Liam Fox Successor Faces Fiscal Challenges

The new defense minister may be the man to finally take control of the department’s finances.

The resignation of the British defense secretary caused Prime Minister David Cameron to carry out a swift, albeit minor, reshuffle of his cabinet last week. Liam Fox found his position untenable after allowing the “distinction between my personal interest and my government activities to become blurred.” In his place former transportation minister Phillip Hammond has been appointed. But what, if any, impact will this have on the British armed forces?

Phillip Hammond’s background is in business and he was elected to Parliament in the 1997 general election. Since then he has served in a number of departments until making a name for himself as shadow secretary of the treasury where he helped George Osborne, now chancellor, draw up the future plans for public spending. He has been described as an architect of what was cut from each government department.

Perhaps the biggest challenge facing the new defense minister will be the time it takes him to get to grips with the complicated structure of the Ministry of Defense. Having got used to this way of doing things he will then have to oversee the shift to the new management structure that has been drawn up for the ministry as the 2011 Defense Reform which includes major staff reductions from over 85,000 today to 60,000 by 2015.

One area that he may be well suited to is keeping tabs on the accounts of the defense department. As a numbers man he should prove more than capable of crunching the figures of the complex procurement projects and he may well prove to be the man to finally take control in this area, a failure of former defense ministers.

With only three and a half years of this Parliament to go there are few decisions to be made so his lack of military experience is unlikely to count against him. It is unlikely that any changes to the draconian Strategic Defense and Security Review will be considered, short of any drastic events taking place.

Whether Hammond will be able to stamp his mark on those programs going forward from the SDSR and get them delivered on budget and on time may be asking a lot of him but it would be a huge achievement and one of which only somebody with experience of business and finance might be capable. Major decisions on new projects will need to be made on whatever the Army decides the Future Rapid Effect System project is to become, the replacement frigate program and the Trident replacement during this parliamentary term.

From a political perspective, the resignation of Liam Fox could be seen as marking a shift away from the Thatcherite right wing of the party. There will now be only three “real disciples” of the Iron Lady in government. With Ken Clarke’s position being called into question over recent months it could be the case that David Cameron is attempting to move his party to a more centrist position in a bid to attract more voters. The replacement of Hammond with Justine Greening also brings another woman into the cabinet, thus going someway to addressing an imbalance for which the prime minister has been criticized.