Much has already been said about the prospect of the Labour Party getting into government on 5 July, ‘opening the books’, and finding a more daunting financial situation than already expected.

However, across the road from the Treasury sits a potentially deeper black hole of hidden horrors and agenda-derailing crises – the MOD Main Building.

This article is the opinion of the author and not necessarily that of the UK Defence Journal. If you would like to submit your own article on this topic or any other, please see our submission guidelines.

Having worked for a senior Labour backbencher trying to expose flaws in the Conservatives’ defence policies and uncover the true state of the MOD, here are just a few of the dilemmas hitting the new defence ministerial team on Day 1.

Defence Spending

There is no money. Despite the Conservatives’ spin on defence spending, the MOD budget has been cut by £2.5bn in real terms this year, as confirmed by MOD civil servants.

In April, the Conservative government committed to a target of spending 2.5% of GDP on defence by 2030. However, there is no detail on where this additional money will come from, making it a fantasy pledge. It is a trap set for Labour, which a Conservative opposition will seek to capitalise on, and should be treated as a Day 1 dilemma.

The equipment plan left by the Conservatives has the largest funding deficit of any plan published since 2012 – at least £17bn. At the same time, funding decisions must be made on a variety of major projects.

Labour must be prepared to quickly assess and attribute the current state of UK defence to the Conservatives before using its long-planned defence review to finally make the tough decisions (that have been avoided thus far) regarding reassessing what UK defence needs versus what it can afford.

Labour’s incoming defence team should use the next few months uncovering and exposing the nasties left in the Main Building after 14 years out of power – and this should start from Day 1.

RAAC on the Defence Estate

One potential hidden horror could be exposed very quickly. For over nine months, the MOD has refused to say how many of its buildings contain RAAC and require mitigation.

Around 12,000 buildings on the Defence Estate have been surveyed for RAAC, yet the Conservatives have managed to avoid revealing the outcome of those surveys – despite numerous parliamentary questions and a freedom of information request.

This could unravel quickly as a Day 1 dilemma – or there could be nothing to be concerned about. Unfortunately, Labour ministers cannot know for sure until they step inside the Main Building and ‘open the books’.

Harland & Wolff Bailout

A Day 1 dilemma Labour ministers can be certain of is what to do about Harland & Wolff. While it may be a historic brand, H&W today is essentially a ‘start-up’ – and it needs money, fast.

The Conservatives overlooked concerns about the financial position and experience of H&W as it stands today when awarding part of the £1.6bn Fleet Solid Support contract to H&W as part of the Team Resolute bid in 2023. H&W was crucial to the bid in terms of providing cover that at least part of the three vessels will be built in the UK (the rest in Spain by Navantia).

But H&W is losing money and has debts of over £90m – most of this is owed to a New York-based credit firm. The company has applied for a £200 million loan guarantee from the Government, and a decision on whether this would be granted looked to be imminent – with the Chancellor reported to be against it – until the Prime Minister called the election, putting the decision on hold for six weeks.

There are serious concerns about H&W’s ability to continue as a going concern if it does not get the £200 million loan. Unions are lobbying hard for the loan to be granted to protect jobs, but there are worries that most of the loan could simply be spent paying off existing high-interest loans and H&W will be back to square one.

How a Labour government deals with this Day 1 dilemma could well be an early defining moment for the new administration, with ramifications for the future of the company, the delivery of the FSS contract, and the outline of British shipbuilding in the longer term.

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64 COMMENTS

  1. Here’s hoping the Tories haven’t been having a Weekend at Bernie’s LARP with the MoD for the past decade..

  2. This sounds like Labour making excuses before the get to No10 so the don’t have to spend money on defence. No different to the the lying scum thats there already. 😎

    • Oh there is a huge difference [quote] “to the lying scum that’s already there.” Namely, the deeply embedded support for Trots Corbyn and his ilk. The Cons certainly have their bickering anti-British globalist factions but nothing like the internal festering’s of the Lab hordes. It’s a simple concept to grasp. By definition, socialism is an intermediatory step towards communism. One cannot exist without the other. No socialist party regardless of nationality, can ever rid itself of the marxist roots from which it grew.

