices key themes in the new Strategy that Jack Straw set out in December. This strategy recognises the importance of effective action in the international arena, principally through strong coordination with our European and US partners.
It notes that tackling international terrorism and the spread of weapons of mass destruction requires a multi-layered approach. Our aim as far as possible should be to prevent the conditions within which international terror networks can recruit supporters, and prevent the emergence of future “failed states” – for example Afghanistan in 2001 – within which terror networks can plan and train their recruits without hindrance.
In this context, I mention the pioneering work of the FCO, MOD and DfID – with full Treasury encouragement and engagement – in developing new approaches to the management of conflict prevention through the Global and African Conflict Prevention Pools. And the role of public diplomacy and the tremendous job that the British Council and BBC World Service do in strengthening relationships between Britain and the peoples of other countries.
Importantly, we also have to recognise that defence cannot act in isolation, but must link up with intelligence, crime prevention, diplomacy and aid.
For example, financial crime is an increasing threat to global peace and prosperity. Corruption destabilises countries – making it difficult for legitimate business to thrive. It diverts aid and hinders development. Many forms of financial crime have been used to finance terrorism – from simple credit card fraud to counterfeiting products. Our traditional response needs to adapt to these threats.
Following September 11th, the Ministry of Defence has also reviewed its ability to respond to the new challenges raised by international terrorism. The 2002 SDR New Chapter concluded that the UK’s emphasis on expeditionary forces enabled the UK to play a key role in the new international environment, but recognised that operations against international terrorism required both increased precision and rapid delivery
Last December’s Defence White Paper took stock of the current challenges facing the Ministry of Defence. It underlined the wide range of operations that our forces could be asked to undertake in coalition – as well as in purely national operations. It recognised the breadth of tasks they will be required to undertake and it highlighted the need for flexibility.
Iraq
Now, before moving into the final section of my speech, I would like to say a few words about Iraq.
First, to pay tribute to our armed forces for all they have done in Iraq. They have shown tremendous courage and professionalism, and we all obviously share in the sadness of the families who lost loved ones on active service, and for those who have been wounded.
I would also like to pay tribute to the tremendous achievement of the Ministry of Defence and the armed forces in deploying 46,000 people and their equipment so swiftly, and on top of domestic commitments such as Operation Fresco. And to the enormously positive role that British forces and officials continue to play in Iraq, helping to keep the peace and playing a leading role on security sector reform.
The very close relationship and cooperation between the Ministry of Defence and the Treasury during these operations has been critical. Our overriding purpose throughout has been to ensure that Ministry of Defence has the resources it needs for the operation when it needs them – and we were grateful to Sir Kevin Tebbit for acknowledging the role of the Treasury in his recent evidence to the Defence and Public Accounts Committees.
Treasury officials have been in Iraq helping on the ground with the reconstruction of the economy. They know at first hand of some of the challenges currently faced by coalition forces, and by all the people we have on the ground out there.
Part III: Defence, reform and efficiency
In all of this, the point I am really making is that this new security environment requires us to change the way we think and the way we plan – it requires greater flexibility and adaptability… from policy makers down to the forces executing operations on the ground. It puts different pressures on our military people and all the supporting infrastructure and processes.
And this Government has a responsibility to the British people to continue to deliver high quality Armed Forces that are capable of responding to all the uncertainties and threats of today’s environment. And ultimately this will always depend on the long run financial and economic strength of the country.
Our strong economic performance has meant that, despite a period of global uncertainty, the UK has experienced the longest unbroken economic expansion on record. And in turn, this strong performance – this hard won stability – allowed us, in the 2002 Spending Review, to provide the biggest sustained increase in the defence budget for twenty years. With an additional £578 million being provided over three years to drive modernisation and efficiency improvements in the MOD. This represents a substantial increase.
This year’s spending review in which I am currently engaged will build on these foundations. Now is the time to lock in the progress we have made, and to increase the effectiveness and efficiency of all our public services –the armed forces amongst them.
