Defence procurement requires a revolution in thinking to cope with tighter spending and unpredictable threats, according to experts.
A report published by think tank Civitas calls for a shift in priorities from large, expensive equipment to funding flexible research and development that can rapidly meet specific weapons requirements.
The report, written by former MP Bernard Jenkin, Chris Donnelly and David McOwat, says the Ministry of Defence (MoD) must reduce its reliance on major programmes delivered by a few prime contractors in favour of research and development initiatives of small and medium-sized enterprises.
The report, Defence Acquisition for the Twenty-first Century, said that current acquisition processes are no longer compatible with a smaller budget, and are “in an impossible mess”. It also warned politicians are falling prey to a “positively dangerous” illusion that Britain is as powerful as a decade ago.
Rather than depending on large and expensive programmes that provide “standing capability”, Britain must develop a research and industrial base which is able to respond rapidly to the specific demands presented by different campaigns as they arise, according to the report.
“Today's defence depends upon a strong and agile knowledge and expertise base, which is able to respond in times of crisis and at times when the UK's national interest requires it,” the report said.
“A state spending only 2 per cent of its GDP on defence cannot have the 'robust' defence structure of previous decades. It must build a force for every campaign in a different way appropriate to that campaign.”
The report claims there is little understanding in government or the defence industry of the strategic changes necessary.
“We either have to spend more, or do things differently, or give up the idea of getting involved in any campaigns that rely on sustained diplomatic effort or military deterrence, let alone on the ability to deliver force,” the report says.
“The politicians still behave as though the UK has the same power as 10 or 20 years ago, but that is an illusion, which is positively dangerous.”
The report says that a more flexible funding arrangement with the Treasury is required so that funding can be better targeted at the most valuable research developments as and when they emerge.
“The key shift which we must make if we are to generate agile capability is to determine how, and how much, to divert defence spending to support agile funding for the security needs of the country on timescales which match the relevant business, development and research cycles,” the report authors said.
"This cannot be on an annual basis. The MoD must be enabled to spend money when it needs to do so and to save it when it can, with the reassurance that the money saved will be available when needed.”