      Only those who have infiltrated and reported on the inner circles of our socialist “scum,” can appreciate how deep the poison runs. Or bare witness to how pure the strain of marxism really is. It’s an ideological “disease of the mind” {quote from Keith Bryer of BP] almost impossible to cure without exposing the sufferers to a “kill or cure” dose of true communism. One need only ask the long suffering Polish, Czech, Hungarian, Latvian, Estonian, Lithuanian or East German people. What they think of adopting socialism/communism again?
      Reports of the STASI activities being particularly eye opening.

      Sadly the often well-meaning Labour party membership have always been a Trojan horse full of enemies of the state. Excuse the old news. However, I’m reliably informed that in the 21st C. Labour itself has been infiltrated by yet another poisonous ideology from the middle east. It would be laughably ironic if it had happened somewhere other than here in GB. The very heart of the anglosphere.

    • Impossible to know.

      The Conservatives have clearly not funded anything properly, from massively immigration backlogs, collapsing schools and hospitals, NHS queues, etc etc. Or looking at defence support ship contracts not being issued, failing accommodation, constant cuts, etc. Just look at the mess that was hs2 or the planned new hospitals that never happened, no investment in the future of the economy has been made.

      What we don’t know is what long term damage that has yet to deliver.

      The Conservatives have had 14 years to fix things (if you blame Labour for them) but to me they have gotten worse not better and the stats on every part of our economy/public sector vs equivalent countries back that up.

      As such I struggle to believe more problems aren’t being hidden caused by under investment, but we will never know for sure, as no matter what the case the next government will blame the last, and that will be the case even if the MOD is in amazing financial shape the next goverment will still state the reverse as it’s no in their interests to say the previous goverment did a good job (just look at sunak blaming boris and truss even though he was a front bencher in their governments).

    • I didn’t read it like that Daniele.

      I read it as someone with a very superficial knowledge trying to get his name in the press and gain recognition; there was little detail, no mention of our capability gaps, worn out surface fleet or lack of RAF platforms. Shame it was given time really.

  4. Not really any different from the huge black hole and mess the Tories found back In 2010. Tony Blair was quick to go to war, but didn’t like paying for it.

    • Ah, Bravo. There was no money then either apparently.
      But going forward, austerity was a disaster.

      • Austerity had all the fiscal sense of quitting your job to cut costs on commuting..
        That said we all know the ‘tough decision’ that will be made isn’t going to be to raise taxes or borrow money for the things we need.

        • I salute your crystal balls for their 20/20 clarity of vision. I think we all know where the axe will fall first and who will benefit most. Buying votes from certain groups is not cheap. Do you think Ladbrokes would give good odds on this before Fridays results.

        • You’re familiar with Lizz Truss? You know what happens when you make unfunded spending pledges? Well spending when you have no income is just that, without austerity we would have had a Liz Truss moment on steroids.

          Of course there loads of 20/20 vision hindsight studies now but market reaction on the day would have been punishing.

          • Borrowing money to pay for government services and projects during low periods is sound standard practice.

            Borrowing money to lower taxes is another Tory fever dream.

          • The thing is it wasn’t just borrowing money in a down turn we’d be living of credit for the previous decade and beyond. It’s standard practice to boost the country’s reserves when you have the opportunity that never happened priorto the financial crisis. As things stand, we have debts interest that equate to the education budget. That would be even higher without so mild trimming if the finances. Greece was a classic example of what happens when you continue to nax out the credit card had Greece not been in the Euro it would have gone the same way as Argentina. But the EU didn’t say hey here’s more money what you need to do is spend even more to get you out tjiz mess they insisted on cutting spending.

            The only thing saving Britain from being ravaged by the market today is most other countries are in the same state with debt problems.

            Problem is when you align politically confirmation bias kicks in, i learned about cognitive biases .sometime ago and took steps to.reduce its impact on my thinking, first to go was any politic allegiance. The hard reality is living beyond means ends one way. Irrespective of party politics.

          • The Greek crisis was caused by many factors: largely institutional corruption, not just because they dared to borrow money.

