War and Public Finance, or How (Not) to Reform an Army

Jonathan Boff (University of Birmingham) looks back at the post Boer War reforms, the 1919-1932 ‘Ten Year Rule’ period and Duncan Sandy’s 1957 Defence White Paper in his examination of the “relationship between public finance and Army reform.”  In his examination, recurring (and familiar) themes of Efficiency, Reform, the need to juggle the balance “between machines and manpower as the situation demands”, “generating improved capacity at lower cost” and the impact Politics (governmental, and inter-service) will have on any Defence Review.

“It is not about the narrative. One does not get more money by vaguely muttering about capability shortfalls or ill-defend threats. Only when the threat is so very real and immediate that it’s clear to a checkout clerk at Tesco’s, will the cash start to flow. In any situation short of that, reform, not expansion, must be the watchword, and the experience of the Edwardian period suggests that it’s crucial to a) prepare the ground and support, within the army, the military, and more broadly, very carefully, and b) to offer economies.”

Will Defence’s contributions to the UK’s COVID-19 response bring the required support from “checkout clerks at Tesco’s” and the Treasury to avoid the need for Defence “to offer economies”?


Written by Jonathan Boff; University of Birmingham.

This article was originally published in February 2019, in Issue 14 of Ares & Athena ‘Don’t look back in anger: How the study of war can benefit today’s Army’

This work is strictly the view of the author, not that of the CHACR, or the British Army and Ministry of Defence. 

Since at least the time of Thucydides, war has been ‘a matter not so much of arms as of money’. Even on 27 August 1918, in the middle of the climactic battle on the Western Front, with the British Expeditionary Force (BEF) pushing the Germans back across the much-fought-over Somme battlefield, the British 2nd Division sent out teams to pick up and salvage anything they could as part of an immense recycling effort decades ahead of its green time. They came back to base with no fewer than 80 wagon-loads of salvage worth, they proudly recorded, £15,000. The British Army was literally scrabbling in the mud for brass shell cases. Every penny, clearly, counted. If that was true at the peak of total war, when, if ever, you would expect money to matter little, how much more must it have mattered in peacetime? This article looks at the relationship between public finance and army reform. It compares and contrasts a number of attempts to reorganise and reform the British Army, to see how important money and finance were in making the difference between success and failure.

Let’s start by looking at the Army in the aftermath of a drawn-out expeditionary war, fought thousands of miles from home, where a brief period of conventional fighting was followed by a tedious and difficult counter-insurgency campaign. A war which had not gone very well. The war was the Boer War, 1899-1902, and the first reform efforts were those of three secretaries of state: William St John Brodrick and Hugh Arnold-Forster, both Tories, and the Liberal who followed them, Richard Burdon Haldane, Secretary of State from 1906 to 1912 and widely considered one of the most successful reformers and men ever to have held the office[1].

When the South African War broke out in October 1899, everyone expected the Army would easily be able to teach a few Boer farmers a lesson. The reality proved very different, with the Army getting a very bloody conventional nose during Black Week in December 1899. Even once the Boer armies had been beaten, a long and frustrating counterinsurgency campaign, which stretched the military resources of Britain and her Empire to the limit, dragged on until May 1902. There were evidently problems with the Army’s administration, kit, manpower, training, and tactics.

St John Brodrick had been appointed Secretary of State for War in November 1900 but his first reaction was not to rock the boat too dramatically while the war went on. Once peace came, however, he realised that he was on the verge of wasting a good crisis and decided to push through reform while he could still finance it using wartime levels of taxation (about double pre-1899 levels). He proposed setting up six regional Army Corps, three of them all-regular and able to form an expeditionary force to fight wherever required overseas, with the other three, incorporating regulars and troops from a reformed militia, providing home defence and a base for Army expansion in time of need. He wanted to recruit 11,500 more soldiers and to improve their pay.

Brodrick made two fundamental mistakes. Firstly, he rushed his reforms and failed to build the necessary support for them, both in the War Office and among the county grandees, for whom the Militia constituted an important aspect of local identity and patronage networks and who were therefore suspicious of reform. Secondly, by expanding the Army and paying it more, he was arguing for spending more money at a time when the mood, both in the Treasury and the country more broadly, was in favour of austerity and finding economies to pay of the £250 million cost of the war.

With the War Office having proved incapable of reforming itself, in October 1903 the prime minister, Arthur Balfour, moved Brodrick and brought in an outsider from the Admiralty, Hugh Arnold-Forster, to implement the reforms arising from the Elgin Commission, set up to identify lessons learnt from the Boer War, and from the Esher committee formed to come up with concrete proposals for change. The chairman, Lord Esher, primarily represented the King’s interest in what the monarch tended to see very much as his Army. The famous Admiral Jackie Fisher was another influential member. Esher’s committee made three main recommendations in early 1904: 1) an Army Council along the lines of the Board of Admiralty; 2) a General Staff; 3) abolition of the post of Commander-in-Chief. These were all implemented and marked important and lasting external interventions in the Army’s governance, but Arnold-Forster was unable to push on with other reforms he had in mind, especially, again, of the Militia, for two main reasons. First, his arrogance managed to alienate almost everyone. It was, perhaps, inevitable that conservatives within the War Office would resent what looked like naval interference in their business and that Lord Roberts, hero of the Indian Mutiny, Kandahar, and South Africa, would resent losing his job as Commander-in-Chief; but Arnold-Forster also repeated Brodrick’s mistake of trying to force through unpopular Militia reform. He even managed to upset Lord Esher and thus the King. Secondly, the Tory party was, from autumn 1903, tearing itself to pieces over Protectionism and Free Trade, and Balfour’s government was increasingly broken-backed. The election of December 1905 put it out of its misery and resulted in a Liberal landslide.

