A Question of Value: The British Army and the UK

On 17 May 21, the All Party Parliamentary Group for the Armed Forces held a meeting to discuss the recently released report by the Oxford Economics group, a world leader in global forecasting and quantitative economics, titled ‘The Wider Value of the British Army’. The report was commissioned by the Army. Taking inspiration from large, private corporations, who regularly assess their value for shareholders and investors, it seeks to apply economic theory to measure the totality of the Army’s outputs.

The first question that falls from this report is; why has the Army used precious resource to examine its wider, arguably more peripheral outputs, rather than focus on and champion its core purpose? The purpose of the Army is to defend the nation against aggressors, both external and internal, and protect the interests of the population. This what the Army is structured, trained and funded to do, and where it provides the chief value; seemingly, this is the narrative that we should be seeking to place front and centre; setting out the risk and opportunity in the international environment over the next decade and making the argument for continued investment. Economic contribution and prosperity are all very well – but they are not core business. Justifying investment in the Army through its incidental benefits, at a time when it has seen its regular workforce reduced by 10,000 in the Integrated Review, seems, at best, to miss the point.

So, was commissioning the paper worthwhile? To answer that question, this article will discuss the utility of the report, exploring the benefit of its findings to the wider discussion on Army purpose and narrative.

The Raison D’Etre – the Function Value

The report, initially, examines the Army’s primary purpose. Unsurprisingly, it highlights that at the heart of articulating the Army’s primary value is the eternal difficulty of estimating, in financial terms, the strategic ‘value’ achieved by deterrence, direct military action or engagement. Thinking in the subjunctive (‘what might otherwise have happened’) is essential for strategy but bad for accounting; it will never provide a precise cost value from disasters avoided or opportunities missed.

The report does attempt to at least qualify the value where precision is impossible; noting that whilst war is episodic, its political, social and economic effects are much more enduring – and in an interconnected world, that is important. The Army can train, deter, constrain and fight in support of UK interests – but avoiding war is by far the most economical solution (the report offers the correlation between national debt and major wars as an illustration). The avoidance of war requires international engagement. The report explains that the Army provides this at scale; for instance, on a typical day in September 2019, over 5,000 soldiers were deployed across 47 countries, equivalent to one-quarter of all countries of the world; a critical security presence for a Global Britain.

The analysis then turns to Resilience, where a year-on-year increase in tasks (145 in 2019) has generated much discussion in the defence community. However, this is often focussed on the tasks themselves. The report reveals that a simple first-order benefit calculus of these operations is not enough. Take, for example, an EOD task in January 2020, where an Army team found and defeated an IED in Belfast docks. This not only saved lives, but prevented a series of damaging commercial losses, including the port turnover (£65.9 million in 2019) and reputation, lost income for manufacturers depending on the port to bring in supplies, and losses to shipping companies. The report makes the case that from core capabilities the Army must hold, it generates multiple, complex benefits. It does acknowledge that the counter-factual is hard to quantify; other services (the Police in this case) could develop the capability. However, this would be at addition cost to the taxpayer – and if their capability had fallen short of the Army’s, an explosion would have had terrible consequences.

The report thus sets out how now we must see Army tasks in the broader context; consider the reputational effect if the 2012 Olympics had not been swiftly supported by the military? Or imagine, for example, the practicality of training and funding civilian organisations to conduct unknown tasks such as supporting the NHS during COVID – a much more expensive and slower option, where time lost can equate to human lives lost. Indirect effects and counterfactuals are important. However, as the Army proves a useful and popular tool for Resilience, sage strategic prioritisation will be necessary to avoid over-commitment – but, as the report makes clear, where the alternative is unpalatable, the Army provides a significantly valuable option.

The report next turns to how the Army supports UK foreign policy through engagement, in the form of exchanges, joint exercises, training teams or humanitarian assistance and disaster relief. It sets out how these activities build relations with strategic partners and have a strong positive, political impact. A useful example is the Royal Military Academy Sandhurst and the training of foreign officers on commissioning courses (at the time of writing the report, 105 individuals from 40 countries). The report highlighted how this creates privileged and enduring access to other nations, opening the door for and supporting foreign policy and economic initiatives. As an idea of scale, eight of the world’s serving heads of state trained at Sandhurst. Huge influence, and difficult to deliver via any other means. The report demonstrates that supporting security (resilience and overseas engagement) is as important as fighting wars itself (and far more economical).

Follow the Money – A Fiscal View.

Having led the reader into a more holistic view of security, the report then provides evidence to articulate the balance of investment. Whilst the Army is indeed a significant investment, viewing it (in corporate terms) simply as a cost or overhead to be minimised is shown to be wrong because it generates value back into British economy, society, culture and environment. The report assesses this in various ways – but in simple financial terms, the benefits are surprisingly significant, putting the net cost of the Army much lower than is commonly understood.