            It is when we think we are free from ideology that we have become wholeheartedly blinded by it

          • I’m certainly not free of ideology, just aware that if I’m not careful I will end up surrounding myself with the same voices that support one perspective. Have a quick Google of congnative bias helps you understand how we think and indeed react.

            I now spend more time researching facts than believing news headlines and trying to form my own opinion based on this rather than believing others. I don’t always like what I find out as it may not be what I have previously believed.

    • Professional liar Blair and chief henchman Campbell had to concede much, to ensure Bush’s’ inclusion of IRA financiers in his War on Terror. However, the true price for those lies was paid for by Prof. David Kelly et al. of the biodefence effort. He was a little touched but nonetheless a true gentleman. May he rest in peace and those responsible for his death/murder/suicide suffer divine justice. 45 mins my arse.

          • Actually, UK banks by in large weren’t that bad, US banks had the biggest exposure + a few bad apples here, Nat West was one but Lloyds was well run but pushed into taking over an over exposed UK bank HBOS by the government. Majority of British banks didn’t need government help and coped. Banking bailout amounts were a fraction of what was given during Covid and Labour pretty much endorsed massive handouts and lockdowns and at time stated handout weren’t enough and lockdowns were too short.

            Of course Labour could have tighten up regulation during the Bair/Brown years so even if you want to lay the blame on the Tories there was ample opportunity to Labour to reverse the legislation.

            Pretty much nearly 30 years Lab and Con have wreck the UK finances and evidence shows from Covid years and lack of action on banking regs it would have been the same if either was in in power.

      • Our migration errors mean that a large number of houses are about to be built in a field behind my house, I would welcome fracking instead.

        • Well I suppose it depends if you live in an area where Fracking is possible which seems to be West coast of Lancashire. There are less damaging solution to new builds everywhere rather than risking geological problems. One obvious one is to stop the right to buy so councils can build houses again. Second is and do something about the 809,000 second homes.

        • Good answer. But the true energy wealth of Great Britain lies under the North Sea and surrounding our Falkland Islands & S. Georgia territory. Go look at the surveys being swept aside to see conservative (sorry for using that taboo un-woke word) estimates.

          The infrastructure is already in place for N. Sea exploitation and economically viable for the Falklands. It’s a fantastic way to boost the islands too. That said, dropping all carbon zero nonsense would go a long way to releasing billions for investment in truly beneficial energy exploration/research. Safer nuclear being the only viable long term solution to the looming energy shortage, the real crisis. Of course when I say beneficial I mean for Great Britain and our unique needs.

          We still have coal reserves too and the technology to reduce pollution to minimal levels from it’s use. Much cleaner that in India or CCP China. While our farmers benefit from the greening of the planet and higher crop yields from slight increases in atmospheric CO2.

          See the published research from the Carbon Coalition for more details. Hardly ever mentioned by the lame stream media.

          • Sorry George but you really need to investigate the available info on the Bowland shale:
            The massive success story of US shale gas and oil is based on shale deposits that are between 200 feet and 600 feet thick. The proven Bowland shale is over 13,000 feet thick.

  6. The Harland and Wolff issue is NOT a bailout. HMG are not being asked to give the loan, they are being asked to make a decision on an export credit guarantee for a commercial consolidation loan, which as far as most people can figure out, H&W meet the criteria for. However, H&W have asked for a guarantee for the whole £200m loan, whereas the export credit scheme normally only garantees 80%. So the whole thing is hung up on whether the guarantee should cover £160m or £200m. All that is needed is a decision, and either way a new cheaper loan can stop the current expensive loan from bleeding money overseas.

    Given that UK Defence is into H&W to the tune of £700m, plus years of argument and wrangling over a replacement shipbuilder, even if H&W defaulted, the government would have no choice but to bail them out. So they might as well go for the 100% and make the new loan as cheap as possible. It’s a no-brainer. Exactly the sort of thing governments should have the brains to decide upon.

    • Given their auditors won’t sign off on their books reportedly, are you sure that H&W accounts are accurate?

      • No. Of course not. Harland and Wolff suspended trading yesterday. That wouldn’t have happened if something wasn’t amiss.