Why did Haldane succeed where Brodrick and Arnold-Forster had failed? The ideas were not radically different, after all. In fact, many had been floating around for years. There were two main reasons. First, he prepared his ground carefully, listening to experts including Douglas Haig and his Permanent Secretary (Sir Edward Ward, founder of the Army Service Corps) and disarming opposition, including from the militia backwoodsmen by compromises, charm, and mobilising royal prestige via Lord Esher. Second, his reforms saved money, by improving efficiency and by cutting the size of the Army by 16,000 men; this commanded bipartisan support. Saving money appealed to both sides of the House and, crucially, to the Treasury.

In his post-war memoirs Haldane suggested that his main motivation was to build an army capable of fighting and defeating Germany in Europe. This was hindsight. The BEF which went to France in August 1914 was not specifically designed to fight Germany, or even necessarily to operate on the continent. At no point did Haldane set a strategic objective for the BEF, much less the army overall. Indeed, no politician or official ever set such an objective between 1888 and 1914. Haldane’s intention was simple: it was to save money. Right from the beginning, he insisted that any reform must result in Army Estimates below £28 million and he achieved it. As Haldane’s biographer Edward Spiers put it, far from “perceiving a strategic objective and simply providing the wherewithal in men, arms and organisation to meet it, Haldane had set a mandatory financial limit and had hoped that the existing forces, if better organised, would fulfil the strategic requirements”.

The Edwardian period, therefore, demonstrates that reform depends both on how it is managed in terms of creating a coalition for change prepared to support it; and on what it seeks to achieve, with the essential element being saving money. Asking for more money, unless one faces a very real, obvious, and immediate threat, does not get anyone very far.

There’s an interesting contrast here with the inter-war period. From 1919 to 1932 the UK had in place the Ten-Year Rule, explicitly ruling out major war within a decade. Throughout those years, the military continually, and correctly, complained that it lacked the resources to do all the things it was being asked to do, and the Services tore each other to pieces fighting for the crumbs. No-one was willing to listen. Eventually, in 1932, in the wake of Japanese aggression in China, the Ten-Year Rule was explicitly dropped but spending did not suddenly jump. There was at that stage no German threat, and Japan was clearly not seen as a realistic danger or adversary. Rather, defence spending flatlined at about 2.8 per cent of GDP, only turning up a little in 1935 and then climbing much more steeply after Munich in 1938. The main beneficiary, partly because the War Office remained hopelessly divided internally, was the RAF.

In other words, capacity cannot be improved just by telling a better story. It is not about the narrative. One does not get more money by vaguely muttering about capability shortfalls or ill-defend threats. Only when the threat is so very real and immediate that it’s clear to a checkout clerk at Tesco’s, will the cash start to flow. In any situation short of that, reform, not expansion, must be the watchword, and the experience of the Edwardian period suggests that it’s crucial to a) prepare the ground and support, within the army, the military, and more broadly, very carefully, and b) to offer economies.

How to find those economies is the tough bit, of course. Promises of ‘efficiency savings’ are rarely believed and never delivered. But history might be able to offer help here. After the First World War, while the main priority was disarmament, where the UK was prepared to spend money was on kit, rather than manpower, substituting capital for labour, and aircraft, tanks, lorries, and so on, for riflemen, to offer more effect for less cash. This was also true of Duncan Sandys’ Defence White Paper of 1957. This, like Haldane’s reforms, was explicitly designed to achieve political and financial, rather than military, ends: the abolition of National Service and a reduction in defence spending from over 8 per cent to 6.5 per cent of GDP. He largely achieved those objectives by setting Service manning levels based on reasonable assumptions of recruitment, rather than commitments, and by letting kit, in the shape of nuclear weapons, including tactical ones, take more of the strain.

The best source of economy, therefore, is to surf that capital labour continuum, switching backwards and forwards between machines and manpower as the situation demands while generating improved capacity at lower cost. That’s what experience in the 20th Century, at least, suggests is necessary to mobilise the Treasury, Parliament and the public for change. That’s why getting stuck on an arbitrary manpower target would remove freedom of manoeuvre and constitute a major mistake.

[1] This is one of the most closely-studied periods in the history of British defence, and I would like to acknowledge the fine scholarship of David French, John Gooch, Nicholas d’Ombrain, Edward Spiers, Peter Grant, George Peden, Hew Strachan, David Morgan-Owen, and Chris Phillips, on whose work this article draws heavily