Defence expenditure: A political battle that the military is sure to win

Not long after the election George Robertson, Secretary for Defence, came to a Cabinet committee meeting and chirpily told his colleagues he had some good news to impart. The German government had now decided to give the Eurofighter project the go-ahead. His announcement failed to have the desired effect on at least one of his colleagues, Gordon Brown, Chancellor of the Exchequer, who reacted by rolling his eyes heavenwards, rather as he had done a few days earlier when given the same information by Theo Waigel, the German finance minister.

Given that Eurofighter will gobble up pounds 16bn over 30 years, Mr Brown's evident lack of enthusiasm is pretty understandable. It also presages what could yet prove to be one of the big looming internal conflicts of the current Parliament: whether or not the defence budget can yield up some of the money which is needed to fulfil the pledges to spend more on health and education. Ask almost any minister where this money will come from and they mention, almost mechanically, social security and defence. These are, after all, the biggest budgets. Since part of the thrust of welfare reform is to reduce social security spending, the DSS is a natural candidate for cuts. But expectations of defence also yielding up some of its treasures are also high. The unlilateralist tendency in the Labour Party is disappearing fast. But there are quite a lot of impeccably New Labour MPs who believe there is plenty of peace dividend still to come.

Savings in the defence budget are an issue tailor-made for Gordon Brown. There are not many issues in which it can be left-wing to cut public expenditure. Defence, by contrast, has the potential to be the issue over which Brown the true Labour radical, and Brown the Iron Chancellor most perfectly converge. The Treasury has anyway long been deeply sceptical of the defence budget. Norman Lamont as chancellor got so fed up with the arguments deployed in favour of the arms bill, that he once wrote a Cabinet minute daring to question the point of Britain's permanent membership of the UN Security Council. Brown, with a highly developed sense of Britain's international leadership role, isn't remotely of that cast of mind. But he has been ruthless over the past few weeks in exposing elements of expenditure that the Ministry of Defence would no doubt rather prefer to keep from Treasury eyes.

But MPs expecting deep cuts in defence should not get their hopes up too high. It isn't generally realised quite how deep were the cuts made by the Tories, largely because it is not in the Tories' nature to take credit for such a thing. Since the mid-1980s defence spending has been reduced by 29 per cent - leaving its share of GDP at 3.5 per cent, the lowest level since the 1930s. Since 1990, armed forces levels, despite the current presence in Bosnia and Northern Ireland, have been reduced from 315, 000 to 215,000. These figures are important for two reasons. First, they dramatise the dangers of further cuts. The Treasury is quite right to point out, as it has been doing, that the switch of pounds 160m from Defence to Health this autumn passed without a murmur. If the Labour Party of the early or mid-1980s had promised anything similar, it would have been regarded as yet another proof of its softness on defence. But the Tories would nevertheless be merciless in exploiting the still raw memories of Labour's unilateralist past if the Government continued cutting at anything like the rate of the previous one.

Secondly, and this may illustrate a deeper truth, Labour is not naturally the defence cutting party. Margaret Thatcher's reputation as the Iron Lady was in fact built on the decision of her Labour predecessor, James Callaghan, to raise in the late 1970s defence spending by 3 per cent a year - a growth sustained until she herself sanctioned reversal of that trend in around 1985. Before the election Tony Blair promised several people that Labour was the party radically to reform the welfare state because Labour had brought it into being. In the same way, it may be that the Tories can cut defence in a way that Labour can't.

But this has to do with more than just mere electoral politics. It has equally to do with Blair's own vision of Britain's role in the world, expressed most forcibly in the Mansion House speech. This was the most unequivocal statement yet of his view that "we need strong defence, not just to defend our country, but for British influence abroad ... we must not reduce our capability to exercise a role on the international stage." The composition of the Ministry of Defence is, I think, no accident. Three of the ministers, Lord Gilbert, John Spellar and Robertson himself, are bastions of the old Labour right, veterans of the anti-unlilateralist struggles of the 1980s. It's true that the armed forces minister John Reid has different political antecedents; but as a close ally of Neil Kinnock in the early 1980s he worked hard to edge Labour's defence policy back to the political mainstream. He also happens to believe strongly in a role for the armed forces which goes well beyond readiness for the post-Cold War threats, such as Iraq, and into that of peacekeeping and engagement which may not be confined to the direct promotion of British interests.

There will no doubt be big changes as a result of both the Strategic Defence Review and the parallel, Treasury-led comprehensive spending review of defence. There will be new efficiencies; including, no doubt, an end to the triplication of many bureaucrats and military staff serving each of the three services. I would not bet on the Government buying all of the 232 Eurofighter aircraft to which they are committed. More tanks will be mothballed on the European front than the Army would like. But some of those who call most vociferously for cuts are also, as the left-wing MP Andrew McKinley pointed out in a Commons defence debate last month, those who will say fastest that something must be done if war breaks out again in Bosnia. There will be a battle within the Cabinet, especially if welfare reform fails to yield the social security cuts hoped for it. There may be some modest savings to be used for health and education. But defence is unlikely to prove the pot of gold that some other spending ministers hope and expect it to be.