        It was only about four or five years ago that Harland and Wolff, Appledore and Furgusons all went bankrupt. Auditors like neat slow-moving companies, which one as effectively new as H&W clearly isn’t. The question is does the government give a stuff? And the Tories don’t or they would have made a decision long before now.

    • Hi Jon If you have ever read anything I post about H&W you will know that I really get that the facilities and infrastructure at the Belfast H&W site are literally the SB industries last Crown Jewels for large surface vessels. Quite simply that yard and its future is the priority here, I just don’t like what I see about how it’s being managed by the present owners.

      The very name Harland & Wolfe is very emotive and I happen to think it’s name is being misused as a shield.
      It’s not the yard that’s directly threatened but Harland & Wolff Holdings PLC formerly known as InfraStrata which has its hand out. They adopted the H&W name just 3 years ago.
      Looking their history up is pretty interesting and as far as I can see they have overextended by buying even more yards without enough workload and have made some very odd financial moves.
      After all the financial institutes aren’t daft and you only agree to a high interest loan when everyone else has turned you away. It’s all about Risk to Banks !

      And it’s that risk that would make me very cautious about guaranteeing an export loan ! What is it they want to export ?

      IMHO HMG should offer the 80% guarantee and then see what happens. If they can’t raise the rest from the Market at as reasonable rate then walk away.

      Just sit back and let the Holding company go into admin and for HMG to then take the Belfast site back into public ownership for a bargain price from the Administrators.
      Which is pretty appropriate as it was us Taxpayers that paid for most of the new facilities in the 60’s and 70’s in the 1st place.

      MOD has already committed to the FSS contract which also covers the investment required, so get someone else in to manage the contract, but with very tight oversight and guarantees on what gets built where and tech transfer.

      That may sound odd but it’s exactly what happens in Australia. The SB facilities are Government owned so when a bidder is awarded a contract they manage it using those facilities. Kockums, NAVANTIA and BAe have all done this at the same yard which is ASC Osborne.

      • As it was put to me by a cab driver the other day: no small company gets to be a big company without bending the rules.

        I would have had at least the first FSSS built by Daewoo in 2017, but we all know that history didn’t go that way. If there was enough money in the kitty, I’d still build another one as fast as possible in Korea. But there isn’t. I believe we have little choice but to support the decision we’ve already made as long as there’s a reasonable chance they can come through. That means all in.

        I won’t get into the “what is it they want to export” in too much detail, but refitting the Canadian ship Sea Rose is money coming in from abroad and I’d call that exports. They say they want to expand Methil and Arnish fabricators in Scotland and believe that will allow them to increase exports for offshore wind farming as well as putting them in a good position to bid for the floating dry dock work in Faslane.

        I don’t think the current government would be capable of managing the oversight of a nationalised shipyard. Remember how they plan to pay for Defence by firing the civil servants who would do the oversight? Maybe Labour would be different.

        • HMG manage a shipyard of god no, not again 🤣 But they have committed to a relationship with Navantia to co build the FSS with H&W at Belfast and the regeneration necessary to do that would ensure a future for the yard.
          As for taking a risk, it has to be a calculated one and it doesn’t look like they can count.
          I don’t disagree with you about us building in S Korea, the Tides are unique in that it’s the only MOD project to come in below its price Target (£50 million).
          But they want to regenerate H&W for very sound strategic reasons namely it can accommodate the QEs a damn site easier than Rosyth. But it needs new infrastructure, facilities and an active experienced workforce onsite. FSS ticks the box and also provides a site capable of building the MRSS in future.
          As for managing it back to health I’d get BAe involved as it is the missing bit in their SB offering, they can’t build anything much over 15k tonnes.
          Or get just get Navantia to do it.
          As for Methil and Arnish talk about being opportunistic, they bought them for a song, with very little idea of what to do with them. Maybe they thought the SNP would stump up the funds.

  7. Where does the current government’s magic £75bn come from? £55bn comes from growth. Just keeping the percentage spent on the budget static as a proportion of GDP will deliver £55bn. Of the other £20bn, £11bn doesn’t have to be found to the parliament after next, so Labour only needs to find £9bn over 5 years to match the Tories.