Defence procurement
Defence procurement is an exceptionally complex process by virtue of the cutting edge technology and long timescales over which plans have to be laid. Many in this room have, I am sure, an intimate and detailed knowledge of this process.
Smart Acquisition has already done a great deal to develop defence procurement but there is still clearly room for further improvement. The recent 2003 NAO Major Projects Report highlights the problems that poor procurement performance causes for the armed forces, and I might add, for the defence industry.
The Treasury has a legitimate interest in the effectiveness of defence procurement, not least because of the large sums of taxpayers’ money at stake. What we are looking for is best practice procurement performance, and realism from both the MOD and industry about what the capabilities our armed forces need will cost.
The UK has the most open defence market of the major industrialized countries, and the spur of competition has served to sharpen industry’s act and produce better value for the MOD. It is therefore no surprise that UK defence companies have done well in export markets over recent years. Industry now needs to build on these achievements to become more globally competitive if it is to prosper.
It has been argued in some quarters that the openness of the UK defence market is unfair on UK defence suppliers: the view being that if other Governments continue to favour their national industries, then the UK should do likewise.
But if we did that, we would certainly not be able to supply all the equipment that the armed forces need at a price we could afford. And can erecting barriers really be in the interests of a UK defence industry whose exports greatly exceed UK defence imports?
So, as set out in the defence industrial policy paper, competition remains the bedrock of our procurement policy and will be the way the majority of procurement is carried out. Of course, we know from past experience that competition alone will not solve everything. The need to spend resources effectively – building on the success of Smart Acquisition – also requires the MOD
- To leverage the volume of its procurement spend across the DPA and DLO more effectively;
- To simplify specifications and better understand how these affect costs;
- To work with their key suppliers and become a better customer;
- And through this, to develop a more commercial style of contracting, in which risks are better understood and allocated to the party that can best manage them.
The MOD will then be in a better position to work cooperatively to ensure successful outcomes for its projects. We believe that the recent stock take of Smart Procurement, if carried through effectively, will make a real difference.
So, in essence, we look to the MOD – as to every government department – to be a good customer, but we also look to industry to deliver the highest standards of delivery performance. Where industry performs well, we believe it is right that it should be able to make a good return for its shareholders. As an economics ministry, how could we believe otherwise.
Other reform and modernisation
Procurement is not the only area where improvements to efficiency can be made.
The MOD manages some of the world’s best and most professional armed forces. We would argue the best. Yet it is also an organisation that manages budgets and resources with a turnover similar to the likes of BT or Unilever.
So it is appropriate that the Ministry of Defence should follow the example set by leading Private Sector companies, and invest in the future by pursuing a vigorous modernization agenda.
This is appropriate in the context of the Review of Efficiency across Government departments that is currently being conducted by Sir Peter Gershon. This review will play a central role in identifying the scope for increased efficiency in MOD’s back office and procurement functions
And of course, there are some success stories within the MOD which we are already able to celebrate:
Achieving the DLO’s strategic goal is within sight, and the End-to-End review of logistics is starting to deliver real savings, in the Front Line Commands and in the DLO
The new Defence Information Infrastructure will provide a single information structure across defence, in the business space and, indeed, into the battle field
I know that the MOD will drive through these initiatives and others with determination, to ensure that the best possible value is achieved from taxpayers’ money, and the defence change programmes, as a single, coherent, prioritised change programme, backed by the defence modernisation fund is a welcome approach – and one which must deliver.
Part IV: Closing remarks
As I hope I have made clear in the course of these remarks, defence has become more than a challenge for the military.
There is a new understanding in the West that global reconstruction and our own national security are inextricably linked. Fighting terrorism is not a war for territory, but a war for values: a war that promotes peace by promoting democracy and economic growth. As Aristotle said, “We make war that we may live in peace.”
And the trans-national threats presented by international terrorism and failed or failing states cannot be countered by states acting alone. More than ever before, our own strategic interests require us to adopt collective measures and actions.
In facing these challenges, the Treasury has its own critical role to play – fostering and supporting cross-departmental working and, most importantly, supporting defence policy with sustained and appropriate investment. This, I promise you, we will do.
Thank you