The direct inputs to the UK economy make for easier metrics than security, but the scale remains impressive. As a corporate entity, the Army contributes £5.5 billion to UK GDP, but makes a much larger contribution through its procurement expenditures and workers’ spending. Oxford Economics estimate that the total economic footprint of the Army in 2019 supported 271,000 jobs and £15 billion in GDP, on an £11 billion investment. In addition, for every job that the Army directly supports, a further 1.3 are supported elsewhere in the economy as a result of supply chains or worker spending multiplier effects. Similarly, for every £1 that the Army contributes to the UK directly, a further £1.70 is supported through multiplier effects This impact can be particularly important to local economies close to major bases and Defence industry locations. For instance, the report calculates that Catterick garrison alone supports over 2,000 local jobs and contributes £66 million GVA (gross value added) to the area.

Nationally, the Army directly provides jobs for 117,000 personnel. The report notes that the Army’s economic footprint is dispersed across the UK, often in less affluent areas, supporting the ‘Levelling Up’ agenda. The AJAX programme is emblematic – new factories built by General Dynamics in Merthyr Tydfil will provide over 800 jobs, supporting the Union and creating broader employment and contingent wealth.

The training and education provided to serving personnel as part of the UK population is also significant. The report estimates the value of training delivered by the Army in just one year to be more than £550 million, which flows back into wider society as individuals leave the Army. The report suggests that this is a conservative estimate too, only capturing the effect of training courses that equate to formal qualifications and does not include the wider training and experience the Army provides.

 A Very British Affair – the Social Value

The report also considers social value, where it sets out a case for the Army’s considerable contribution, based on three aspects. First, the Army is one of only a few major employers that offers entry and progression to those without formal education; social and educational background is not a barrier to entry or potential.  Second, the Army disproportionately recruits from parts of the UK where wages are lower. Third, formal training is delivered with a much higher degree of success. In 2019, 60% of junior soldiers who joined at 16 or 17 had only Level 0 or Level 1 qualifications. Within this group, more than 80% achieved a Level 2 literacy qualification by the time they were 19, compared with 21% in the wider population. The report’s statistics show the Army to be a singular vehicle for social mobility amongst the Government and large employers.

More broadly, the report explains how the Army also supports the UK way of life through heritage and culture, across a broad set of categories. It supports the Defence Heritage Portfolio, where its division is similar in size to that of the National Trust. It has a myriad of ties with museums (over 50 directly) and Armed Forces- or MOD-funded museums employ more than 1,000 people and contribute £30 million to GDP. These also have positive effects in providing leisure opportunities for the British public, are a draw for tourism and provide a soft power tool. The National Army Museum (NAM) in London, as an example, received 235,000 visitors in 2019/20, of which 11,000 were on school trips and 3,000 on family programmes. Finally, the Army contributes to protecting the UK’s natural environment: training estate covers approximately 2% of the UK’s landmass, delivering significant portion of the UK’s green areas. The report uses Foxglove Culvert in Catterick as an example; it is home to 2,776 species (including several threatened species); it has attracted 747,000 visitors since 1992; is a regular location for school trips; and is a centre for conservation groups and military and civilian volunteer organisations.

Mentioned in this section, though not extensively covered, is also the deeper effect of national identity and pride. Understandably impossible to quantify, it is so obvious that it is often missed.¹  This is not simply about generating tourism – but that contributing to a shared national narrative and history provides a unifying force and psychological good in its domestic population. The report cites Royal Weddings, The Changing of the Guard or the Royal Edinburgh Military Tattoo to demonstrate what a central position the Army holds in the British narrative and identity. Thinking broadly, if prosperity is in pursuit of wider societal happiness, then underpinning national pride and culture is hugely important; and the Army plays a significant role in this.

Summary

Armies have always existed as a central function of the state, providing a warfighting and protective function, and the British Army is no exception – but this report shows that consideration of its wider contributions demonstrates that the Army provides value derived from avoiding war and providing resilience to the homeland, social value and supporting national prosperity.

There is no doubt that the primary purpose of the Army endures – warfighting – and when the Army is facing cuts in the IR, it is easy to be cynical about a report that looks at wider or more intangible value. Nonetheless, the report leaves the reader with a different understanding of the actual value of the Army; the economic rigour applied by the Oxford Economics report demands a different approach to the question – what is the Army worth in totality? It acknowledges that there are gaps, and that the exact details of counterfactuals required to fully develop the economic outputs aren’t always possible – but it also suggests that these data issues encountered by the Oxford Economics team mean that the figures given are likely to be conservative. It highlights a crucial truth – the view that the Army is a ‘sunk cost’ or an expensive insurance policy is a fallacy and misses a more nuanced reality when it comes to value.

The Oxford Economics Report was commissioned to support the debate about the future of the Army, to enlighten the discussion on ‘balance of investments’ and to challenge the narrative that the investment into the Army is a sunk cost. As the report states, the Army supports £15 billion in GDP on an £11 billion investment. This is a hugely important aspect of the Army’s utility, and key reading for any nuanced discussion about its value to the UK.

1. The effect of national narrative, culture and pride are difficult to define but hugely important. Their centrality in providing social cohesion and psychological goods have lead to charities such as the Turquois Mountain Foundation, which aim to rebuild destroyed heritage sites and traditional national skills in war-torn nations as a means of national healing.