    The problem is it’s nowhere near enough. If Labour actually want to stop Defence from shrinking it needs to cancel some big ticket items, like HS2, or put up headline taxes rather than the regressive stealth tax that copying the Tories freezing of personal allowance which they are planning on.

    However, someone on here suggested an excellent wheeze. If you can have a stealth tax increase, why not a stealth tax decrease? By giving service personel different higher personal tax allowances, you effectively increase their pay with more money as a percentage going to other ranks, which need it. This definitely needs to be made available to the RFA too.

    Next I’d say lift the blanket cap on MoD recruitment to allow MOD departments to bid against MOD Frameworks, replacing expensive contractors with cheaper Crown alternatives.

    Last recommendation here is for MOD to work more closely with the Treasury. As long as the game is seen as pulling the wool over Treasury’s eyes, the Treasury will say No by default. By bringing them in formally and showing them the risks ahead of time, perhaps the technical failures will be better understood, and any financial disasters (like T26B1) won’t be down to the Treasury saying No.

  8. Why on earth is UKDJ allowing a POLAD/SPAD from the Labour Party to publish spin pieces about something they fundamentally dislike (Defence), caused by people they plan to hire more of (civil servants). Subjective political pieces like this before an election is really disappointing.

      • So what’s it doing on a site that’s supposed to pride itself on factual accuracy? Can you verify the ‘cut the defence budget by 2.5 billion’ claim for example? That sounds like an accounting trick to me.

        • It’s clearly labelled as an opinion piece. We’ve had some from the SNP, one from Plaid and this isn’t the first from a Labour perspective. I’d hope we’d see pieces from other parties too but it’s getting a bit late for that to happen before the election. If you don’t want to understand the perspective of the party that’s likely to be in power on Friday, you are just burying your head in the sand.

          £3bn in foreign aid going to Ukraine this year and pushed through MOD’s books to artificially inflate the UK budget numbers is an accounting trick, one of many used by the current government. I don’t doubt for one second that there has been a significant cut this year, and it will take a lot of effort to unravel all the tricks Conservatives have used to find out by how much. However, you are probably right that the £2.5bn figure comes from a different accounting trick. There was a one off increase in the 22/23 figures which added £3bn to the accounts in real estate values. Winding down from that is what naively gave a real terms cut of £2.5bn in the headline numbers. That’s now closer to £2.1 bn because of an extra £500m going to Ukraine.

          • I do want to understand the Labour perspective- I want to know what their geostrategic priorities are, where these sit relative to other spending priorities, how much resource they are prepared to put into defence and security and what they propose to spend it on. This piece gives us none of that- all it seems to be doing is getting the excuses in early for not bothering to prioritise national security.

  9. If the Conservatives or Labour have no money for Defence, then they should not be provoking Russia by sending military supplies to the Ukraine.

    If they want war, at least they should prepare for it.

    • Crippling Russia by sending our leftovers to Ukraine is by far the cheapest way of keeping Ivan away. The “second most powerful military in the world” doesn’t pose any threat to NATO as long as it’s bogged down in a field outside Kharkhiv relying on diminishing Soviet era stockpiles and North Korean munitions.

    • Of course Russia could always withdraw to their own country and there wouldn’t be any need to “provoke” anyone! Just a thought mind.

    • Perhaps Putin shouldn’t have provoked us with the radioactive poisoning of a UK citizen on UK soil, not to mention nerve toxins in a perfume bottle casually donated to a UK charity shop. Then there’s the anti-Putin emigrees in the UK hanged, poisoned, shot, impaled and pushed out of windows over the years.

      Forget the geopolitics, every single assassination on UK soil is itself a casus belli and Putin’s use of globally banned chemical and radiological weapons to do so was a deliberate provocation to see what he could get away with. He reaps what he sows. The British people, slow to anger and slow to forget, will support Ukraine for as long as it takes.

      • The normal British people will I agree. I think most of the posts here are aimed at the Fascist loons of Reform who do not care about such things.

  10. Let us hope the extent of Tory booby traps are enough to derail every marxist scheme labour can cough up. Trots Corbyn may seem to have been expelled from the party but his extreme left supporters are still deeply embedded within its rank and file. Just waiting for their activation commands.

    Oh how we need political and cultural REFORM to take us further down the road to full BREXIT. Reaffirming British Judaeo-Christian standards as hard won ethical norms. Let’s begin with some parliamentary accountability. A referendum on leaving the ECHR before the end of the year. Then as a true soverign nation we can set about cleansing the hive. Making Britain Great again!

    British and proud of it.

    • If they were serious about Booby Traps they could have stayed quiet and just signed binding contracts with eye watering penalty clauses for extra F35, Typhoons, Frigates, Submarines and just let Labour deal with it.
      Just say you got the idea from Mr G Brown and the QE contract.

      • 😊To be completely honest. I don’t think any of the current professional political class in the commons, have the acumen to set a mouse trap. Never mind a clever political booby trap to disadvantage the next transient government. Just look how simpleton minority groups can intimidate and run rings around them. But it’s good for the soul to verbally abuse the self centred reversed secnon at every opportunity. If you get my drift – against the tide.
        The very mention of the word booby will have them slinking off to the rest room with a copy of Playboy. (Showing my age there. Read smartphone and p-hub instead.)

        The real devious ones are the civil servants and the aids who remain in the shadows. Unlike Alister Campbell and that Grove fella, who stepped into the sunlight and combusted.

  11. Kevan Jones was one of the members of the Defence select committee who tried to grasp the underlying year-on-year changes, and frustrated himself by using numbers gererated to keep the Treasury happy, not the numbers needed to monitor defence spending. I never understood why the select committee didn’t design a measure (for example the money spent on UK conventional defence capability – no security, no operations, no pensions, no CASD, etc) and get MOD to give them annual back-dated figures, shorn of the headline BS. Call it Underlying Defence Spending or some such.

    I hope the new committee will do that so we can all see the real ups and downs of Defence spending. That would be my day-one ask on MOD.

  12. What a well researched piece. The latest ” black hole” in the equipment budget only arises because, as the NAO has made clear, the RN has changed the way it has calculated 10 year costs. Included in its numbers are costs for T32, T 83, MRSS, FAD, none of which has been designed never mind authorized. In fact, unlike the Blair/ Brown government which ordered carriers with no increase in funding, this government has actually provided extra funding to ensure the equipment plan( calculated on the same basis used until 2023,) can be afforded. The rest of the opinion is just propaganda. In truth, Labour is bereft of original ideas with no clue how to address the current budget deficit of @£120b. With their commitment to a green fantasy, they will simply make matters worse.

    • You’re having a giraffe.

      The current Govt have levied the highest taxation on the population.

      Their arrogance at ordinary people, their willingness to lie through the back of their teeth is unbelievable; they need kicking out and taking a decade of hubris where they seek to redefine themselves and present a credible opposition to Govt.

      Nothing of this train crash of 14 years will ever exonerate the Cons from what they have done and frankly, all of them deserve to be trying to claim Universal Credit on Friday.

      (Mind you, Labour are sho!te on Defence as well).

      • I just mentioned a few facts on the theme of the article- the defence budget situation facing an incoming government.
        Exactly what achievements of the Blair/ Brown duopoly give you any reason to expect improvement from a Labour government?
        * Sale of gold reserves at rock bottom prices?
        * Removing financial regulation from the BoE leading to the financial crisis?
        * Giving up much of our EU rebate in return for nothing?
        * Starting two ruinous wars in Iraq and Afghanistan?
        * Relaxing immigration controls in order to change the demographic balance for party political advantage?
        The truth is that we have been poorly governed for 30 years not just the last 14.

        • Great counter factuals in there.

          Sorry, who is our favourite big brother and with who we have (had) a special relationship with?

          Who asked us to go to war in Iraq?

          Which organisation back our special relationship partner with backing for Article 5?

          I think both conflicts were a waste of blood and treasure but hey, international relationships are difficult.

          Which Govt has so cut our RN that we’d be lucky to get a handful of platforms to Sea?

          And, as I wrote, Labour are sho!te as well on Defence.

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